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How to get an investment fund license

How to get an investment fund license

In most countries, an investment or a hedge fund is subject to licensing; only under this condition can an organization work with professional and non-qualified investors. In some jurisdictions, such funds can operate without a special permit. However, a particular registration procedure may be applied. An offshore fund license guarantees the investors who want to invest in that fund and proves that the fund is controlled by the regulatory authority and does not violate the laws. 

An investment fund in offshore countries

Our company assists with the official registration of offshore funds, including the Cayman Islands registration. This jurisdiction has a good reputation and is not on the FATF and OECD blacklists of the non-cooperating countries. Nonetheless, we need to point out that on March 13, 2022, the Cayman Islands were included in the European Union’s list of high-risk third countries, which, in the long run, can complicate the interaction of the Cayman funds with the EU financial institutions. Another advantage of a Cayman hedge fund is that the director and/or the founder do not have to be the residents of this jurisdiction. 

There are two types of funds in the Cayman Islands:

  1. Regulated (open) – Licensed mutual funds, Administered mutual funds;
  2. Unregulated (open and closed) – Registered mutual funds, Private funds – are the most suitable options for our clients.

Requirements for the fund:

  • Two directors and one shareholder, not necessarily the jurisdiction residents.
  • Compulsory audit of financial statements.

A fund may be exempt from licensing in the Cayman Islands under the condition that the investment activity is carried out in favor of the shareholders (investors) with a minimum investment cheque of 100,000 USD. 

Among other options, we would like you to consider the following offshore jurisdictions:

  • The British Virgin Islands have a good reputation, simple registration procedure, and no requirements for the residency of the directors and founders.
  • The Bahamas provide you with anonymity and confidentiality for the investors, exemptions from local taxes and fees, and a simple company registration process with the minimum requirement of one shareholder and one director.

Hedge funds in Europe

All financial activities in Europe are subject to licensing. This is also true for Malta, where we can assist you in obtaining an investment and hedge fund license from the local regulator – The Malta Financial Services Authority (MFSA). In terms of the organizational and legal basis, the investment fund type in Malta advisable to our clients is SICAV (French – Société d’Investissement à Capital Variable). It allows you to attract additional investors, apply various investment strategies, and invest in securities. 

Types of hedge funds in Malta and the requirements for them

Depending on the potential investors, there are three types of investment funds in Malta

  1. The Professional Investor Fund for Experienced Investors.
  2. The Professional Investor Fund for Qualified Investors.
  3. The Professional Investor Fund for Extraordinary Investors.

Requirements: 

  • Experienced Investors are the persons who are aware of all the risks and have relevant expertise and work experience in financial markets;
  • Qualified Investors are the persons whose net worth is more than 750,000 EUR or who are the members of a group whose net worth is higher than the abovementioned;
  • Extraordinary Investors are the persons whose net worth is more than 7.5 million EUR or a company that is a member of a group whose net worth is higher than the abovementioned.

SBSB assists you with investment fund registration (including the granting of the license) in Malta, as well as in other jurisdictions. We provide you with a “turn-key” service, which means a range of services – consults, company registration, documentation, and client support and representation in all the issues regarding the regulatory authorities. 

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