The regulated fund is a type of investment fund in the Isle of Man that can be incorporated only by observing the detailed set of regulations it is subject to. The managers are only to be appointed with the consent of the Financial Services Authority in the Isle of Man and the fund can only be established once a thorough evaluation has been performed.
The main source of regulations for this type of fund is Schedule 2 to the Collective Investment Schemes (Regulated Fund) Regulations 2017. It sets out the requirements for the establishment application as well as the manner in which an existing fund can be changed or have a new manager.
Our team of Isle of Man company formation agents can provide investors with complete information about the regulated fund, the manner in which it can be constituted as well as the approval process and the regulations that are in place for its functioning.
The approval process for a regulated fund can take more than one month, this is why we advise investors to reach out to our agents in due time, so that the preparations for the first stage, the initial approvals, can commence as soon as possible.
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What are the features of a regulated fund?
The main characteristics of the regulated fund are the following:
- Targeted investors: these funds are aimed at retail investors or markets that require a fiduciary custodian.
- Type: the regulated fund can be an open-ended or closed-ended investment company.
- Manager: it must appoint an Isle of Man manager and the manager is subject to pre-approvals and approvals from the Authority.
- Marketing: the regulated fund is usually sold via independent financial advisers to some investors.
- Others: the fund must also have a fiduciary custodian, a trustee or custodian.
Our Isle of Man company registration agents can provide investors with more details about each of these key traits of the regulated fund.
What are the approval conditions for a regulated fund?
The first step before establishing the regulated fund is obtaining the approval for the proposed manager to act for the fund. This is done with the Financial Services Authority and, in its evaluation, the Authority will take the following into consideration: the review of the constitutional and the offering documents for the fund, the material agreements as well as the qualifications of the proposed functionaries.
The first stage for obtaining the approval for this fund is to submit a special form, the “initial request to act as manager of a Regulated Fund.” This document will contain the name of the fund, its legal structure (constituted as a closed/open-ended company, a trust or limited partnership), the registered office, the name of the registered agent and other details about the fund. Other sections in the form include information about the manager, the asset management arrangements, the auditor and others. The form is to be accompanied by a fitness assessment for the members of the governing body. One of our agents who specialize in setting up a company in the Isle of Man can provide investors with more details about the formation of the fund and the requirements.
How are regulated funds updated or changed?
Investors can operate changes to existing regulated funds provided that they notify the Authority by filling in an online form for the replacement of the manager or any other changed. In some cases, the changed may require the shareholder’s approval. One of our Isle of Man company registration agents can assist investors with the mandatory procedures. It is important to note that no change takes effect until it is approved by the Authority.
The Isle of Man is a jurisdiction that offers many advantages to investors who open a company here. Offshore company formation in the Isle of Man is an easy process, and investors have access to tax transparency, low taxes, and a favorable business climate. The Isle is considered part of the EU for VAT purposes, for customs and excise purposes but treated as a non-member for all other types of taxes.
The Financial Services Authority maintains a comprehensive database of the licensed companies and the numbers that were available in Q3 2019 were as such:
- trust services companies: 101 license holders;
- experienced investor funds: 10;
- regulated funds/full international schemes: 5;
- specialist funds: 14;
- qualifying funds: 7.
Our Isle of Man company formation agents can provide investors with complete information about regulated funds but also other types of funds as well as general company incorporation. You can contact us for complete assistance during the incorporation of a company or the formation of a fund.