Offshore investment funds in the Isle of Man are of various types and the available pool of options, including both hedge funds and specialist funds, attracts a wide range of foreign investors. The types of investment vehicles that can be used as funds include cell companies, limited partnerships, open-ended companies.
Offshore company formation in the Isle of Man is a simple process and one that can expedite in some cases. Foreign entrepreneurs who are interested in using a corporate vehicle for investment purposes can reach out to one of our agents who specialize in the creation of funds.
The Isle of Man is a location that offers a set of important advantages for doing business, from a low tax regime to a convenient geographical location near some of Europe’s most important markets.
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Legal forms for investment funds in the Isle of Man
There are several ways in which investors may establish a fund in the Isle of Man and the fact that the legal form is flexible is another important advantage for all those interested in setting up this type of vehicle. The list below includes the range of investment vehicles that can be used for the formation of funds:
- Corporations: setting up a corporation is the top choice for those investors interested in setting up collective investment schemes. The international special purpose vehicles are governed by the Companies Act and allow for a flexible capital structure, few administrative requirements as well as a limited degree of investment disclosure – all important advantages.
- Protected cell companies: conventional companies and special purpose vehicles can be incorporated as a protected cell company – composed of a core and a number of cells that each have separate assets and liabilities. These can be used in multi-manager investment offerings as well as multi-class manager structures.
- Limited partnerships: these allow for a flexible legal structure and can be successfully used for cross-border tax planning at the same time allowing investors to benefit from the limited liability characteristic. In the Isle of Man, a limited partnership can have or not have a legal personality. One of our Isle of Man company formation agents can give you more details.
- Unit trusts: this is a fund vehicle with a high degree of flexibility and security because the arrangements for investment are not publicly recorded. These structures were very popular for retaining equity investment purposes but can be used for different investment schemes.
Types of funds in the Isle of Man
Funds in the Isle of Man can be fully regulated or exempted from regulation. A majority of funds will generally fall into the middle of these two extreme scenarios and they are not subject to strict regulations but they will function by appointing an Isle of Man fund manager with a license and will offer a number of guarantees to investors.
The international scheme is a type of fund established in the Isle of Man that is neither authorized nor exempt. They cannot be promoted for general public availability in the Isle of Man and they can be established quickly because they do not require special authorization or approval.
The specialist fund is used by alternative investors and it must operate by having an appointed regulated administrator. This fund structure is managed by a non-executive director who occupies a function on the board (and in some cases the board must also include an Isle of Man resident). There is no need to obtain pre-approvals for this type of fund but there are requirements in terms of the minimum initial investment. The specialist fund is to be registered with the Financial Services Authority. This type of fund is not intended for retail investment purposes. As far as the audit and accounting requirements are concerned, the specialist fund needs to submit the annual financial statements by observing the international accounting standards (these must also be audited by an authorized and registered auditor).
The qualifying fund is used by more experienced investors as it is subject to a higher level of regulation compared to the specialized fund. It must also have an appointed regulated fund manager and an independent non-executive director on the board as well as at least one Isle of Man resident on the board (they can be the same person). The minimum investment requirement is not pre-established in this case, it is determined by the manager and the governing body. Target investors are non-retail. This is also a type of fund that has to be registered with the Authority and has to follow the annual accounting and auditing requirements, like the specialist fund.
Other types of funds can include authorized funds, regulated funds, foreign funds. Our team of Isle of Man company formation agents can give you more information about the advantages of opening an investment fund in the Isle as well as assist you during the registration of the chosen type of investment fund.
Investors in the Isle of Man enjoy a light taxation regime, with a 0% income tax rate for businesses in most industries and the requirement to only maintain those accounting records that will allow them to accurately prepare the accounts, if they are required by the board members. Our accountants in the Isle of Man can answer personalized questions about the accounting principles and requirements.
Contact us for more information and specialized assistance for setting up a company in the Isle of Man that will be used as an investment vehicle.