The British Virgin Islands (hereinafter “BVI”) ranks second in the world in terms of the number of active investment funds. It is rapidly gaining popularity as a jurisdiction for the creation of offshore investment funds.
Benefits of investment funds in the BVI
1.No taxation.
There is no taxation in the BVI, that is paid by the investment fund to persons who are not residents of the BVI. In addition, Stamp Duty is not payable on all transactions related to the transfer of assets to an investment fund, transactions in shares, debentures or other securities of the fund, and other transactions related to the operation of the fund.
2. Lack of tight control
As of today, the BVI lacks control over the Investment Fund or its members regarding the payment of taxes and currency conversion.
3. Investments all over the world
The Trustee or a company pursuant to its Memorandum of Association can make any type of investment anywhere in the world. It is subject to the restrictions of the local laws of any applicable jurisdiction.
4. Government approval
Other than managerial requirements, there are no formal government approvals or statutory requirements for an investment fund to issue closed stock or offer documents.
Open-ended investment funds can operate as either private or public. They are registered with the Financial Services Commission (hereinafter “FSC”).
Types of investment funds in the BVI
The BVI Investment Fund acts as:
- BVI Company (“BVI Business Company”, hereinafter “BVI Business Company”). Regulated by the Commercial Companies Act 2004 (as amended). It is used most often for both open-ended and closed-end investment funds.
- International Limited Liability Partnership. Regulated by the BVI Law on Partnerships, 1996.
- Consolidated Trust.
Closed-end funds in the BVI
Closed-end funds have fixed assets, so the value of shares is determined by supply and demand. Shares can be issued preferentially or at a discount to net asset value. But the capital remains unchanged. And the number of the fund’s shares does not expand or contract.
Open funds in the BVI
The open-ended fund is divided into a certain number of shares. They can be issued and / or redeemed as required at net asset value.
An open investment fund law defines a company, partnership or joint trust that:
- accumulates investors’ funds in order to carry out collective investment;
- issues shares giving the owner the right to receive on demand (or within a certain period of time after demand) an amount calculated taking into account the value of the ratio of shares to the amount of net assets.
SIBA defines “fund shares” as “the rights or interests of investors in an investment fund in relation to the assets of the fund, excluding debts.”
Any investment fund is not required to register or be recognized under SIBA, if that goes beyond the specified SIBA definition.
Most foundations are set up as Open Source. Read more about the types of Open Investment Funds below in our Blog.
Please call us at the phone numbers listed on the website, or write to the CRM form located at the bottom of the page. Our specialists will answer online if you want to learn more about creating an Investment Fund in the BVI.