How to Open a Direct Investment Fund in the British Virgin Islands?

Before 2018, a legal entity could easily open a direct investment fund in the British Virgin Islands (BVI) without a direct presence, that is, without the need to physically register a company there. However, times have changed and the rules have become stricter. Of all the "classic" tax-free offshores, the British Virgin Islands were the first to enact new rules at the legislative level. Nowadays, you can open a direct investment fund on BVI only after you have registered a company on BVI and after obtaining the appropriate permission for this activity.

The registration process

The law envisages several regimes of economic presence requirements (simplified and complex), depending on activities the company is engaged in. Normally, the usual regime has to be applied, when the company meets the following criteria:

• direct management on the BVI;
• a qualified staff is physically present on the territory of the BVI;
• evidence to prove that sufficient costs have been incurred to organize such activities of the company;
• owned or rented office facilities on the territory of the BVI.

The requirements apply to legal entities that are engaged in relevant activities such as banking, fund management, holding activity, insurance, and some other. 

Why is it Expedient to Open a Limited Partnership on BVI?

Today, you are allowed to open a limited partnership on BVI with or without a separate legal entity. This is guaranteed by the new BVI Limited Liability Partnership Act (the LP Act). This flexibility gives you an opportunity to use the partnership structure to open an investment fund on BVI.

If you intend to open a Limited Liability Partnership on BVI, you will need to compile the following package of documents:

• Personal data of the registrar, application for registration;
• Personal data of the general partner;
• Duration of the partnership (limited / unlimited term);
• A document confirming that the registrar agrees with the appointed general partners.

 We would also like to emphasize that if you plan to establish a direct investment fund in the British Virgin Islands, and the name of the organization will use the word "fund", you will need the prior approval of the FSC.

The IQ Decision UK team draws your attention to the requirements for BVI direct investment funds, regardless of the structure used for the fund:

• Availability of a registered office and registrar;
• Maintenance / storage of documentation, including financial, for the last 10 years in the office;
• Presence of an authorized representative, custodian and administrator.
• Annual financial statements.

It is also worth mentioning that registering a company on BVI for the purpose of interacting with a private investment fund, such as fund transactions or advising, requires mandatory permission from SIBA.

Cryptocurrency funds on BVI

Recently, the jurisdiction has seen a surge of those wishing to open a cryptocurrency business on BVI, as well as funds intending to invest in the sector. In addition, there is currently no separate regulation system for tokenized funds at BVI.

Probably, by this fact, a growing interest in opening a tokenized fund on BVI could be explained.

State Policies to Attract Investment 

BVI is maintaining its reputation of the perfect destination for offshore business and it is still popular among capital owners from around the world. To a greater extent, this is dictated by the interaction and leadership in regulating the economy by the London rules, the stability of which on a global scale has been infrangible for decades. 

BVI regulators and the government are constantly trying to keep and improve the favorable atmosphere for attracting investment and businesses to the territory of their state. 

The tax system is loyal to companies founded using foreign capital. The reporting procedure is simple and open interaction with the payer of mandatory fees to the state budget.