BVI Finance has announced that the BVI Financial Services Commission has introduced the Incubator Fund and the Approved Fund to further establish the Territory’s reputation as a flexible, innovative and cost-effective jurisdiction for new fund launches.
Executive Director of BVI Finance, Mr. Julien Johnson stated that the new funds are aimed at start-up managers and those managing funds for smaller groups of closely connected investors.
Mr. Johnson said, “The new funds complement the Territory’s existing funds offerings and further demonstrate the jurisdiction’s commitment to collaborate more effectively with the private sector to develop world-leading solutions.”
He added, ”We are providing asset managers the very best environment in which to optimise the growth of assets, as well as family offices looking to establish a fund for a longer term, but with a more private investor offer.”
The new legislation that governs these products is the Securities and Investment Business (Incubator and Approved Funds) Regulations 2015 (“the Regulations”). The Regulations are made in accordance with the Securities and Investment Business (Amendment) Act 2015 which amends the Securities and Investment Business Act 2010 (“SIBA”). The Regulations were published on May 18, 2015 and will be brought into force shortly.
The Incubator Fund is designed for managers who do not necessarily have the benefit of seed investor capital, but wish to set up quickly and establish a track record with minimal set-up costs, without having to comply with difficult regulatory obligations.
Under the Regulations, the Incubator Fund is permitted to operate for two years (with the possibility of one additional year) with no functionaries such as administrator, custodian or manager, and no requirement to appoint an auditor, provided it remains within the relevant thresholds applicable to the fund.
In comparison, the Approved Fund is aimed at managers who wish to establish a longer-term fund, on the basis of a more private investor offering, appealing to family offices or an investor base of close connections.
The British Virgin Islands has over 2,100 regulated funds domiciled in the Territory, making it the second largest funds jurisdiction in the world.