RETAIL TYPE SCHEMES
Authorised Schemes are funds that are subject to detailed and prescriptive regulation and which are capable of promotion to the general public in the Isle of Man, and elsewhere as permitted by the prevailing legislation. These funds are suitable for promoters requiring a retail investment product benefiting from a high degree of investor protection. Investors in authorised schemes are covered by a compensation scheme. Authorised schemes must be vetted and approved by the regulator prior to launch.
Regulated Schemes are funds that are subject to FSA regulation and which are capable of promotion within and outside of the Isle of Man, (subject to host jurisdiction rules). Regulated Schemes can be suitable for both retail and institutional investors and can apply for secondary listings on recognised exchanges. Regulated schemes must be vetted and approved by the regulator prior to launch.
PROFESSIONAL TYPE SCHEMES
The Isle of Man has a full suite of fund options, but the fund category of choice for institutional alternative investment is the Specialist Fund. The Specialist Fund has a minimum $100k initial investment criteria. The Specialist Fund is not subject to regulatory pre-approval.
The Qualifying Fund is the ideal solution for distribution to non-retail investors, offering maximum flexibility on strategy and asset allocation with no minimum investment as long as they are sold via suitably qualified intermediaries. The Qualifying fund is not subject to regulatory pre-approval.
Exempt Schemes are private funds which cannot be marketed to the public and are restricted to having no more than 49 participants. Exempt schemes are easy and quick to establish, requiring no vetting or ongoing oversight from the regulatory body. These funds are generally suitable for use by small groups of investors such as family offices and start-up managers when ‘own money' is used to build a track record and wide promotion and extensive regulation are unnecessary.
Closed-Ended Investment Companies
Closed-ended investment companies (CEICs) generally fall outside the regulatory net for collective investment schemes. A CEIC will only be a collective investment scheme if its shares are not listed on a securities market supervised for market abuse purposes by an ordinary member of IOSCO and are promoted by its board for participation by the public. A CEIC will not be considered to promote its shares for participation by the public if (a) it is prohibited from offering its shares to the public, (b) it cannot have more than 49 shareholders or (c) it has a minimum initial investment requirement of at least US$100,000. CEICs can also elect to be collective investment schemes with the Authority’s approval.
In order to be promoted to retain investors in the Isle of Man a fund must be registered with the Isle of Man Financial Services Authority as a Recognised Scheme and maintain certain facilities in the Isle of Man. Funds established in the designated territories (currently Guernsey, Ireland, Jersey, Luxembourg and the United Kingdom) may be registered through a streamlined notification process, whereas funds established in other jurisdictions must comply with a more application procedure
Please note that the IOMWFSA does not provide legal advice, please contact one of the legal services providers in our Member Directory.