How to Start a Hedge Fund in BVI
Updated on Thursday 14th December 2017
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The British Virgin Islands (BVI) is one of the leading jurisdiction for investment purposes and the second destination at a global level for offshore hedge funds. The legislation under which hedge funds can be set up in this country is given by the Securities and Investment Business Act 2010. Investors interested in setting up a hedge fund startup in the British Virgin Islands should know that this type of vehicle can be registered as open-ended or closed-ended, each category being regulated by a different set of rules.
Hedge funds – popular vehicles in BVI
The legislation on hedge funds in BVI provides numerous tax advantages. Moreover, investors can benefit from flexible investment policies, as the legal framework does not impose any regulations on this matter.
At the moment, hedge funds set up in BVI are some of the main investment tools preferred by foreign investors, as the local market accounts for approximately one quarter of the offshore hedge funds registered at a global level.
More importantly, investors interested in how to start a fund in BVI should know that they are not required to appoint local directors and other local representatives, such as auditors.
Types of hedge funds in BVI
As mentioned at the beginning of the article, the hedge funds that can be set up in the British Virgin Islands can be categorized as open-ended or closed-ended vehicles. Most of the hedge funds registered here are incorporated as open-ended structures and they fall under the regulations of the Financial Services Commission.
Open-ended hedge funds in the BVI can be incorporated as one of the following:
• private funds;
• professional funds;
• public funds;
• approved funds;
• incubator funds.
The main type of vehicles that are set up as open-ended hedge funds are registered as professional funds (at the level of March 2017, BVI had a total number of 1,064 professional funds). Those who want to know how to start an investment fund registered as a professional vehicle should take into consideration that there are specific incorporation requirements that have to be met for this type of fund, including for the initial investment which, in this case, is set up at $100,000.
Foreign businessmen can contact our team of affiliates in the British Virgin Islands for in-depth advice on the registration of an open-ended hedge fund. Our partners can also advise on the regulations referring to the closed-ended hedge funds available in BVI.