There are three types of funds that you can protect under British Virgin Island law:
Who’s using these types of funds? Currently, there are over 800,000 companies that are registered in the British Virgin Islands. These financial entities on the British Virgin Islands are used to invest in the Chinese mainland as well as Singapore and Hong Kong, where 40-50% of the financial entities on the British Virgin Islands are utilized across the Asian market.
Individuals with a high net worth and a desire to have less than 50 investors with most likely be primarily interested in the private funds. But an individual investor isn’t the only one who can establish private funds through the British Virgin Islands. Partnerships, trusts, or even small companies can use British Virgin Island private funds as a vehicle for investing.
So why do businesses and wealthy individuals choose to put their funds in the British Virgin Islands? Because there are little to no restrictions to limit them, unlike most regions across the globe. This means that shares can be given to friends and family with no minimum investment required, and shares can be liquidated whenever and however; and can even be put into separate classes that have different rights under British Virgin Island law.
On top of the lack of restrictions placed on shares, there are no income, corporate, gift, wealth, inheritance, or capital gains taxes to be paid through the British Virgin Islands. The funds are completely under the control of the shareholders, and they’re free to do whatever they like with those funds, and govern them however they see fit; free of taxation and restrictions.
There’s also no requirement that forces information to be released regarding the director and shareholders, so those involved with the funds can remain completely anonymous if they wish. The lack of regulations imposed on asset vehicles in the British Virgin Islands is one of the main reasons why they’re such a popular investment strategy.
Trust Types to Know About
There are also two kinds of trusts that can be extremely beneficial to the shareholders and director.
One is a Private Trust Company, which allows settlors to become directors, and control the decisions of the trustees. There’s no requirements for a director to be physically present in the British Virgin Islands in order to control the assets, and the overall requirements are fairly lax. You’re left with little to no liability and an assurance that the assets will continue to exist regardless.
The other is the VISTA Trust, which allows any shareholder to establish a trust that would remove all management responsibilities from the trustee. This is a smart decision when the assets make up the majority of the investments involving a level of calculated risk that’s not deemed suitable for trustees of private trusts. The only requirement of the VISTA Trust is that a minimum of one trustee has to be a company that has their trust license from the British Virgin Island’s Financial Services Commission, if they’re not already a private trust company on the islands.