A fund management company
engages in activities that consist of managing the funds included in the accounts of the investors who choose to work with the company. Investors who are interested in BVI company set up
for these types of companies are required to obtain the necessary authorizations and function in compliance with the conditions set forth by the Financial Services Commission. This is the regulatory and supervisory authority for the financial services sector.
Asset or fund management companies may restrict their services to institutions or high-net-worth individuals, however, most companies will also serve small investors through the management of pension plans or hedge funds. The client base should be established during the business plan phase as the company founders discuss the types of services that will be offered to their clients.
Fund management companies are commonly incorporated in the British Virgin Islands because of the favorable regime for foreign investors, the taxation laws as well as the simplified BVI company formation process.
BVI company incorporation for a fund management company
Fund management companies can target several types of clients, from businesses to individuals who are willing to make asset investments with a certain minimum amount. The offered services can be distinguished as per the types of specific customers and can include the following:
- Safekeeping: activities related to maintaining the security of the fund assets as well as opening a funds account and a securities account.
- Evaluation: complete performance evaluations, as required, account-related evaluations, risk measurement and other analysis for clients.
- Trading supervision: the supervision of the fund investments, as per the type of fund and the contract agreed with the client.
- Compliance: maintaining the complete records and following the compliance requirements for the funds as well as making sure that the clients are informed of relevant situations.
The fund management company will work according to the client’s investment portfolio, by taking into consideration issues such as risks, preferences, income tax issues and general tax circumstances. Companies can also offer bespoke services to their clients.
Investors who are interested in BVI offshore company formation for opening a fund management company can take these services as an example. The list of types of services exhaustive and will depend on the company’s profile and business plan.
The British Virgin Islands are often used as a location for a fund management company because they are a financial services center, with a high number of registered funds. Many foreign clients require various services for the management of the funds they have incorporated in this jurisdiction.
Requirements for fund management companies in BVI
When investors open a BVI offshore company that will provide fund management services, they need to follow a few steps for incorporation and the licensing of the business. The final licensing requirements are important, as they will grant the right to operate in this jurisdiction. The main steps for the establishment of a fund management company are the following:
Prepare the company documents: these are the Articles of Association and the Memorandum of the company, which include information about the business and its main scope.
Mandatory requirements: the company will need to have a registered office as well as a registered agent in the British Virgin Islands.
Fees: investors need to pay a mandatory Government fee for the incorporation of the fund management company.
Incorporate: once the documents are in order, the new legal entity can be incorporated as a business company.
The British Virgin Islands are one of the top locations where investors choose to register offshore funds, especially offshore mutual funds. The following statistics are relevant for this purpose:
- there are more than 3,000 mutual funds that are registered in the BVI;
- the total assets under management are estimated to have a value of 100 billion USD;
- the number of quarterly incorporations in 2019 was 61 for foreign companies in BVI;
- there have been 17 licenses issued as of the end of March 2019 for company management (fiduciary services licenses).
The data provided above is according to a report issued by the Financial Services Commission.