Seychelles Mutual Funds
The Mutual Fund & Hedge Fund Act of 2008 provides a regime for the establishment and management of Mutual Funds in Seychelles.
Please read the below carefully
Pursuant to
Seychelles law a Mutual Fund is a company, unit trust or partnership:
· that collects and pools investor funds either
(a) for collective investment purposes (including Hedge Fund purposes); or
(b) with the aim of spreading investment risks ; and
· which issues equity interests affording investors the right to receive a portion of the collective’s profits
The definition of ‘Mutual Fund’ in the Act also specifically includes:
· An Umbrella Fund whose equity interests are split or segregated into different funds or sub funds; and
· A Hedge Fund
Fund Management
Seychelles Mutual Funds may be administered:
· From within
Seychelles by a
Seychelles licensed fund administrator; or
· From outside of
Seychelles by an approved foreign administrator ie an entity licensed as a fund administrator in a “recognized jurisdiction” (the list of recognized jurisdictions includes over 30 of the world’s leading Financial Centres).
Licensed Fund Choices in
Seychelles
There are three kinds of Licensed Fund that one can establish in
Seychelles, a Public Fund, a Professional Fund and a Private Fund. The essential differences and distinctions are as follows:
1. A Public Fund: is one which is designed to be mass marketed. As it is aimed at the general public a detailed Offering Document must be provided to the Authority before a license can be granted. (The authority will need to be satisfied that all plans and risks of the fund are disclosed upfront to the investors).
2. A Private Fund: is one aimed at the Professional Adviser looking to gather together a consortium of investors from his or her client database. It is limited to 50 investors only and no minimum or maximum investment is required. Unlike a Public Fund the applicant does not need to furnish the Registrar with a detailed Offering Document as a condition to obtaining license approval.
3. A Professional Fund: is one aimed at sophisticated Investors. Minimum investment is $100,000 and only qualified investors can invest. (Again, unlike a Public Fund, the applicant does not need to furnish the Registrar with a detailed Offering Document as a condition to obtaining license approval).
The law describes a “Qualified Investor” as:
* a person whose ordinary business or profession is the buying and selling of mutual fund assets;
* a person who (individually or jointly with his spouse) has a net-worth exceeding US$1,000,000 (a declaration must be signed to that effect);
* a bank licensed in
Seychelles or in a recognized jurisdiction;
* a mutual fund licensed in
Seychelles or in a recognized jurisdiction;
* an insurance company licensed in
Seychelles or in a recognized jurisdiction; or
* a securities dealer or stock broker licensed in
Seychelles or in a recognized jurisdiction
Exempt Foreign Funds
The law also permits foreign funds to conduct business from
Seychelles without needing a
Seychelles Fund Licence provided that the fund is:
a) already licensed as a mutual fund in a recognized jurisdiction; and
b) administered by a
Seychelles licensed fund administrator; and
c) is either listed on a stock exchange or provides for a minimum investment of not less than US$100,000.
Private Fund
Key features of a Private Fund are as follows:
1. Limited to no more than 50 investors in (though there’s no limit on replication of the licensed fund model itself)
2. The constitution documents must specify that an invitation to the public to subscribe for shares is prohibited
3. A Private Fund is not able to be registered as a licensed managed investment scheme in most “onshore” jurisdictions, such as might otherwise be possible with a Licensed Public Fund
Fund Managers
Seychelles Mutual Funds may be administered:
* in or from
Seychelles by a
Seychelles licensed fund administrator; or
* from outside of
Seychelles by an approved foreign administrator (namely, an entity licensed as a fund administrator in a recognized jurisdiction).
