The BVI is a well regulated jurisdiction with a proven track record and is a widely preferred and recognised choice for the incorporation of Mutual Funds.
In May 2010 SIBA replaced the Mutual Funds Act, 1996 (the MFA) and has been welcomed by the industry due to the fact that SIBA has retained the well-established framework of public, professional and private funds established by the MFA but has updated the regime to bring it in line with best practice and international standards. Funds recognised or registered under SIBA are regulated by the Financial Services Commission (the Commission), the financial services regulator in the BVI.
The BVI is a well regulated jurisdiction with a proven track record and is a widely preferred and recognised choice for the incorporation of Mutual Funds. The BVI was amongst the first jurisdictions to implement specific anti-money laundering legislation in 1996 which has resulted in the BVI possessing some of the highest standards of KYC due diligence but within realistic and practical codes of conduct.
There are a number of major benefits to a BVI Offshore Mutual Fund, some of which are summarised below.
Benefits of a BVI Offshore Mutual Fund:
- Flexible regulation ensures ease of establishment and administration of the fund
- Relatively low formation and operating costs compared to other jurisdictions
- Wide choice of fund structure
- Fund assets can be anywhere in the world
- No restrictions on investors
- No requirement to appoint local directors, functionaries or auditors. Also there is no obligation of BVI residency of the key fund functionaries
- No substantial back office operation required
- Legal system based on English Common Law
- Exemplary legal and professional advisors resident in the BVI to assist where necessary
- BVI Funds are recognised and are capable of being listed on exchanges including NYSE, TSE, Dublin, Singapore, Luxembourg and Bermuda
- The Local Currency is the USD and there are no exchange controls
- The BVI is a British Dependent Territory and is politically stable
Fund Vehicles
Sponsors and Fund Managers considering the establishment of an investment fund in the BVI may choose from the following range of vehicles:
- BVI Business Company
- Limited Partnership
- Unit Trust
The vast majority of British Virgin Islands investment funds are established as companies limited by shares under the BVI Companies Act, 2004 or as limited partnerships formed under the Partnership Act, 1996.
Categories of Fund
There are three categories of mutual funds:
The Private Fund
A Private Fund is defined in SIBA as a mutual fund with the following:
- No more than 50 investors
- The making of an invitation to subscribe for, or purchase fund interests issued by the mutual fund, is to be made on a private basis only.
The Professional Fund
- Fund interests shall only be issued to professional investors
- The initial investment by each investor in the fund is not less than 100,000 USD.
The Public Fund
- Offers investment to the general public
Functionaries / Service Providers:
Under SIBA a fund applying to be recognised or registered must appoint the following functionaries:
- Investment Manager
- Administrator
- Custodian
- Auditor
Private or Professional funds may apply for an exemption to appoint an investment manager, a custodian or an auditor in certain circumstances, for example where the fund only has a very small number of investors.
An application for recognition or registration of a fund whose functionaries are domiciled in a Recognised Jurisdiction will usually be processed by the FSC without the need to assess the fit and proper status of the functionaries. The following countries have been designated by the FSC as “Recognised Jurisdictions”:
Argentina, Australia, Bahamas, Belgium, Bermuda, Brazil, Canada, Cayman Islands, Chile, China, Denmark, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hong Kong, Ireland, Isle of Man, Italy, Japan, Jersey, Luxembourg, Malta, Mexico, Netherlands, Netherlands Antilles, New Zealand, Norway, Panama, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, United Kingdom and the USA.
The FSC may, upon application, accept functionaries domiciled in jurisdictions that are not recognised jurisdictions if satisfied that the jurisdiction effectively regulates fund business.
