The legislative structure in the BVI is attractive for hedge funds and offers a suitable level of regulation for private, professional and public funds under the Mutual Funds Act 2010.
The Act requires all investment funds to be recognised or registered with the BVI Financial Services Commission and to file annual returns. The three categories of regulated fund that are most commonly used are as follows:
- Private fund – For funds that will have no more than 50 investors or the invitation to subscribe for or purchase shares is made on a private basis. There is no requirement for audited accounts or filing with of such with the Commission.
- Professional fund – For funds only made available to professional investors and the initial investment by investors not less than US$100,000. There is no requirement for audited accounts or filing with of such with the Commission. The fund must be registered within 14 days of issuing its prospectus.
- Public fund – A Public fund must file a duly approved copy of its prospectus with the Commission before offering shares to the public. It is required to have an independent custodian and prepare audited financial statements.
The BVI Financial Services Commission require that all functionaries, including the administrator be incorporated in either the British Virgin Islands, or a “recognised jurisdiction”, which includes Gibraltar.