Gibraltar provides a transparent yet highly compliant jurisdiction for funds, not to mention a pragmatic and approachable regulator that is sensitive to the demands placed on the local industry by recent EU and international legislation.
The primary reasons that fund managers are attracted to Gibraltar are:
1) Gibraltar is a fully compliant EU jurisdiction from which funds and fund managers can passport right across the European Union.
Funds that establish themselves in Gibraltar can, if they wish, passport and market right across the European Union from within Gibraltar. A Gibraltar Experienced Investor Fund can be set up and operational in a matter of days. If the fund manager registers as an AIFM under the Alternative Investment Fund Managers Directive, the manager can passport and market its funds across the European Union. If the manager does not qualify based on the size of its assets under management, it can voluntarily “opt-in” and follow a tighter regulatory regime by complying with the full AIFM requirements, thus allowing the manager to passport across the EU.
2) No restrictions on Asset Classes, portfolio composition or investment spread.
Another major factor in the attractiveness of Gibraltar as a funds jurisdiction is that the Experienced Investor Fund regime imposes no limitations on the types of asset classes that can be invested in or on asset concentration. Gibraltar therefore permits the establishment of funds that could not be established in many of the other principal European Funds jurisdictions.
For example, there are many funds in Gibraltar that invest solely or primarily in some of the following asset classes:
- Venture Capital, Private Equity & other unlisted securities;
- Web domains;
- Renewable Energy Projects;
- Distressed Debt;
- International Property;
- Energy Futures;
- Precious Metals;
- Sports stars’ economic rights;
- Gambling and litigation.
Moreover, a Gibraltar Experienced Investor Fund does not need to have an appointed investment manager. In such instance the fund would be “self-managed” as the investment management function would fall directly under the responsibilities of the fund’s board of directors.
3) Low – Cost, English-speaking European Union jurisdiction
Gibraltar offers the full range of fund services at a very competitive cost in comparison to other EU jurisdictions. Coupled with this, Gibraltar is an English - speaking European Union jurisdiction with a legal system based on English common law. It is increasingly becoming the jurisdiction of choice for fund clients who find other EU fund jurisdictions such as Ireland and Luxembourg too expensive or too restrictive. Due to its bilingual English – Spanish speaking workforce and the flexibility of its regulatory regime, Gibraltar is also quickly becoming the destination of choice for Latin American managers wishing to domicile in or passport into the EU.
4) Private Funds
A Gibraltar Private Fund is an extremely useful, simple and efficient fund structure. This type of fund is not listed on any stock exchange and cannot have more than 50 investors. Although there must be some identifiable link between the investors in a Private Fund, there are no investment restrictions whatsoever.
Following the implementation of the Alternative Investment Fund Managers Directive (“AIFM”) across the European Union in July 2013, many company structures that invest pooled assets according to a defined investment policy will now be regarded as collective investment schemes and therefore need to be structured and licensed as “Alternative Investment Funds” or “AIFs”. Similarly, where it is deemed that any dealing, investment management or investment advice is being provided within or to an entity that consists of pooled assets, it is likely that such an entity would also be classified as a collective investment scheme.
In Gibraltar, an AIF can take the form of a Gibraltar Private Fund or an Experienced Investor Fund. Many clients are finding that the incorporation of some form of fund structure in their overall structures is now required in order for them to structure and manage their assets in a compliant manner. Gibraltar Private Funds have no investment restrictions, are subject only to light touch regulation and are very cost effective to set up and run. As there is no obligation to have an appointed investment manager, the investment management function is something that can be undertaken by the fund’s board of directors.
5) EU Feeder Funds
The flexibility of the Experienced Investor Fund and Private Fund structures make them ideal vehicles to act as European Feeder Funds. Given that there are no investment restrictions, such a fund can invest up to 100% of the subscription proceeds in a Master Fund. As there are no currency restrictions, specialist funds may be facilitated on currencies other than the predominant dollar, euro and sterling denominations.
Disclaimer: This website contains general information only, without any warranty that the content is accurate, complete or fit for a particular purpose. Neither Castle Fund Administrators Limited nor The Castle Trust Group accept any responsility for loss which may arise from reliance on information contained in this website and recommends that for a specific matter a suitable professional is consulted. Neither Castle Fund Administrators Limited nor The Castle Trust Group will be liable for any damages of any kind resulting from the use of this website.
Castle Fund Administrators Limited is licensed and regulated by the Gibraltar Financial Services Commission under licence number FSC0955CIS, to provide fund administration services to collective investment schemes.