British Virgin Islands Funds Group
The British Virgin Islands is a popular offshore jurisdiction for private equity funds and other closed-ended funds with a particular focus on the start-up market due to low government costs. Closed-ended funds are typically unregulated and the jurisdiction is attractive because it is supported by a fully-developed business law, an English-based legal system and a regulatory and professional infrastructure capable of implementing large and complex international business transactions.
Our British Virgin Islands Funds Group, which is one of the longest established dedicated funds practices in the territory, services various household names and continues to advise on a significant percentage of new private equity fund registrations.
In addition to fund formation, we advise on the several different licensing options available for fund managers, advisors, administrators and other entities that are involved in investment business and that wish to be licensed in the British Virgin Islands.
Setting up a hedge fund in the British Virgin Islands offers a number of advantages:
- Speed and simplicity of establishing British Virgin Islands entities
- Relatively low cost of doing so, particularly in the context of typical transaction sizes and government fees
- Flexible and practical business statutes
- British Virgin Islands insolvency law is simple and effective, and hence of great appeal to lenders
- Robust and healthy compliance culture
- English-based legal system, established judiciary and absence of political or sovereign concerns
- Professional infrastructure and reputation. The British Virgin Islands is well known for its established and experienced financial services sector and substantial capacity
- Compliance with international anti-money laundering, anti-terrorist financing and other financial regulatory standards
- Significant number of international tax information exchange agreements and OECD ‘white list’ status
- Tax and exchange control neutrality
- Service providers to the fund (investment managers, advisers, brokers, administrator, auditors etc.) may usually be located anywhere in the world
There are three main fund structures:
International Limited Partnerships. Closed-ended/private equity funds are most commonly established in the British Virgin Islands as international limited partnerships.
Business Companies. Business companies are usually incorporated with limited liability. The limited liability company is only used occasionally for private equity funds.
Unit trusts. The unit trust is also used in the British Virgin Islands and essentially follows English trust law whereby unit trusts are established under a trust deed giving unit holders undivided beneficial interests in the trust property. Unit trusts are often used (in place of companies) for investors in jurisdictions where participation in a unit trust is more acceptable or attractive than shares in a company.
Our unparalleled overview of the funds market gives our clients an edge. We provide insightful, practical and prompt advice based on the latest legal developments and structuring trends.