Gibraltar has become the latest offshore centre to allow the establishment of funds for professional...
Gibraltar has become the latest offshore centre to allow the establishment of funds for professional investors which have less onerous registration requirements than retail funds.
Legislation was passed on 5 August to enable Experienced Investor Funds (EIF) to be set up under the Financial Services (Experienced Investor Funds) Regulations, 2005. These regulations mean Gibraltar has followed such centres as the Isle of Man and more recently Jersey and Guernsey.
The legislation effectively divides the types of licensing requirements on funds that may be incorporated in Gibraltar into three categories: EIFs, non-Ucits retail funds and Ucits funds.
The Gibratar Finance Centre said that no EIFs have yet to be etsablished. They are designed for professional, wealthy and experienced investors. The investors in these funds need to have a net worth in excess of E1m or the fund has to have a minimum investment of E100,000.
As a result of these requirements, managers of EIFs only have to provide the Gibraltar Financial Services Commission (FSC) with 14 days' notice before establishing the funds. The legislation does require EIFs to have two Gibraltar-based directors, a custodian or prime broker and a Gibraltar domiciled administrator.
The licensing procedure for non-Ucits funds normally takes about two months. The fund must have paid up share capital of at least £50,000 and at least two Gibraltar resident directors. Unlike for EIFs, all of the directors and managers of non-Ucits funds must be approved by the FSC and not solely the Gibraltar-resident directors. With the approval of the FSC, these funds can invest in hedge funds, physical property and private equity.
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