Establishing your BVI Incubator Fund
British Virgin Islands, establishing its reputation as a top offshore jurisdiction for new managers, by the innovative Incubator and Approves Funds products.
The low cost Incubator and Approved Fund provide the opportunity for managers to gain enough traction in the market. Both are restricted to having no more than 20 investors and while the Incubator Fund caps net assets at US$20 million, with a minimum subscription of US$20,000 and the Approved Fund, has no minimum investment, can hold a maximum of US$100 million in assets.
The advantage is that is not required to prepare an offering memorandum. Instead, the only which needed is a written description of both investment strategy and an outline of risks.
Additionally, there is no need for either type of fund to appoint an auditor or custodian. With its higher limit on net assets, the Approved Fund has been a popular alternative for funds looking to raise capital from a limited number of investors, such as friends and family, although unlike the start-up friendly Incubator Fund, the Approved Fund is required to appoint an administrator.
It is also important to note that an Incubator Fund can only exist as such for a period of two years, which can be extended by one year, before which it must either convert to a Private, Professional or Approved Fund. Alternatively it can convert to a closed-end fund or be wound-up.
Both must have two directors, one of which is an individual whose resume has been lodged with the FSC, in addition to having an authorised representative in the BVI.
Incubator funds are required to submit semi-annual returns to the FSC which confirm their continuing eligibility for the classification, as well as annual returns and annual financial statements, although auditing is not necessary.