Nov/06/2020

BVI Incubator Fund

BVI Incubator Funds

Regulated funds within the BVI can be categorized in one of only a few ways. First, they can be incubator funds, but they can also be approved, private, professional or public funds. Now, for those that have closed-ended funds where equity interests are not in any way a redeemable option for the inverter there are no regulations through the SIBA or the BVI. This changes the options and adds other options.

Hedge Fund Compliance

When it comes to fast launch and lower cost the incubator fund is a great way to go. It offers start-up managers a range of different benefits that include fewer regulatory hurdles and a lack of mandatory functionaries. Also, funds can operate as incubator funds for as long as three years. From there, if they are viable they have to be private, approved or professional funds.

If the fund is not viable or the individual chooses anyway, the fund can be wound up and dissolved. But, during the period of time that it’s working it needs to meet only four obligations:

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

This type of fund is better than a closed-end fund because it offers more benefits. For example, it doesn’t require the seed investor capital but does provide for fast startup and the ability to create your own record. It also costs little to start and doesn’t need to comply with all of the standard regulatory obligations. Growing your assets becomes a whole lot easier and cheaper this way.

There is no need for an auditor, service functionaries or a large bank balance to get going. All you need is:

  • Maximum of 20 investors
  • Minimum of $20,000 investment per investor
  • Market cap of $20 million

Setting Up Directors

In order to have this type of fund or an approved fund you must appoint an authorized representative and two directors (or more). At least one of those directors must be an individual person, however the other can be a company or corporation. Finding these individuals can be quite simple as well.

Understanding the Risk

You will need to understand the possible risks associated with this type of fund. In general, this means you need to put together a packet of information for all investors that includes the risks of the incubator fund as well as descriptions and constitutional documents. This information and the fee of approximately $1,500 must be submitted to be approved as an incubator fund.

Start of Business

Incubator funds and approved funds are allowed to begin work as soon as two business days after they have submitted the application. The application must be fully filled out and received to initiate the two-day countdown. The license will not be provided at this time however a certificate can be issued to express the correct status.

Financial Statements

In order to be an incubator fund or an approved fund the fund must submit financial statements each year. The funds financial records here are not required to go through the audit process and will instead be submitted semi-annually as well to ensure eligibility for their classification.

Converting the Fund

If the rules or regulations for this type of fund are surpassed, however, it is required that the fund be converted to another type of fund instead. If this happens consistently over two months consecutive the change must be made. The BVI must be notified within seven days and an application must be made to convert to another type of fund. The fund can also be liquidated or dissolved through proper amendments and rulings within the founding documents.

All of this allows those who choose to the ability to create their own funds and ensure that all of the requirements are being met. Incubator funds offer a range of different benefits and make the entire process of investment a great deal easier for those involved.

Conclusion

Questions? Contact the BVI incubator fund experts at 213.534.8656 or fund@wabashadvisor.com

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