Are you thinking of setting up a closed-ended investment fund in the BVI? This document provides an overview of the closed-ended funds industry in the BVI and why the BVI is such an attractive jurisdiction for private equity, venture capital and other closed-ended fund managers. We explain the regulatory regime in the BVI, the fund structures available and how we can support you from the initial structuring and planning conversations, all the way through to the launch and ongoing support.
Closed-ended funds in the BVI are regulated by the Financial Services Commission (the Commission). The primary legislation which governs the industry is the Securities and Investment Business Act 2010, as amended (SIBA), and the Private Investment Funds Regulations 2019 (the PIF Regulations).
This guide focuses on the closed-ended fund industry, but it should be highlighted that the BVI does have a separate regulatory regime for hedge funds and other open-ended funds - these are discussed in a separate legal guide. Do let us know if you would like further details.
What factors determine whether a closed-ended fund must be regulated in the BVI?
Generally, an entity will be considered to be a closed-ended fund and will be subject to regulation as a Private Investment Fund (or PIF) if it falls within the following definition of a "private investment fund":
It collects and pools investor funds for the purpose of collective investment and diversification of portfolio risk, and
The equity interests that it issues entitle the holder to receive an amount calculated by reference to the value of a proportionate interest in the whole or a part of the net assets of the fund
The BVI Private Investment Fund Regime
BVI closed-ended funds falling within the definition of a "private investment fund" are generally required to be regulated by the Commission as a PIF. However certain entities, including but not limited to single investor funds, single asset funds, joint venture companies and special purpose acquisition companies do not require regulation as a PIF. The PIF is a flexible, cost-effective and lightly-regulated fund product which is suited for everyone from the start-up manager to established institutional private equity houses with billions under management. The characteristics of the PIF are set out below.
Private investment fund
Interests in a PIF may be distributed on either a 'private' or a 'professional' basis. There is no minimum investment amount for a PIF distributed on a private basis. If distributing on a 'private' basis the PIF is restricted to either:
Having no more than 50 investors, or
Making an invitation to subscribe for or purchase fund interests on a private basis only
If the PIF interests are being distributed on a 'professional' basis, they may only be made available to "professional investors" and the minimum initial investment by each professional investor must not be less than US$100,000 (or other currency equivalent), unless the investor is an "exempted investor" in which case there is no minimum initial investment.
A "professional investor" is a person:
Whose ordinary business involves, whether for that person's own account or the account of others, the acquisition or disposal of property of the same kind as the property, or a substantial part of the property, of the fund; or
Who, whether individually or jointly with their spouse, has a net worth in excess of US$1,000,000 (or other currency equivalent) which does include the primary residence
An "exempted investor" means:
The manager, administrator, promoter or underwriter of the fund, or
Any employee of the manager of the fund
A PIF is required to issue an offering document or term sheet (although in certain circumstances the Commission can provide an exemption from this requirement).
A PIF is required to maintain a clear and comprehensive policy for the valuation of its assets (Fund Property) with procedures that are sufficient to ensure that the valuation policy is eff...

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