The BVI is the second largest offshore jurisdiction for hedge fund formation. The Securities and Investment Business Act 2010 (SIBA), which repealed and replaced the Mutual Funds Act 1996, provides an effective regulatory platform that is in tune with global regulatory standards and best practices. The Approved Managers Regime provides a flexible, efficient, commercially attractive and balanced approach to regulating various types of asset managers.
Open-ended funds can be created as companies, partnerships or unit trusts and are required to be recognised or registered by the BVI Financial Services Commission (FSC) as Private Funds, Professional Funds or Public Funds.
- Private Funds may be sold to no more than 50 investors on a private basis;
- Professional Funds are aimed at professional investors or high net worth investors and typically have a minimum initial investment requirement of US$100,000;
- Public Funds are divided into “ordinary” mutual funds sold to the general public and ‘”selective” mutual funds sold on a selective basis through intermediaries. There are no minimum investment criteria, but they are subject to more extensive regulation than private or professional funds.
SIBA introduced a requirement for BVI funds to have at least two directors and for BVI funds, licensed managers and licensed administrators to appoint a BVI resident authorised representative. Professional and private funds intending not to appoint an investment manager, administrator or custodian are required to apply to the FSC for an exemption. It also enabled professional funds to commence business for up to 21 days before receiving FSC recognition provided the application for recognition is submitted to the FSC for consideration within 14 days of the launch date.