Benefits of having a Licensed Managed Fund Structure in
Seychelles
·
Seychelles is a well regulated and respected jurisdiction (OECD, FATF and IMF compliant)
· The progress and growth of the jurisdiction has been very steady over the past 14 years (averaging 10% + growth every year)
· The laws in
Seychelles are extensively researched in that comparable jurisdictions laws are considered at length before new laws (creating new or improved products) even hit the drawing board
·
Seychelles is very politically stable
· The Mutual Fund law is flexible in that it caters also for “Umbrella” Funds (ie a fund which invests in a range of different funds or sub-funds) and Hedge Funds
· Fund and Fund Manager’s accounts may be audited by a non-
Seychelles based Auditor
·
Seychelles licensed funds (and exempt foreign funds) enjoy a range of financial concessions including exemptions from
Seychelles:
(a) business tax on the fund’s income
(b) withholding tax; and
© stamp duty
The
Seychelles as an Offshore Jurisdiction is very favorable in that:
·
Seychelles has a very stable, democratic AND tolerant society
· The country pays its own way and is not dependent on others for financial assistance
·
Seychelles is an independent country and not beholden to any super-power such as US, UK, Aus EU etc
·
Seychelles Financial Services Sector is extremely efficient, ethical and competent
The
Seychelles Mutual Fund Law is very favorable in that:
· Investors are well protected (eg the Authority can take action to protect investors’ interests as required)
· It’s an easy Act to understand
·
Seychelles is a well regulated well respected jurisdiction
· The new Act is an enabling law - it is designed to ATTRACT new Funds, not to tighten the regulation of existing funds
· The Regulator is approachable and willing to review applications pre-registration
·
Seychelles is based in a very favorable timezone at +4GMT which gives
Seychelles overlapping contact with the business days of Australia, Asia, UK and Europe
· Privacy is guaranteed by law – the Mutual Fund Regulator in
Seychelles is prohibited from disclosing anything to do with its activities to 3rd parties - see s.28(1) of the Legislation (which can be accessed from the Downloads section of our Reseller website)
·
Seychelles has excellent facilities in terms of Service Providers, Communications, Hotels, Service Businesses etc
· The Regulator has true flexibility in determining whether to grant a license or not to a particular applicant, meaning that each application will be treated individually on its own particular merits.
How to Register as a Private Licensed Fund
The process for applying for registration as a Fund in
Seychelles is quite simple and streamlined (in particular compared to our competitor jurisdictions such as Caymans & BVI etc), and has been deliberately designed this way in order to begin attracting business promptly. An application to register a new fund would likely not be subject to the kind of delays as might commonly be experienced in other jurisdictions.
In Summary you need to:
· Set up a Company, a Unit Trust or a Limited Partnership as the Fund vehicle
· Submit a draft of the proposed Offering Document {which draft DOES NOT have to contain the extensive detail as would be required unless a Public Fund is proposed – see section 7(2) of the Legislation which sets out what would need to be included if you were to seek registration as a Public Fund}
· Submit an application in the prescribed form
· Submit certified copies of the Corporate/Constitution documents of the Fund entity
· Submit completed personal questionnaires from the Directors/Officers of the Fund Company/Entity
· Submit a signed Consent from the proposed Fund Administrator (note the Fund administrator will need to be a Fund Manager licensed in
Seychelles or Licensed in an approved “Fund” jurisdiction)
· Obtain consent from the proposed auditor
· Attend to payment of the application fee ($500 annually for a Private Fund or $750 for a Professional Fund)
The Offering documents must contain:
· A description of the equity interests of the fund in all material respects
· Such other information as is necessary to enable a prospective investor to make an informed decision as to whether or not to subscribe for or purchase equity interests
Other items of interest are:
· Audited accounts must be filed with the Fund authority annually
· The Fund must Know And Be Able To Identify Its Clients ie The Fund will need to keep confidentially records of its shareholders including the underlying beneficial owners of shareholder entities (eg individual IBC owners/investors)
· Concessions are guaranteed for 20 years including complete exemption from Business tax and all usual Taxes (see the Schedule of the Legislation which sets out specifics in this regard)
In Summary
Prior to passing of the new
Seychelles Mutual & Hedge Fund Act many Fund Managers would have been attracted to establish Funds in centres such as Caymans or BVI.
Seychelles is now set to become a premier destination for Fund establishment for these reasons:
(a) Why set up a Fund elsewere when you should be able to do it faster, with less paperwork, less red tape and at a lesser cost in
Seychelles?
(b) Whilst the new
Seychelles Mutual Fund law draws heavily on the Caymans, BVI and Luxembourg models the simplicity of the Application procedures and lack of red tape involved in the licensing process should bring a lot of Fund business to the jurisdiction over the course of the next few years.
© In
Seychelles you have experienced, well regulated Corporate Service Providers with Private Fund establishment experience
(d) In
Seychelles you have one of the world’s top ten banks (Barclays) in which to safely bank the Funds and the investors money
OK ?
