Hedge Fund Filing Fees: Delaware, Cayman Islands, BVI, and others

As the manager of a hedge fund, factors such as location and price will play a big role in where you form your fund. It is important to have an understanding of hedge fund filing fees in various locations, as well as options that conform to your budget and the complexion of your investors.

The most common US jurisdiction for forming a fund structure is Delaware, but funds can be formed in any state that the manager wishes. US state specific hedge fund filing fees run from $500 to $1,000. Some managers starting their funds may require an offshore investment fund to accommodate foreign investors and/or US tax-exempt investors such as Individual Retirement Accounts (“IRAs”). The Caribbean is the usual place to go, and not just for the warm waters and sandy beaches. With over 70% of offshore funds domiciled in the Cayman Islands, it is a good place to go as far as investor recognition is concerned, but there are other options that are just as good and, quite frankly, less expensive. These include the British Virgin Islands (“BVI”), Curacao, and Bermuda.

Depending on the jurisdiction, you can expect initial filing fees to range from $4,500 in BVI to $9,000 in the Cayman Islands. Ongoing annual fees range from $3,000 in BVI to $7,500 in the Cayman Islands. This would include the law firm’s registered office fee, because the jurisdictions require you to have a listed address in that jurisdiction.

When researching your options, be sure to be mindful of the influences guiding your decision. Discussing your investment strategy and investor pool with your attorney, administrator, and auditor will help them guide you in the proper direction for structure and jurisdiction.  Below is another post from our forum that may be helpful in regards to filing requirements and fees.

Basics about Form D and Blue Sky Filings