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Requirements for recognition or registration
All applicants whether a
private, professional or public fund, must submit a completed
application, which is set out in the Mutual Funds Regulations.
The form is simple and requires basic information about the fund itself
including its principal place of business, directors (where the
applicant is a corporate entity), classification and functionaries. Each
of the functionaries i.e. the manager, administrator, investment advisor
and custodian/prime broker must be stated and be located in a recognized
jurisdiction.
The Commission has issued an extensive list of jurisdictions thus making
this requirement immaterial for most practical purposes.
The application must be accompanied by certified copies of the articles
of incorporation and certificate of good standing, director and
shareholders’ details including full names, date and place of birth,
addresses and citizenship, country and length of residence, educational
and professional qualifications, employment history, details of 25% or
more shareholding interests in companies in the past 10 years, nominee
details, questions detailing business, litigation and general legal
background, and the names of three non-related referees.
A prospectus must also be submitted for public funds and for private and
professional funds, a business plan must also be submitted detailing the
following: investment objectives, types of investments, restrictions on
investments, risk factors of the fund, actual or expected size of
shareholders’ investment base, valuation arrangements and frequency of
valuations and redemption mechanisms.
Dual recognition
A private and professional
fund, which is registered or licensed under the law of a jurisdiction
other than Anguilla, may be recognized in Anguilla upon submission of an
application providing evidence that it falls within the definition of
either of those terms, is lawfully constituted under the laws of another
jurisdiction and pays the requisite fee.
This is similar to the regime in, say, Singapore, which allows approved
funds from other jurisdictions to be registered there by the Monetary
Authority of Singapore.
Regulatory oversight, flexibility and tax exemption
The Commission regulates
the domiciliation of funds in Anguilla.
It is an independent statutory body free from political influence and
the British Governor appoints its members. In exercising its functions,
the Commission adopts an efficient, business sensitive and deliberate
approach. Applications are thoroughly vetted and responses given in the
shortest possible period of time.
An ideal application, which is thoroughly completed and involving
persons who have recently gone through a due diligence review by the
Commission, could be approved within a matter of 5 working days. Unknown
applications tend to take a bit longer in order for the Commission to
complete its due diligence review but once all the requisite information
is provided determinations are usually made within 10 working days. In
addition, the Commission has published guidelines, which are publicly
available for review as to its approach to granting approval.
Under the Act, there are several provisions, which allow for flexibility
in the Commission exercising its functions. For example, under section
14, a private or professional fund, which is maintained by a group of
family trusts for the sole purpose of facilitating investment and
without any solicitation being made for the sale of a right to
participate in the fund, is exempted from recognition.
A professional fund is also allowed to carry on business from within
Anguilla for a period of 14 days without being recognized. While under
section 31, the Commission may choose not to apply any provision of the
Act if it would not be prejudicial to the public interest.
An Anguilla fund is exempt from all forms of taxation including stamp
duty, corporate, dividends and withholding among others. This is
specifically enshrined in the Act.
Fast track procedure for setting up funds
The Commission allows
service providers with a proven track record in establishing hedge funds
to apply for what it terms “qualified fund administrator/intermediary” (QFAI)
status. This allows the recipient to establish a fund prior to the
application being reviewed by the Commission provided that he/she
adheres strictly to the guidance issued
by the Commission. The Commission will conduct a regulatory review
within 30 days of the establishment of the fund, post facto, to ensure
that the QFAI exercised its prerogative properly.
If it fails to do so, then the recognition, since this only applies to
private and professional and not public funds, will be revoked and the
QFAI will lose its status. QFAIs can launch
their funds within 24 hours if they use an Anguilla corporate entity
which can be formed online using the ACORN system.
Netting legislation
In addition to the Act,
Anguilla also has a stand-alone Netting Act 2006, which provides for the
ability of an over-the-counter derivative transaction to net the
mark-to-market values of all existing transactions under the master
agreements upon their early termination following the default of its
counter party or other specified events.
The Netting Act is based extensively on the International Swaps and
Derivatives Association model and is ideally suited for hedge funds thus
contributing to Anguilla’s
attractiveness.
Written By: Caribbean Management
Services Ltd. (CMS) Associate Mr. Carlyle K. Rogers Mgr. Dir. GCS Ltd.
Conclusion
Anguilla is recognized as a
financial service jurisdiction for Hedge Funds due to its good
governance toward regulatory policies and legislation.
Caribbean Management Services Ltd (CMS) as an Overseas Agent views that; the Anguilla Hedge
Fund sector will fairly bridge the void between the Cayman Islands Stock
Exchange and other International Exchanges.
Contact our offices for a consultation:
Caribbean Management Services Ltd. (CMS)
Managing Director
Post Office Box 950, The Valley
Anguilla, British West Indies
Phone: +1 264-498-5858
Fax: +1 264-497-5504
E-mail:
mgrdir@cmservicesltd.com
mgrdir@yahoo.com
Website: www.cmservicesltd.com
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