Fund Breakthrough In Gibraltar

by Robin Pilgrim, LawAndTax-News.com, London

06 September 2005

A recent reform in Gibraltar fund legislation has brought about the possibility of setting up Experienced Investor Funds under the Financial Services (Experienced Investor Funds) Regulations, 2005, says James Lasry of law firm Hassans.

These are funds designed for professional, high net worth or experienced investors. Investors in these funds typically have a net worth in excess of €1,000,000 or invest a minimum of €100,000 or equivalent. An Experienced Investor Fund (EIF) may be set up in a matter of days. For authorisation to trade, it need only notify the Financial Services Commission (FSC) within 14 days of establishment. The notification is made by the administrator and is accompanied by the fund’s offering documents and an opinion from counsel that the fund complies with the EIF Regulations.

An EIF must have two Gibraltar-resident directors who are pre-approved by the FSC, a custodian or prime broker and a Gibraltar-based administrator. EIFs also produce annual audited accounts.

This is a niche area for funds in Gibraltar. EIFs do not have to go through the regular procedure for regulation and licensing but are structured both to ensure adequate investor protection and comfort and to allow for expansion and flexibility. This regulatory regime is appropriate for most types of funds including hedge funds, funds of funds, equity funds and property funds.

Of particular interest is that EIFs in Gibraltar may be structured as Protected Cell Companies. Protected Cell Companies are companies which are comprised of cells, the liabilities of which are statutorily segregated from each other. Furthermore, Gibraltar funds are resident companies but are tax-exempt on a basis that is not affected by the recent changes to the Exempt Company regime.

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