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British Virgin Islands Funds License

Starting Offshore > British Virgin Islands Funds License

Brief Overview:

Located east of Puerto Rico, the British Virgin Islands, alternatively called the Virgin Islands are British overseas territories in the Caribbean. The main islands consist of the islands of Tortola, virgin Goda, Jost van dyke and Anegada and 50 smaller islands with about 15 unoccupied. English is the official language, although Spanish is widely spoken by Puerto Rican, Dominican, and other Spanish-speaking immigrants.

The BVI is a prime location for offshore mutual funds.  It is quite popular as a global leader with more than 3000 registered mutual funds managing over 100 billion USD. In the Virgin Islands, the Mutual Funds Act, 1996, governs mutual funds investments under the administration of the British Virgin Islands Financial Services Commission. The Act which controls regulates and authorize, open-ended funds, also provide the guidelines for registration of managers and administrators doing business in the territory.

In May 2010, the Government introduced a new modernized regime with Part III of the Securities and Investment Business Act, 2010 (as amended, SIBA) and the Mutual Funds Regulations, 2010 (MFR), repealing and replacing the MFA.

The acts define mutual fund as an incorporated company, a partnership, a unit trust, or other similar bodies formed under the laws of the BVI or any other jurisdiction. It pools investor’s funds for collective investment, and also issues shares, which entitle the holder to be given an amount either within a specified time or on demand. This amount received by any member of the company, partnership or unit trust is computed about the proportionate value of the member’s interest in the whole or part of the net assets.

There are three basic types that include private funds, professional fund, and public fund. To register under the act in any of these categories, applicants must have proven to a satisfactory level that it is constituted lawfully, and complies with the definition of private or professional.

To register a mutual fund for licensing, the fund must first of all issue a prospectus, which will contain an accurate disclosure of all information required by investors to make an informed investment decision. The prospectus must comply with both the MFR and the Public Funds Code should be approved and signed by or on behalf of the board of directors of the board.

Adequate accounting and auditing records and financial statements in respect to each financial year of operation by generally accepted accounting principles are required to be filed with the Commission within six months of the financial year-end.

Application Process:

Documents required in order to obtain a British Virgin Islands Funds License :

  • Offering memorandum (N/A for incubator and approved funds)
  • Subscription agreement
  • Constitutional documents (e.g. Memorandum and Articles of Association for a company, limited partnership agreement for a partnership and trust deed for a unit trust)
  • Investment management agreement (N/A for incubator and approved funds)
  • Administration agreement (N/A for incubator funds)
  • Prime brokerage/custodian agreement (N/A for incubator funds)
  • FSC application form (F-100)
  • Application for exemption from the requirement to appoint a custodian (if required)
  • Consent letter from the auditor (N/A for incubator and approved funds)
  • Consent letter from the BVI lawyers
  • Organizational and directors’/general partner’s/trustee’s resolutions
  • Questionnaire, affidavit of no conviction and personal references for each director (Licensed funds)
  • An application to the BVI registrar to incorporate the company or register the limited partnership and supporting documents (e.g. resume, references and police checks) for directors of public funds.

Advantages :

  • BVI is a well-regulated jurisdiction with a long and proven track record.
  • Outstanding political stability, legal predictability as well as a robust economy.
  • Absence of restrictions and exchange controls on transfers.
  • It is subject to zero taxation on capital gains and profits.
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