The Isle of Man brings together a number of characteristics that make it one of the top locations in Europe for fund domiciliation. A low tax regime is among the top of these reasons.
The types of investment funds in the Isle of Man that are available to investors suit a number of purposes, they can have different investment levels, they can be sold to the general public (or not) and they can be specialist funds.
Our team of Isle of Man company registration specialists highlights the main types of funds available to foreign investors and enumerates some of the conditions applicable to locally domiciles fund products.
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The main types of funds available to investors in the Isle of Man
The Collective Investment Schemes Act 2008 and its subordinate legislation govern collective investment schemes or funds in the Isle of Man. Currently, seven current schemes are recognized, with the following characteristics:
- Authorized collective investment schemes: it is the type of fund subject to the highest regulation; must appoint a manager and a trustee.
- Regulated fund: can be open or close-ended, there are no restrictions as per the type of investor;
- Qualifying fund: there is no minimum initial investment level and no regulatory pre-approval;
- Specialist fund: a minimum investment level above 100,000 US$, no formal requirements for the custodian, no regulatory pre-approval;
- Exempt scheme: possible with less than 50 investors, based on private arrangements and not directly subjected to regulation.
- Recognized scheme: for those investment schemes established outside of the Isle of Man; it is the equivalent of an authorized investment scheme.
- Overseas scheme: formed outside of the Isle of Man, the equivalent of the exempt scheme.
There are also two types of superseded fund types, the full international scheme (replaced by the regulated fund) and the experienced investor fund or EIF (replaced by the qualifying fund).
One of our agents who specialize in offshore company formation in the Isle of Man can provide investors with more details about each of these types of funds and the applicable regulations, as per the Collective Investment Schemes Act. For example, specialist funds are regulated in Paragraph 4 of the Collective Investment Schemes Act 2008 and the Collective Investment Schemes (Specialist Fund) Regulations 2010. One of our agents can give you more details.
Conditions for opening a fund in the Isle of Man
For some of the types of investment funds presented above, an important regulation is to have an Isle of Man manager. Moreover, it is also a common condition to have an appointed trustee or fiduciary custodian.
investors who are interested in Isle of Man domiciled fund products should also have in mind a number of other issues:
- if the fund will be sold to the general public: for this purpose, an authorized scheme is commonly chosen by investors, with an Isle of Man manager.
- the investment level: if the minimum investment level is below 100,000 US$, investors will not be able to form a specialist fund.
- target investors: when the fund is aimed at retail investors, a common choice is the regulated fund.
- promotion: the manner in which the funds will be marketed, this can be done directly to the public in the Isle of Man.
- licenses: functionaries who provide services to funds need to be properly licensed under the Financial Services Act.
The Isle of Man offers a wide array of vehicles that can be used as fund structures, among which the open-ended investment companies, the protected cell companies or the limited partnerships. Setting up a company in the Isle of Man is straightforward and interested foreign investors can receive personalized assistance from our experts.
According to a statistical bulletin issued by the Isle of Man Financial Services Authority, there were:
- 4 regulated funds and 17 specialist funds registered at the end of 2017;
- these funds had 106.54 million US$ (for the regulated ones) and 1.26 billion US$ (for the specialist ones) as a total asset value in December 2017;
- most collective investment schemes were administered or managed in the Isle of Man (more than 150 of the total).
- the top asset class was property, with more than 80 funds, followed by private equity, in nearly 30 funds – in December 2017.
These statistics are useful for showing Isle of Man’s position as a fund center in the region. For more information about the types of investment funds, their management, control, and other considerations, please contact our team of Isle of Man company formation agents.