The Financial Services (Experienced Investor Funds) Regulations 2012 (EIF Regulations) allow for the establishment of experienced investor funds (“EIF’S”). These are funds designed for professional, high net worth or experienced investors (for details on the establishment and operation of such funds please refer to the EIF Regulations).
The Financial Services (Experienced Investor Funds) Regulations 2012 were published on 12 April 2012, replacing the Financial Services (Experienced Investor Funds) Regulations, 2005.
There is a fast track notification process for EIF’s which makes it possible to establish the fund within a short time.
The administrator of an EIF will either:
In both instances the following documentation is required at notification stage:
An EIF has to issue an offer document that complies with the provisions of the EIF Regulations.
It must contain such information as would reasonably be required and expected by participants, and potential participants, and their professional advisers for the purposes of making an informed judgment about the merits of participating in the experienced investor fund and the extent of the risks of participating in the fund. The Commission’s responsibility is not to separately check the documentation for compliance with the requirements. Any breaches subsequently identified may result in the fund ceasing to qualify as an Experienced Investor Fund. The Commission places great importance on the declarations/warranties made by directors, lawyers and administrators of EIFs.
An experienced investor is a person or body who, at the time of the investment falls into one of the following categories:
Each investor has to provide a written confirmation that he is an "experienced investor" and that he has received and accepted the investment warning required to be contained in the EIFs offer document.
A request for name approval of a company with the name ‘Fund’ in its name would be sent to the FSC before the company is registered with Companies House. The following details need to be provided to the FSC:
In practice EIF are primary established as investment companies but unit trusts or partnerships are also possible. An EIF may also be constituted as a Protected Cell Company (PCC); this special type correlates with an Umbrella-fund. With a PCC-structure any assets attributable to that cell (sub funds) are – save to the extent that the company may have agreed so - isolated from other cells and therefore protected; thus, in no case cellular assets not attributable to the relevant cell shall be used to satisfy the liability of that other cell (Section 13 (1) of the Protected Cell Companies Act 2001). Alternatively, an existing EIF, established as a "normal" company, may be converted into a PCC.
There are no investment restrictions for an EIF. Although the Offer Document should be transparent regarding what it will invest in and the specific risks for that type of investment(s).
It is a requirement as per the EIF Regulations that a fund shall have at least two Gibraltar ordinarily resident directors authorised by the Authority to act as the director of an experienced investor fund. In order for an individual to be considered by the Commission, proposed applicants are required to apply for a Class VIII licence under the Financial Services (Investment and Fiduciary Services) Act.
Applicants will be required to submit an Individual Questionnaire and are obliged to accompany this with a summary detailing their fund related experience and the prescribed application fee set by the Experienced Investor Funds (Fees) Regulations 2010 (Fees Regulations). The Commission would expect fund related experience to include, but not be limited to, involvement providing significant services to a fund, oversight of fund related activity or a position of responsibility within a fund.
The Commission allows applicants who do not appear to hold sufficient said experience to be issued with a restricted license limited to a specific fund. This shall only be permitted where the board collectively has sufficient fund related knowledge and experience. Applicants that have a restricted licence are encouraged to submit to the Commission, at the initial stages of setting up a fund, evidence relating to the fund knowledge and experience of individuals on the board. It is envisaged that this restricted licence will be expanded to a full licence to provide EIF directorships once the individual has been able to provide evidence that sufficient general knowledge, expertise and experience has since been obtained.
Where consent is granted to issue an EIF director licence, prior to its issue the annual fee, as prescribed by the Fees Regulations, should be paid.
Subject to the EIF Regulations an EIF shall have a depositary. In practise usually a credit institution based in Gibraltar will be appointed, however a registered office in Gibraltar is not required.
An EIF is not required to have a depositary where the fund is a closed end fund or the Authority makes a determination to that effect.
The administrator of an EIF must be domiciled and regulated in Gibraltar or, if not so authorised, be established in a jurisdiction where it is regulated in accordance with a legislative and regulatory regime that provides at least equivalent protection to the regime in Gibraltar. The appointment of fund administrators established outside of Gibraltar requires the Commission’s consent and is also subject to the consent of the Minister with responsibility for financial services.
Where an administrator has been given consent by the Minister, these will be listed on the Commission’s website.
Consent and listing of non-Gibraltar administrators does not mean that these have been approved or licensed by the Commission. The Commission has no regulatory oversight of these entities and such cannot be considered as approval/licensing of the entity.
The appointment of fund administrators based outside of Gibraltar will only be considered in certain circumstances such as redomiciliations or funds of a significant size.
An agent for service, based in Gibraltar, should also be appointed in these instances who will be the point of contact locally for the Commission and other stakeholders of the fund.
Details of material changes should be notified to the Commission within 20 (working) days of the change taking place. It is the responsibility of the fund’s controller to ensure that all material changes to information originally provided are notified to the FSC.
In accordance with Regulation 12 of the EIF Regulations, a return must be submitted on an annual basis by the controller in respect of each experienced investor fund. Audited financial statements are also to be submitted within six months of the fund’s year end.
The FSC undertakes to process notifications for EIFs within 10 working days.
Essentially all notifications received 10 working days before the establishment of the fund will receive a written notice from the Commission within 10 working days (as per Regulation 4(4)). If further information is requested the Commission will endeavour to review and get back to the fund or register the fund within 10 working days.
For funds notifying within 10 working days of the establishment of the fund, the Commission will endeavour to register the fund within 10 working days.
There may be instances where these service level standards are not attainable, such as where there are significant areas of the notification that need to be explored further, in these instances the fund's contact person will be made aware of this.
It should be noted, however, that these timeframes can only be met when the notification is complete and it is therefore up to the fund to ensure that a full submission of a notification and accompanying documents has been made.
The FSC undertakes to process all notifications for External Fund Administrators to be listed on the FSC’s list of approved External Fund Administrators within 28 working days.
There may be instances where these service level standards are not attainable, as the FSC may seek independent verification or further research. Furthermore, information may also be requested from the relevant regulator. This can sometimes cause delays to the processing. In these instances, the External Fund Administrator’s contact person will be made aware of this.
It should also be noted that as per Regulation 2(b) of the EIF Regulations the FSC also needs to request the consent of the Minister with responsibility for Financial Services. The FSC's Service Level standards will therefore cover the work involved by the FSC. Please note that once the FSC receives consent from the Minister of Finance, this will be processed by the FSC within 5 working days.
It should be noted that these timeframes can only be met when the External Fund Administrator Form is complete and it is therefore up to the External Fund Administrator or its legal advisor to ensure that a full comprehensive submission of the External Fund Administrator Form has been made.
For queries please e-mail the funds division at: email@example.com.