Valsen Fiduciaries Funds

BVI Incubator Fund

The BVI Financial Services Commission (FSC) regulates mutual funds under the segregated portfolio companies (mutual funds) (amendment) regulations, 2018. This Act sets out the guidelines pertaining to the application and licensing of mutual funds in the BVI.

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About BVI Incubator Fund

The BVI Incubator Fund is a start-up fund for those managers who want to keep costs in line until they have a track record to attract sufficient subscriptions to make the funds viable for the long term. Rather, investors must only be provided with a written description of the investment strategy and a written outline of the risks including the risk of investing in an Incubator Fund to investors.

The Incubator Fund can only be approved for a two-year period.

For managers who have gained investor interest and attraction during the two-year period, an Incubator Fund may be converted into an Approved Fund, Professional Fund or Private Fund.

BVI Incubator Fund Legal Requirements

Requirements

Description

  1. Applicable legislation

Mutual Funds Act, 2010

  1. Supervising Authority

BVI Financial Services Commission (FSC)

  1. Corporate vehicle permitted

BVI Business Company

Segregated Portfolio Company

Unit Trust

Limited Partnership

  1. Share capital or equivalent

  • Minimum subscription

USD 20,000

  • Minimum investors

None but has a maximum of 20 investors

  1. Directors / Partners / Trustees

  • Minimum number

2

  • Corporate Directors / Partners / Trustees allowed

Yes

  • Local Directors / Partners / Trustees required

Yes

  1. Fund functionaries required

  1. Custodian

  • Custodian required

No

  • Local custodian required

No

  • Eligible custodian

Any other person as the authority may approve who is independent of the manager or administrator

  1. Fund manager / Investment manager

  • Fund manager required

No

  • Local fund manager required

No

  • Fund manager requires to be licensed

Yes

  • Eligible fund manager

Any licensed fund manager worldwide

  1. Fund administrator

  • Fund administrator required

No

  • Local fund administrator required

No

  • Eligible fund administrator

Any licensed fund manager worldwide

  1. External auditor

  • External auditor required

No

  • Local external auditor required

No

  • Eligible external auditor

Foreign or local auditor satisfying conditions as may be prescribed by the Commission.

  1. Asset Requirements

  • Restriction on type of asset class invested

None

  • Asset diversification requirements

None

  • Limitation on size of the fund or total assets under management

Net assets of up to US$20 Million

  1. Local physical office required

No

  1. Prospectus / Offering Memorandum required to be filed

No

  1. Eligible for listing

Yes

  1. License fees

  • License application fee

USD 1500

  • Annual license fee

USD 1000

  1. Estimated license processing duration

3 months

Ongoing Obligations

Requirements Description
Monthly obligations
None
Quarterly obligations
None
Annual obligations

Prepare and file annual financial statements to the Commission (with no requirement for an independent audit)

File bi-annual returns with the Commission

Pay an annual fee of on or before 31 March of each year

Other obligations
None
Tax Obligations and Other Exemptions
Requirements Description
Business Tax
There is no income, capital gains, profit or other forms of direct taxation on corporations, regardless residence status.
Withholding Tax
No withholding tax is payable on dividends and/or interest payable.
Value Added Tax (VAT)
VAT is not applicable to mutual funds in its entirety.
Capital Duty
None
Payroll Tax
If the fund employs anyone within the British Virgin Islands, such person will be subject to payroll tax of between 10 and 14 per cent (8 per cent being paid by the employee, and the remainder paid by the employer) on remuneration (including severance pay, bonuses and money paid under profit-sharing scheme) for services rendered wholly or mainly in BVI
Real Property Tax
Land tax is levied at USD 50 for half acre or less. The tax is USD 150 for more than half an acre, but less than one acre, any additional acre or part of an acre is taxed at USD 50 per year. Lower fees apply if the land is owned by a BVIslander or a BVI company. House tax is levied at the rate of 1.5% of the assessed annual rental value.
Social Security
The employer must pay 4.5% of the employee’s salary (up to a cap) through withholding from gross salary. Both the employer and the employee pay 3.75% of the employee’s salary for the national insurance.
Stamp duty Act
If the fund invests in real estate within the British Virgin Islands, it would be required to pay BVI stamp duty at a rate of 4 per cent for ‘belonger’ entities and 12 per cent for ‘non-belonger’ entities on the appraised value of the land.
Trades Tax Act
None
Immovable Property Transfer Restriction Act
None
Immigration Decree
None
Exchange Control Act
There are no foreign exchange control restrictions
Foreign Earnings Act
None

Benefits of a BVI Incubator Fund:

  • Ease and speed of establishment
  • Flexible structuring of the entity
  • Favourable compliance restrictions
  • Friendly regulatory environment