What’s a BVI Approved Fund and why would you use it?

The British Virgin Islands (BVI) is an British Overseas Territory located in the heart of the Carribean, east of the US Virgin Islands and north west of Anguilla. Comprising of around 54 islands, most activity is centred on Virgin Gorda, Anegada, Jost Van Dyke, and Tortola which is home to the capital of Road Town. The islands are home to approximately 36,000 people who speak English, and if they are citizens, hold British citizenship.

Half of the territories income comes from its thriving financial services sector with most of that accounted for by the licensing of offshore companies and related corporate services. It is a key player in the global offshore finserv sector and is home to 45% of the world’s offshore companies. Businesses set up in or operating from BVI can enjoy a range of benefits including strict confidentiality, flexible organisational structures, and of course, a very favourable tax regime. 

But did you know that BVI is a preferred jurisdiction for start-up funds and new fund managers?

BVI Approved Fund

There are a variety of different kinds of Alternative Investment Fund structures available to those looking at BVI as a possible location. One of which is the BVI Approved Fund.

The Approved Fund was introduced in 2015 under the Securities and investment Business Regulations. In a short period, around 50 of these funds were set up, acknowledging a need in the market for an investment vehicle that is lightly regulated but that can grow with the manager as the business, and assets grow as well.

An Approved Fund in the BVI has a net assets cap of $100 million and caps the number of investors at 20. There is no minimum investment capital for this kind of fund and it can also operate without the appointment of a custodian, auditor or investment manager, although an administrator is required.

Those wanting to apply to establish an Approved Fund must submit a number of documents to the Commission which include details of the investment strategy, constitutional documents, and a prescribed form of investment strategy. 

Each fund is required to appoint an authorised representative within the BVI as well as an administrator, but there are no mandatory custody requirements. There is also no requirement for an offering document to be issued and if one is not issued, the investor warnings can be included in a separate term sheet.

Once all relevant documents have been submitted and approved, the Approved Fund can usually commence within two days.

Once established, annual fees become payable before 31 March each year, and there is a requirement to have at least two directors at all times- one of which must be an individual. The Commission must also be notified of any changes to the information submitted during the application and financial statements must be submitted each year.

It is also worth noting that the Approved Fund has no limited life span or limits like some other kind of funds available in BVI.

Fast Offshore

Fast Offshore have been working with clients in BVI for over twenty years and we have been involved in assisting with the set-up of a large number of different kinds of Alternative Investment Funds. With years of experience, we are perfectly placed to guide you through the process and make sure that all of your paperwork is in order. We are on hand to liaise with the Commission on your behalf, as well as to take care of any other corporate or financial requirements you might have.

Get in touch with us today to find out more.