Nov/06/2020

BVI Private Fund

British Virgin Islands Private Funds

There are several different funds available within the British Virgin Islands, and each of them offers a range of benefits to those who choose to invest. This country is actually one of the most affordable and most popular options when it comes to opening hedge funds because the country has zero taxes, no capital gains taxes, no sales tax, no capital transfer tax, no inheritance tax and no VAT. They are, however, fully compliant with international financial regulatory norms and regulations.

What really makes this a great country to invest in is that there are no regulatory restrictions on any type of investment policies or investment strategies. There are also no requirements to appoint a local director, auditor or administrator. Yet you can still get all of the normal professional services without paying exorbitant fees.

BVI Private Funds

Private funds are those that have no more than 50 investors or those who offer invitations for subscription or purchase through what’s considered a private basis. This means that they must be made to specific persons and must not allow for shares to be available to others that have not been personally invited. They may also be arranged through personal or business connections of the two people involved.

According to standard guidelines, up to 300 people can be invited to a private offering if those offerings are made specifically and individually as well as having no intent to be offered to the general public. Larger offerings and invitations can be more difficult to convince regulators of their being a private fund.

Advantages of BVI Private Funds

Why would you want this type of fund for yourself? Well, there are a number of different reasons. The first being that there are no minimum requirements for investors or investments to be suitable. They also allow for hedge fund service providers to be located absolutely anywhere in the world. You don’t need to meet specific requirements for local individuals or sign-offs.

On top of all of this you can create a BVI quickly and without a whole lot of added requirements as a hedge fund. The compliance culture is strong but the other requirements are very simple. Not to mention you get an English-based legal system and you’ll have a good judiciary system as well.

Structure of BVI Funds

These types of structures come in a few different variations. A BVI business company, a limited partnership, or a unit trust are all options that you can use. The most important thing is that they are established properly. Generally this is done through the Business Companies Act of 2004.

Business companies will generally be incorporated for limited liability and will also have open-ended investment companies, which allows for redeemable shares. This will also ensure positive options for hedge funds.

Unit trusts, however, are relatively rare, but they can be used in this area and follow most English trust law. The process involved creating a trust deed that will give beneficial interests for the unit holders. They can be used for investors in certain jurisdictions where this is better than a company. The assets of the trust are vested in the trustees and a trust deed will set out the rights and any obligations for those trustees.

Requirements of a BVI Private Fund

Private funds are recognized according to the Securities and Investment Business Act of 2010 and are a requirement for appointing an auditor. Not only that but they’re required for filing audited financial statements. This Act requires funds to appoint an administrator, auditor, custodian and investment manager in order to be recognized and registered.

Now, it is possible to circumvent this rule by applying for an exemption, however this is not always possible to achieve. Also, these funds require at least two directors, though they can lie anywhere in the world and they require a local authorized representative.

Private Fund Maintenance

There are several different requirements that need to continue to take place within a private fund. These include:

  • Notice of board composition changes to FSC 14 days in advance
  • Notice of change in place of business to FSC 14 days in advance
  • Notice of change in constitutional documents to FSC 14 days in advance
  • Notice of new/amended offering documents to FSC 14 days in advance
  • Notice of appointment of new functionary to FSC 7 days in advance
  • Notice of Cessation/resignation of functionary to FSC 7 days in advance
  • Filing of audited accounts within 6 months of financial year end
  • Filing of annual returns by June 30 each year
  • Notice of material changes to nature/scope of business to FSC ASAP
  • Annual fee payment

BVI Fund Types

Regulated funds can be categorized in several different ways. These include: incubator funds, approved funds, private funds, professional funds and public funds. Open-ended funds are the only ones that are regulated by the SIBA, and so closed-ended companies are able to use funds without mutual fund regulations.

Overall, these funds will provide an investor with a better, easier and more simplistic method of controlling their money and establishing the type of fund that will best protect their assets. Using the British Virgin Islands to take care of this improves overall profitability for the individual.

Conclusion

Questions? Contact Wabash Advisors today at 213.534.8656 or fund@wabashadvisors.com

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