IOM Clarifies Closed Experienced Investor Fund Rules

by Jason Gorringe, Tax-News.com, London

05 April 2011

The Isle of Man Financial Supervision Commission has clarified the rules surrounding new investments to closed Experienced Investor Funds in a minor amendment to the Collective Investment Schemes (Experienced Investor Fund) Regulations 2010, and accompanying guidance.

The addendum to the aforementioned regulations is to clarify the rules surrounding EIFs after the Commission received a number of queries. The Commission has confirmed, in response to the queries, that a closed EIF is not able to accept new investment, and for the avoidance of doubt it has now been proposed that the following wording be added to the EIF Regulations to clarify this point, in Article 26A:

The governing body of a closed EIF must ensure that:

• The fund does not accept any new investors nor any new subscriptions from existing investors with exception of any dividends payable by the fund which may be reinvested on the instruction of existing investors; and
• The fund is no longer being promoted and mechanisms are in place to ensure that no further applications to invest in the fund are accepted.

The change is merely a clarification and is not expected to have any practical implications for closed EIFs.

The Commission’s guidance states:

“Those operating EIFs that wish to accept new investments should convert the Fund into an open product, either within the EIF Regulations or in a qualifying or specialist fund as appropriate. If a licenceholder acts for a closed EIF that wishes to open to new business it is recommended that it discusses the proposed approach with its relationship manager in advance of any change.”

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