Nov/06/2020

BVI Approved Fund

BVI Approved Funds

There are a range of different funds available through the British Virgin Islands. These include incubator funds, private funds, professional funds, public funds and approved funds. With some exceptions, these are the only funds available through this process.

Compliance on Approved Funds

In order to have an approved fund you must meet specific requirements, and you also may choose to follow this process for some purpose of your own. For example, an approved fund is good for those who want an incubator fund but will have it in action for longer than the three years allowed or who will operate on a private basis. If there is a need for minimal regulations and low cost then this is a good way to go.

These funds do not require functionaries to be appointed other than an administrator, which helps to keep some of the costs low. It can also be approved quickly, within just two days. This makes sure that it is more efficient and ready to operate as fast as possible. It also allows for 20 investors at a time and allows up to $100 million of market capitalization.

There are a number of similarities between this and the private fund, which include the fact that investors are not required to have a minimum initial investment. These funds do require three things in order to function, however:

  • file an annual return with the Financial Services Commission before January 31st
  • Pay an annual license fee of $1,000 by March 31st.
  • File a financial statement and director’s certificate by June 30th.

Setting Up Directors

This type of fund is actually quite similar to an incubator fund in that it requires an authorized representative and two or more directors. One of those directors is required to be an individual, however the other can be anyone or any entity.

Understanding the Risk

There are set risks that must be disclosed when it comes to working with an approved fund. These must be expressed to any and all investors at the time of their investment. There must also be a fee of $1,500 to apply for approval with the government to create an approved fund.

Start of Business

Both approved funds and incubator funds can start work within as little as two business days once their application has been submitted. It must be fully filled out and received by the BVI in order to count for this. At that point there will be a certificate from the BVI but not a license from the commission.

Financial Statements

Incubator and approved funds are required to submit annual statements, though they do not have to be audited before submission. The reports can also be submitted semi-annually as well to ensure eligibility for their classification.

Converting the Fund

If the fund stops meeting the requirements or limitations of this particular type of fund for a period of time of two consecutive months then it must be changed. It can be converted to a different type of fund or it can be liquidated and dissolved through the processes that have been previously determined in the founding documents.

This type of fund provides a number of the same benefits as an incubator but provides for a longer span of time that you can continue to use it and profit from it. If you’re looking at an incubator but want it to last more than three years then an approved fund may be the way to go.

Conclusion

Questions? Contact the hedge fund experts at Wabash Advisors today – 213.534.8656 or fund@wabashadvisors.com

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