REGULATED PROFESSIONAL INVESTMENT FUND
The British Virgin Islands
is the world's pre-eminent offshore corporate domicile.
Other Services available from BVI:
Proposal for the formation and licensing of a
British Virgin Islands regulated
professional investment fund
and ongoing annual administration and valuation.
investment fund structure proposal is for investing in real estate and trading foreign
exchange and global commodity markets.
TRADER FUND CONCEPT
OffshoreSimple through it's partners is launching a new fund
concept and which is specifically designed for new starter investment
funds. The product is called the Trader Fund Concept, (TFC). TFC is a
new and innovative regulated investment fund product, which has been
designed specifically for the fledgling investment managers who are
seeking to enter the international investment fund arena for the first
time and for new investment funds with ‘seed-capital’ of between $ 1
million and $ 3 million. The underlying feature of TFC is a highly
regulated and licensed British Virgin Islands professional investment
fund structure, which provides new ‘start-up’ managers the opportunity
to establish their own fully regulated investment fund at a fraction of
the usual costs. TFC recognizes that the formation and annual operating
costs associated with regulated and licensed investment fund structures
are a major discouragement to new ‘start-up’ managers, as the initial
seed-investment capital can be relatively small, i.e. between US$ 1m –
US$ 3m. The TFC product is designed to overcome this initial cost hurdle
by providing a competitive and efficient solution.
feature of the TFC product is that it provides the new manager with an
initial establishment and annual operating cost structure, which is
attuned to the initial seed-investment capital in order to provide the
new manager with the best possible opportunity to perform during the
crucial months following the launch of the investment fund. With regard
to the establishment costs, a typically charge is minimum
$30,000. However, for TFC we will establish the fund structure for
an initial $17,500. (This is subject to an associate holding the
voting shares in the fund; however you are provided with an open-ended
call option to acquire the voting shares at any time for an additional
$12,500). The initial set-up cost of $17,500 is then amortized within
the fund over a period of 36 months and therefore, following the launch
of the fund the initial setup cost is reimbursed to you. With regard to
the annual operating costs, these are only gradually increased as assets
under management increase, therefore reducing the impact on performance,
which is essential during the early trading period of the new investment
fund. This schedule
illustrates the gradual increase in operating expenses, which are
attuned to the increase in assets under management and detailing the scaled operating costs structure.
named Directors can be provided at a ‘low-start’ fee and KPMG have
agreed to exclusively act as auditors for TFC investment funds. It is
proposed either Barclays International or Bank of Bermuda (now a
subsidiary of HSBC) as the principal bankers for all TFC investment
funds. This provides the TFC fund vehicle with internationally
recognized services providers, adding to the creditability of the fund.
We propose this structure for the following reasons:
structure is an ‘open-ended’ investment fund, which enables the fund to
receive subscriptions on a regular basis. We are proposing month-end
valuations, thus enabling the fund to receive subscriptions monthly;
structure is highly regulated and therefore provides investors with a
high degree of protection. An independent administrator carries out the
valuations and a leading firm of accounts audit the fund. We propose in
this instance KPMG.
British Virgin Islands is a tax-free jurisdiction for ‘non-resident’
investment funds. Although the profits of the fund are not taxable in
the BVI, individual investors may be taxable on their investment in the
fund. Certainly in Europe, we believe that persons are taxable on their
worldwide income and are therefore obligated to declare all of their
income sources. However, this will vary from one jurisdiction to
There are many legal solutions to reducing tax liabilities and this will
depend on the jurisdiction of the investor, however one solution is for the
investors to invest in the fund via an ‘insurance’ type product. This has
the possibilities of reducing the tax liability and certainly we have
knowledge that this type of investment vehicle can provide EU nationals with
a legal solution to reduce their tax liability.
We can assist in providing such solutions on a case-by-case basis, as it
will depend on the status and jurisdiction of the individual investors.
regard to confidentiality, the BVI adopts very strict confidentiality
laws and therefore investor details are not open to public scrutiny.
With regard to the trading strategies of the proposed investment fund, i.e.
Real Estate and trading Foreign Exchange and Commodity Markets, we would
suggest that you consider separating these strategies into separate
investment fund vehicles. The reason is that trading foreign exchange and
commodities, (we assume via the global futures markets), are via exchange
traded markets and therefore valuations can be conducted using published
market close prices. Real Estate investments are obviously more difficult to
value, as the nature of the investment dictate that the frequency of
‘official’ valuations is less for exchange traded securities.
Please note that the annual administration fee of a minimum of $ 25,000
relates to providing month-end valuations for a fund, which is trading
exchange-traded securities. With regard to the Real Estate investments, the
administration fee will depend on the frequency of the valuations and also
the methodology of the valuations as agreed between the client, auditor and
The fees for the establishment of a
‘recognised’ professional investment fund is detailed as follows:
fee proposal includes the provision of the following:
||US$ 5,000 *
|Incorporation of Fund
Drafting, Filing and Certifying M&A’s
Drafting of main Offer Memorandum
B.V.I. Legal Review of Offering Memorandum
Drafting of Investment Management Agreements
Establishment of Fund Bank/Broker Accounts
Appointment of Administrator/Registrar
Appointment of Auditor
|US$ 12,500 *
Plus out of pocket expenses, such as courier,
telephone, fax, etc.
Provision of 2 ‘Named’ Director, per annum, (if
required) US$ 4,000 *
* This is for a TFC low cost start structure
It should be noted that in normal
circumstances the costs associated with establishing a licensed fund are
reimbursed to the ‘sponsor’ immediately the investment fund receives investor
subscriptions and the fund is activated. It is normal practice that the
establishment costs are presented as an asset in the accounts of the fund and
amortized over a period of 24 to 36 months.
The above fees include the Offering Memorandum
being legally reviewed by a BVI lawyer. Please note that should the proposed
fund be open to United States of America investors a U.S. Attorney must also
review the offering document. A fee quote can be provided on request.
The establishment fee is payable in
instalments as follows:
Advance - US$ 17,500
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Whilst every effort has been made to ensure that the details contained herein
are correct and up-to-date, it does not constitute legal or other professional
advice. We do not accept any responsibility, legal or otherwise, for any errors
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