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IOM Launches New Funds Regime

by Jason Gorringe,, London

24 September 2007

On 20th September the Isle of Man today officially launched a new dynamic and comprehensive funds proposition, developed to attract further funds business to the Island and continue the strong growth of the Island’s fund sector. This comes on the back of phenomenal growth of the IOM's funds sector from US$7 billion in 2003 to more than US$50.1 billion.

The regime offers a new and enhanced suite of fund categories, including SF (specialist fund) and QF (qualified fund) products. It includes a major new focus on alternative funds in order to secure business for the incorporation, domiciliation and establishment of fund management operations in the Isle of Man. Funds under administration in the Island are forecasted to double to US$100 billion over the next 3 years.

The new initiative follows the publication of the ‘Smith Report’ in February 2007, conducted under the auspices of leading funds expert, Paul Smith, formerly global head of HSBC’s Alternative Fund Services Division, in consultation with the Isle of Man Funds Review Group comprising leading members of Public and Private Sector. The Report announced the Island’s intention to position itself as the preferred location both for the incorporation, domiciliation and management of institutional funds in the global alternative funds industry. In addition the initiative will position the Island as a highly cost effective and zero tax location for fund managers to locate their middle/back office operations.

As a result of the ‘Smith Report’ recommendations, Treasury Minister Allan Bell MHK will be taking three new Orders of Legislation to Tynwald in October, effective 1st November 2007. They provide for the new Specialist Fund (SF), the new Qualified Fund (QF) and transitional / retention arrangements for existing Experienced Investor Funds (EIF).

The SF is the fund category of choice for distribution to institutional and high net worth investors, offering maximum flexibility on strategy and asset allocation. As well as existing benefits for fund operations in the Isle of Man, for example, a tax neutral environment for fund management, the SF offers a minimum initial subscription of US$100,000. Further there is no requirement for any regulatory pre-approvals. The SF can be launched quickly and without any risk of regulatory delays.

Brian Donegan, from Isle of Man Finance, commented: “The Isle of Man Government Treasury is delighted to launch this new initiative with the Isle of Man Fund Management Association. The Island’s fund industry has grown immensely in the past 5 years, with funds under management and administration standing at US$50.1 billion in June 2007. We anticipate that our new funds initiatives, when coupled with the Isle of Man’s existing taxation advantages, will treble this figure and position us as the jurisdiction of choice for fund management and fund administration operations.”

The funds initiative was launched officially with a presentation on the key strategic recommendations and implementation of the ‘Smith Report’, by the Isle of Man Fund Management Association and Chairman of the Fund Review Committee Paul Smith, hosted by Isle of Man Finance. The event was held at the Isle of Man’s City of London office at No.1 Cornhill.

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