Without a doubt, The British Virgin Islands (BVI) is the preferred jurisdiction for new fund managers and start-up funds. The Incubator and Approved Fund products continue to grow in popularity, as they allow new fund managers to start building a track record and launch funds under much less stringent conditions.
Both the BVI Incubator and Approved Fund vehicles provide a low-cost opportunity for new managers to build a name for themselves in the market while keeping costs low enough so that enough capital can be attracted to become viable over the long term.
Benefits of Incubator and Approved Funds
The big benefit to a new manager is that neither the incubator nor approved funds are required to prepare an offering memorandum. Instead, investors just need to be provided with a written description of both the investment strategy and an outline of the risks involved, including the specific risk of investing in these types of fund. Additionally neither has to appoint an auditor or custodian.
It is important to note that an Incubator Fund can only exist in that form for a period of two years, which can be extended by one year, before which it must either convert to a Private, Professional or Approved Fund. Such requirements do not exist for an Approved Fund.
The total cost to establish an investment fund in the British Virgin Islands such as a BVI Incubator Fund or BVI Approved Fund is one of the most reasonable in the world today.
Incubator and Approved Funds Requirements
Both funds may commence business less than a week after submitting a completed application. They must have two directors, one of which is an individual whose resume has been lodged with the FSC, in addition to having an authorized representative in the BVI.
Incubator funds are required to submit semi-annual returns to the FSC which confirm their continuing eligibility for the classification, as well as annual returns and annual financial statements, although auditing is not necessary.
Both options are restricted to a maximum of 20 investors, with the Incubator Fund capping net assets at $20 million with a minimum individual investor investment of $20 thousand and the Approved Fund capping net assets at $100 million with no minimum individual investor investment.
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If establishing an Investment Fund interests you, we encourage you to contact us. Take advantage of our more than 22 years of experience and let us help you every step of the way. Your business is important to us and we guarantee professional service.