An offshore mutual fund is an investment vehicle based in a jurisdiction that is different from that of the founder or founders, usually in an offshore center like the British Virgin Islands. These funds are can be structured like an open-ended investment fund, however, they can also be incorporated as an offshore company or partnership.
The types of offshore mutual funds in BVI are described in this article. Our team of British Virgin Islands company formation specialists can help investors establish and license a chosen fund. The jurisdiction is well known as a jurisdiction where investors choose to establish a fund, due to its favorable regulatory and taxation regimes.
What are the types of recognized mutual funds in BVI?
Under the legislation in force, the BVI Mutual Funds Act 1996, together with its subsequent amendments, there are three types of offshore mutual funds in BVI:
- Public funds: these are not private or professional, they target general investors and are subject to a high degree of regulation.
- Private funds: has a maximum number of investors of fifty and operates based on certain criterion, defined in its constitutive documents.
- Professional fund: targets only professional investors and the initial investment is substantial, for example no less than 100,000 USD.
One of our BVI company incorporation agents can provide investors with additional details about each of these types of mutual funds. We can also provide services related to their establishment and licensing.
What are the regulations for the different types of funds?
The BVI Mutual Funds Act contains the framework for the registration, the recognition and the licensing of the funds. Below, we list some of the issues that need to be taken into consideration when initiating the procedure of establishing a fund in the British Virgin Islands:
- Fund structure: they can be incorporated as a company, a BVI Business Company most often, or as a limited or unlimited partnership; they can also take the form of a unit trust.
- Fund constitutional documents: these are the Memorandum and the Articles of Association for the fund.
- Fund licensing: the mutual fund needs to be registered with and recognized by the Financial Services Commission.
- Fund administration: this can be provided by a professional BVI-based company that offers fund administration services.
What are some basic principles related to fund creation in BVI?
Investors in BVI who are interested in opening an offshore mutual fund are required to observe both the particular conditions, as per the chosen type of fund, and the general ones, relating to licensing. All fund managers and administrators who provide services in the jurisdiction are required to be licensed by the Financial Services Commission. In order to receive the said license, they must comply with the conditions to be a “fit and proper” individual in order to be involved in the management or the administration of funds. Moreover, the administrator will need to prove his expertise and knowledge for engaging in the said business.
One of our BVI company formation agents can provide investors with more information on the general requirements stated by the law as well as the guidelines issued by the Financial Service Commission for obtaining the license.
Particular requirements for mutual fund creation depend on the chosen type of fund. For example, public funds are required to be registered and to provide complete and accurate disclosure of information for the general public to which it is open. This prospectus will also include a summary regarding the rights of the investors. Private funds are required to maintain this characteristic by maintaining a limited number of invitations to prospective investor. The professional fund is one that is limited to savvy investors: either one whose business involves a business that is also related to investments or an individual who can be considered a high net worth individual, thus being able to comply with the requirement for a substantial initial investment. While public funds undergo a registration process, private and professional funds undergo a recognition procedure.
Contact our BVI offshore company specialists for more information about how to incorporate a legal entity, partnership pr unit trust that will serve as an offshore mutual fund.
We provide complete services to investors in the British Virgin Islands. Reach out to us for more information about how we can assist with incorporation, licensing and other matters.