Offshore Investment Funds

OFFSHORE INVESTMENT FUNDS

BVI INVESTMENT FUNDS OVERVIEW

Maritime International Ltd. recommends BVI as one of the top offshore investment fund jurisdictions, with over 3500 funds registered (Click here for details on the advantages of BVI as an offshore fund jurisdiction.)

We particularly recommend the BVI Incubator Fund for start-up investment managers. This is a very unique fund not available in most jurisdictions. The fund is not regulated by the Financial Services Commission but is a fully legal Fund structure, with its authorization contained within the M&A of a BVI offshore company. It does not require local Directors nor does it require the filing of audited statements. It also does not require a Management Company nor an independent Administrator, both of which are very major expenses. A further advantage is that all the company documentation including the Offering Documents, Subscription Agreement and so on, are prepared in draft form, after completion of the work but prior to submission to the Government for approval. The client therefore has the opportunity to further tailor the documents to suit their own needs rather than being required to use standardized documents. The Fund is inexpensive and can readily be updated to a fully regulated fund, once the fund reaches a suitable size. (Click here for further details on the BVI Incubator Fund.)

The BVI Mutual Fund Act (MFA) under which all funds are regulated defines a Mutual Fund as a company, partnership or unit trust which:

a) collects and pools funds for the purpose of collective investment; and
b) issues shares (or similar interests) that entitle the holder to receive on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in the whole or part of the net assets of the company, partnership or unit trust.

The BVI MFA Does Not Cover:

a) funds with only one investor (where that investor is a mutual fund that is regulated by the BVI MFA), or
b) closed-ended funds, such as the Incubator Fund (because the investors do not have the right to receive the NAV of their interests on demand).

There are four types of funds regulated under the BVI Mutual Fund Act (MFA). Private and Professional Funds, as described below, are by far the most common form of fund to be established under the Act, and the primary form of structure is as a BVI corporate entity.

The Four Types of Funds Under the Act are:

• Public Fund - in which shares are sold to the public;
• Restricted Public Fund - These funds have specific investment objectives and are considered UCITS equivalent funds.
• Private Fund - a Mutual Fund whose constitutional documents specify that either (a) it will have no more than 50 investors, or (b) the making of an invitation to subscribe for interests is to be made "on a private basis", ie. the invitation is made (i) to specified persons (however described) and is not calculated to result in shares becoming available to other persons or to a large number of investors, or (ii) by reason of a private or business connection between the person making the invitation and the investor.
• Professional Fund - only available to Professional Investors. The initial investment, in respect of the majority of the investors, must be not less than US$100,000.
  - "Professional Investors", ie. persons (i) whose ordinary business involves, whether for its own account or the account of others, the acquisition or disposal of property of the same kind as a substantial part of the property of the fund, or (ii) whose net worth (whether individually or jointly with his or her spouse) exceeds US$ 1,000,000 and who consents to being treated as a professional investor.

Note: Private and Professional Funds are not required to prepare audited financial statements. Public funds require audited statements but there is no requirement to file such statements with the Financial Services Commission.

Professional funds can take advantage of a BVI fast track procedure which allows such funds to operate for a 14 day period, prior to obtaining recognition as a professional fund.

A BVI Fund (other than an Incubator Fund) Will Require:

• An independent Administrator. They can be local or foreign. If the Administrator is to be foreign, it must be established in a "recognized jurisdiction". If a local Administrator is desired, Maritime International Limited will assist in identifying a prospective locally registered entity.
• Two Directors. These can be local or foreign. One Director must be a natural person. The other may be a natural person or a corporate Director as long as it is a BVI offshore company. (The Directors are usually foreigners.)
• A Management Company. This may be local or foreign, but if foreign, it must be in a "recognized jurisdiction".

CONTACT Maritime International Limited for further details and/or a Quotation on your requirements.

General Information

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