Managing Funds in the British Virgin Islands

As per BVI legislation, the following kinds of funds may be established:

• confirmed;
• public;
• private;
• professional;
• incubator.

To register a fund in the BVI, investors are required to submit an application to the FSC. Obtaining a BVI investment license requires making sure that the following requirements are met:

• unlicensed investment activities are prohibited;
• licensees must confirm their companies’ financial soundness;
• two directors (one individual) must be appointed;
• fund managers must appoint directors & senior officers;
• major changes in a company’s structure are to be endorsed by the FSC;
• professional insurance benefits are to be paid;
• financial records must be properly maintained;
• KYC policy is to be implemented;
• an authorized intermediary between the FSC & a licensee is to be appointed;
• an auditor is to be selected & appointed;
• an AML compliance officer is to be selected & appointed.

BVI: Setting up a Marketing Fund

Setting up a marketing fund in the Virgin Islands requires obtaining a permit from the local regulator. As per BVI legislation, marketing foundations can engage in an activity aimed at providing information; they are also allowed to invite or encourage other individuals to invest in mutual funds. However, they’re prohibited from attracting local residents & providing them with investment-related services.

BVI: Setting Up a Retail Fund

Normally, a retail fund is structured as a mutual fund, commercial company or LP. Opening a retail fund in the BVI requires compliance with these important criteria:

• a fund is to be registered as a public one;
• releasing a prospectus requires getting the FCS’ endorsement;
• no fewer than 2 directors are to be appointed;
• managers & administrators of a fund are to be appointed;
• auditors are to be appointed;
• an authorized intermediary between the FSC & a licensee is to be appointed.

Taxation

Just like other registered organizations, retail funds are exempt from an income tax. Stakeholders mustn’t pay an income tax & capital gains tax, either. If funds employ no local residents, they mustn’t pay a payroll tax, either.

Retail Funds

Investors seeking to open a retail fund in the BVI must ensure that:

• a fund is registered as commercial entities;
• a director registry is kept;
• memos, AoA, stakeholder register, minutes & transactional records are to be maintained.

Non-Profit Funds

Opening a non-profit foundation in the BVI requires it to have a structure of a company or LP. Normally, a legal form of closed-ended funds is chosen for non-profit foundations; hence, they can operate beyond the Securities Law. Regulated as per legislation under which they were set up, they require no permission or license for their activities.

Because they’re closed-ended foundations, non-profit funds mustn’t abide by any financial reporting requirements. However, they must ensure compliance with these two requirements: 1) be present in the BVI’s company registry 2) pay an annual fee.

Redomiciliation

It’s legally permitted & possible to redomicile foreign companies to the BVI. Foreign investments are also allowed, however, there’s certain rules regarding foreign investments in the BVI-created funds. There’s no specific rules for domestic investments.