IoM Regulator Revises Policy On Eligible Custodians For EIFs

by Jason Gorringe, Tax-News.com, London

26 May 2005

After consulting with the Isle of Man Fund Management Association, the Commission has revised its policy in relation to who, locally, may act as a Custodian to an Experienced Investor Fund (EIF) or Professional Investor Fund (PIF).

In addition to licensed banking institutions in the Isle of Man, the Commission will now consider certain licensed investment businesses, namely those with a Category 4 or 5 licence.

Such licenceholders wishing to act as Custodian will be assessed on a case by case basis taking into account the type or nature of the underlying scheme assets. It will also be required to demonstrate to the Commission that it is an entity with adequate financial resources and has the relevant track record, competence, experience and systems to undertake this function.

The Commission’s existing policy (i.e. under which only a licensed banking institution can act as a Custodian in the Isle of Man) is being retained for those persons wishing to act as Trustee/Custodian of an Authorised or 'pure' International Scheme.

John Aspden, Chief Executive of the FSC commented:

“This development should further enhance the attractiveness of the EIF fund structure which was established in 1999 as a flexible fund structure to promote the establishment of hedge and alternative investment funds”.

Jon Carr, chairman of the Isle of Man Fund Management Association added:

“The FMA welcome this move. The EIF structure is now the fund of choice for establishing funds in the Isle of Man. Since this product was launched in October 1999, 141 EIFs are now operated in the Island with funds under administration currently standing at £4.1bn which represents 53% of the total net asset value of all collective investment schemes administered in the Island."

The Experienced Investor Fund (“EIF”) structure was launched in October 1999 and was designed to provide a simple, inexpensive and flexible solution to the ever more complex needs of sophisticated individuals, market professionals and global asset managers, while seeking to provide an adequate level of comfort to investors by ensuring proper disclosure and administration.

The Experienced Investor Fund is subject to a form of regulation that is aimed at the 'Experienced Investor'. Such schemes are exempted from certain of the legal and regulatory requirements that are generally applicable to International Schemes through the Financial Supervision (Experienced Investor Fund) (Exemption) Order 1999.

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