BVI Financial Services Commission Introduces Two New Funds Products

With the introduction of the Securities and Investment Business (Incubator and Approved Funds) Regulations, 2015 (the Regulations), the British Virgin Islands Financial Services Commission (the FSC) has introduced two new funds products, the “Incubator Fund” and the “Approved Fund”, which will complement the British Virgin Islands’ (BVI) current funds offering, by appealing to two traditional sweet spots for the jurisdiction, namely start-up managers and friends and family/ non-institutional offerings.

The introduction of these two new funds products is an exciting development for the BVI’s funds industry and one which is universally welcomed by all industry participants.

Key features of the two funds products are as follows:

Incubator Fund

  • available for offerings to “sophisticated private investors” only (for these purposes, to be a “sophisticated private investor” a person must be invited to invest and the amount of his or her minimum initial investment shall not be less than US$ 20,000);
    maximum of 20 investors;
  • aggregate maximum investments in the Fund not exceeding US$ 20 million (or its equivalent in another currency);
  • “Incubator Fund” approval status limited to two years (with a possible further 12 month extension available at the discretion of the FSC, provided such application for an extension is filed at least one month prior to the expiration of the two year period) (defined in the Regulations as the “period of validity”), following which the incubator fund must either (i) convert into a private fund; professional fund; or approved fund or (ii) cease operating as a fund;
  • simplified licensing process;
  • fast track time to market in that an incubator fund may commence business two business days following receipt by the FSC of the licence application;
  • offering document/ prospectus not mandatory and if no offering document is prepared, the regulatory requirement is that investors must each be given a written investment warning;
  • on-going regulatory obligations limited to notification of changes within 14 days;
  • audit of financial statements not mandatory; and
  • no mandatory service providers

Approved Fund

  • available for offerings to “sophisticated private investors” only (for these purposes, to be a “sophisticated private investor” a person must be invited to invest and the amount of his or her minimum initial investment shall not be less than US$ 20,000);
  • maximum of 20 investors;
  • aggregate maximum investments not exceeding US$ 100 million (or its equivalent in another currency);
  • simplified licensing process;
  • fast track time to market in that an approved fund may commence business two business days following receipt by the FSC of the licence application;
  • offering document/ prospectus not mandatory and if no offering document is prepared, the regulatory requirement is that investors must each be given a written investment warning;
  • on-going regulatory obligations limited to notification of changes within 14 days;
  • audit of financial statements not mandatory; and
  • other than a requirement to have a fund administrator, no other mandatory service providers.

 

If you are interested to explore the above, feel free to write to us at info@kensington-trust.com