Incubator and Approved Funds Guidelines

Summary

These BVI Financial Services Commission Guidelines explain how open ended funds can qualify for the lighter touch incubator fund or approved fund regimes created under the Securities and Investment Business (Incubator and Approved Funds) Regulations, 2015. They set out the application process, ongoing restrictions and obligations, and the circumstances requiring conversion or liquidation. Funds approved under these categories are not licensed, recognised or registered under SIBA and are not subject to the Regulatory Code, 2009.

• Application: Entities must submit Form IB-A2-IAF with all required information and supporting documents (constitutional documents, offering document or investment warning/strategy description) at least two clear business days before intended commencement of business, together with the application fee.
• Incubator fund limits: Net assets must not exceed US$20,000,000, minimum initial investment is US$20,000, and investor numbers are capped at 20.
• Approved fund limits: Net assets must not exceed US$100,000,000 and investor numbers are capped at 20.
• Breach notification: If thresholds are exceeded for two consecutive months, the fund must notify the Commission in writing within seven days and simultaneously apply to convert to a private, professional or approved fund, or proceed to liquidation or amend constitutional documents to cease being a mutual fund.
• Validity period: Incubator fund approval lasts two years, extendable by application (Form IB-E1-IAF) for up to 12 months at a time, filed at least one month before expiry; approved fund approval is unlimited in duration.
• Ongoing filings: Funds must submit financial statements and file periodic returns as prescribed for incubator funds and approved funds respectively.
• Conversion/liquidation: Funds that fail to convert, liquidate or amend documents when required may be forced into conversion or liquidation by the Commission.

The Guidelines are interpretive and defer to the Regulations in any conflict; they are intended to help applicants avoid processing delays but do not themselves override statutory requirements.

Key obligations

• Submit a complete application (Form IB-A2-IAF) with required supporting documents and fee at least two clear business days before the intended commencement of business.
• Ensure the net assets of an incubator fund do not exceed US$20,000,000 and that it has no more than 20 investors, each investing a minimum of US$20,000.
• Ensure the net assets of an approved fund do not exceed US$100,000,000 and that it has no more than 20 investors.
• Notify the Commission in writing within seven days if net assets or investor thresholds are exceeded for two consecutive months, and simultaneously file an application for conversion to a private, professional or approved fund.
• Where conversion is not sought after exceeding thresholds, proceed into voluntary liquidation or amend constitutional documents to cease being a mutual fund, and give investors notice and a redemption opportunity before the change takes effect.
• Submit any additional information or clarification requested by the Commission within seven days of notification, or advise promptly if it cannot be provided.
• For incubator funds wishing to continue beyond two years, submit an extension application (Form IB-E1-IAF) at least one month before the end of the validity period.
• Submit financial statements and file periodic returns as required for incubator funds and approved funds.

Applies to

incubator funds, approved funds, open ended mutual funds, private funds, professional funds, fund administrators, fund directors and general partners

Deadlines

• two (2) business days prior to commencement of business: Deadline for submitting a complete application before the applicant intends to commence business.
• within two (2) business days from receipt of application: Commission's target period to process and communicate a decision on an application, or within any extension granted under regulation 6.
• seven (7) days after notification: Time allowed to provide additional information or clarification requested by the Commission, after which an incomplete application is deemed abandoned.
• two years: Validity period of approval as an incubator fund.
• at least one month before the end of the incubator fund's validity period: Deadline for submitting Form IB-E1-IAF to request an extension.
• up to twelve (12) months: Maximum length of an extension the Commission may grant to an incubator fund.
• within seven (7) days of the event: Deadline to notify the Commission after an incubator or approved fund exceeds its net asset or investor limits following the two consecutive month period.
• 1st June, 2015: Commencement date of the Guidelines.