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Opening a Qualifying Fund in the Isle of Man

Updated on Friday 12th July 2019

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Opening-a-Qualifying-Fund-in-the-Isle-of-Man.jpgThe qualifying fund is a sub-category of fund that is exclusively available to qualifying investors, those who have shown that they possess sufficient experience and understanding of the associated risks. This type of fund is incorporated under Schedule 2 of the Collective Investment Schemes Act 2008, the one referring to International Schemes.
 
The process of opening a qualifying fund in the Isle of Man includes a special notification regarding its launch to the Financial Services Authority.
 
Our team of Isle of Man company formation agents answer some of the top questions regarding this type of fund and can provide investors with complete assistance for opening the fund as well as making the necessary submissions.
 

Who can open a qualifying fund?

 
The qualifying fund can be incorporated only by an investor, individual or company, with sufficient experience to manage the fund. Moreover, at the time of the incorporation, the investor must fall into one of the categories outlined in Schedule 1 of the Collective Investment Schemes (Qualifying Fund) Regulations 2010. According to this legal resource, the qualified investor can be:
 
  • - a company or individual with the primary business or professional activity related to acquiring, managing, holding or disposing of investments, as an agent or as a principal, as well as offering advice about investments; a director or consultant to an individual with this function can also be included.
  • - a functionary or an associate of a functionary to a qualifying fund;
  • - an employee, director, shareholder or consultant to a functionary or an associate of a functionary to a qualifying fund who is purchasing the investment as part of the remuneration plan or as part of a co-investment or an incentive arrangement;
  • - a trustee of a family trust for one or more individuals mentioned above;
  • - an individual who has adequate experience, knowledge and is certified according to Schedule 6 (Certifications).
 
This list is not an exhaustive one and one of our agents who specialize in offshore company formation in the Isle of Man can provide investors with more information about the qualifying investor and how he is defined in the legal framework.
 

What are the conditions for opening a qualifying fund?

 
When opening a fund in the Isle of Man, investors will need to prepare the fund’s offering document, which will include the following information:
 
  • - qualifying investor details: a definition of the capacities of the qualifying investors and compliance with the conditions set forth in Schedule 1.
  • - arrangements: the description of the arrangements for the management of the assets as well as their custody.
  • - statements: regarding the minimum investment amounts, the issuance of the annual financial statements and others. 
  • - risk warning: information about the suitability of the fund (only for qualifying investors) and about the regulations with which the fund is expected to comply.
 
The fund manager and the governing body are subject to ongoing compliance for filing and reporting. For example, any amendment to the fund must be notified via the online portal of the Financial Services Authority within ten business days. Moreover, the fund manager must submit the annual compliance declaration.
 
Our Isle of Man company formation agents can provide additional details about these ongoing notification requirements.  
 

How are qualifying funds terminated?

 
A qualifying fund in the Isle of Man can be de-registered from the Financial Services Authority by means of notification of cessation within ten working days of the closure date or within ten working days of the date the fund entered into liquidation. 
 
The Governing Body of the fund must, prior to the cessation, submit the annual compliance declaration.
 
The Isle of Man is a recognized financial center, one that offers favorable conditions to foreign investors. moreover, offshore company formation in the Isle of Man is a straightforward process, one that can be handled with the help of our agents.
 
The list below contains some of the statistics issued by the Financial Services Authority as per the  number of license holders under the Financial Services Act:
 
  • - license holders for experienced investor funds, including qualifying funds: 10;
  • - number of license holders for services to collective investment schemes: 43;
  • - specialist funds: 14;
  • - license holders for corporate services: 137.
 
Some license holders may have more than one license. The data is issued for 2019.
 
Contact us for complete details on how to open a qualifying fund and obtain the necessary licenses.
 

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