A BVI Limited Company or Partnership can apply for a license from the BVI Financial Services Commission (FSC) to operate as a BVI Incubator fund. A BVI Incubator fund is a great tool for someone looking to start an investment fund with minimal regulatory obligations and quick turnaround times. It offers a Cost-efficient and flexible platform for startup fund managers who want to build a track record with relatively minimal regulatory oversight and costs.

Advantages of a BVI Incubator Fund

No audit requirement- Incubator funds are only required to prepare and file unaudited financial statements each year with the FSC. However, at the time of their future conversion into a private fund or a professional fund, an audit of (i) the fund's current financial position (such audit being an independent determination of the status of the fund's finances as opposed to an audit of its financial statements); and (ii) its compliance with the requirements of the incubator funds regime, will be required
No mandatory requirement to appoint a third-party fund administrator No long-term Private placement memorandum (PPM) is required. However, it is recommended that the fund should submit a short-form term sheet.

Run Time

Time limit for taking advantage of incubator fund status: two years, with a possible further 12-month extension available at the discretion of the BVI regulator, the Financial Services Commission.

Alternatively, the fund can also choose to apply for conversion into an approved fund before the expiry of the two-year period.

Fund Size and Investor Limitations

a maximum of 20 investors
a minimum initial investment of US$20,000; and
net assets of up to US$20 million.

Application requirements

The Fund must have at least two directors, one of which has to be an individual. If one out of two directors is a corporate director, the corporate director(entity) must have at least an individual director. The fund can be managed by an investment manager entity, yet the fund needs two directors.

Authorized representative (AR) is required (typically, the BVI registered office provider acts as AR)
MLRO officer is required. The director can be the MLRO officer
It is required to have certified copies of the constitutional documents of the BVI entity
It is required to have the details of the Investment Strategy and written warning. It is recommended to submit the short-term sheet for the fund along with the application
Must pay the applicable license fess

FSC Timeline

Once the application is submitted with all the required documents and the FSC acknowledges receipt without requesting any further information, the fund may begin operations two days after the application has been received by the FSC

Ongoing Obligation to notify FSC

notify BVI Financial Services Commission ("FSC") the FSC within 14 days of any changes of any information provided in the licence application; (eg change of authorized representative, change of director or general partner, amendment to constitutional documents, change to investment warning and/or description of investment strategy )
notify BVI Financial Services Commission ("FSC") the FSC within 7 days if the total number of investors exceeds the threshold for two consecutive months, the maximum value of the fund’s assets exceeds the threshold for two consecutive months, notify BVI Financial Services Commission ("FSC") the FSC immediately of any matter related to the conduct of the business activities of the fund which may have a material impact on the fund (for example a suspension of subscriptions or redemptions or becoming subject to legal or regulatory proceedings, Number of directors falls below two (for whatever reason)

Annual regulatory and government requirements

Please note the following important dates related to the ongoing obligations for the BVI Incubator Fund. Once the fund is registered, you will receive automated reminders from our team to ensure all pending obligations are completed on time. Kindly note that the due date for receiving the required information from your side will be set in advance of the actual deadline, allowing us sufficient time to complete the filings on your behalf.

31 January -File semi-annual return in respect of the previous six months with the FSC
31 January -Submit a statement that the fund is not in breach of the requirements of the Regulations
31 March - Pay approval fee to the FSC. Failure to pay may attract administrative penalties and/or other enforcement action
30 April -For funds that are limited partnerships, pay the licence fee to the Registry of Corporate Affairs (the Registry)
31 May -For funds that are companies incorporated from 1 January to 30 June, pay the Registry licence fee
30 June- (assuming the financial year end is 31 December)-Provide a copy of the fund’s financial statements (which do not need to be audited) to the FSC
31 July -File semi-annual return in respect of the previous six months with the FSC
30 November -For funds that are companies incorporated from 1 July to 31 December, pay the Registry licence fee*