Valsen Fiduciaries Funds

Isle of Man Specialist Fund

The Financial Services Authority of Isle of Man (FSA), the regulatory authority on the Isle of Man responsible for collective investment schemes, is committed to applying international standards of regulation and supervision across all areas of its work in order to maintain the integrity of the Isle of Man’s financial system.

Collective investment schemes in the Isle of Man are regulated by the Collective Investment Schemes Act 2008.

About Isle of Man Specialist Fund

The Specialist Fund was created to meet the demands of the alternative investment market. Although not by any means exclusively targeted at the hedge fund market, the Specialist Fund is intended to provide hedge fund promoters with a product providing maximum flexibility in the fast-moving international investment environment. The fund accepts investments only from Specialist Investors, defined as institutions and professional investors (including government and public authorities), corporations with assets available for investment of not less than $1-million and individuals with a self-certified net worth (excluding principal residence) of not less than $1-million.

Isle of Man Specialist Fund Legal Requirements

Requirements Description
  1. Applicable legislation

Collective Investment Schemes Act 2008

Collective Investment Schemes (Specialist Fund) Regulations 2017

  1. Supervising Authority
Financial Services Authority of Isle of Man
  1. Corporate vehicle permitted

An open ended investment company (OEIC)

A limited partnership

A unit trust

  1. Share capital or equivalent
    • Minimum subscription
USD100,000
    • Minimum investors
None
  1. Directors / Partners / Trustees
    • Minimum number
2
    • Corporate Directors / Partners / Trustees allowed
Yes
    • Local Directors / Partners / Trustees required
1
  1. Fund functionaries required
    • Custodian
      • Custodian required
No
      • Local custodian required
No
      • Eligible custodian
No
    • Fund manager / Investment manager
      • Fund manager required
Yes
      • Local fund manager required
Yes
      • Fund manager requires to be licensed
No
      • Eligible fund manager

Fund manager is not required to be licensed.

Governing body must ensure appropriate arrangements are in place

    • Fund administrator
      • Fund administrator required
Yes
      • Local fund administrator required
No
      • Eligible fund administrator

Isle of Man licensed fund administrator or

Approved Foreign Administrator

    • External auditor
      • External auditor required
Yes
      • Local external auditor required
Yes
      • Eligible external auditor
Qualified local auditor must be appointed
  1. Asset Requirements
    • Restriction on type of asset class invested
None
    • Asset diversification requirements
None
    • Limitation on size of the fund or total assets under management
No
  1. Local physical office required
No
  1. Prospectus / Offering Memorandum required to be filed
Yes
  1. Eligible for listing
Yes
  1. License fees
    • License application fee
£2,279
    • Annual license fee
£1,573
  1. Estimated license processing duration
3 months

Ongoing Obligations

Requirements Description
Monthly obligations
None
Quarterly obligations
None
Annual obligations
Submit annual audited accounts to FSA within six (6) months after the fund’s financial year-end.
Other obligations

An annual Compliance Declaration must be submitted:

  • within 6 months of the first anniversary of the launch of a fund;
  • within 6 months of a fund’s financial year-end thereafter; and
  • immediately prior to the fund ceasing to be a fund.

Quarterly statistical information must be provided within 15 business days of each quarter end (March, June, September and December);

Where the audited annual financial statements are not distributed within six months of the year-end or the stated timescale per the offering document (if earlier), notification of late issuance of audited accounts must be made to the Authority. 

The Authority does not require copies of annual audited financial statements for Specialist Funds however notification must be made where issued financial statements are qualified or contain an emphasis of matter.

Tax Obligations and Other Exemptions
Requirements Description
Business Tax
The standard rate of income tax for resident and non-resident companies is 0%.
Surtax
Mutual funds are exempt from payment of Surtax tax.
Alternative Minimum Tax
Mutual funds are exempt from payment of Alternative Minimum tax.
Withholding Tax
No withholding tax is payable on dividends and/or interest payable.
Value Added Tax (VAT)
VAT is not applicable to mutual funds in its entirety.
Stamp duty Act
Mutual funds are exempt from payment of stamp duty.
Capital Duty
Capital duty is payable up to a maximum of GBP 5,000 on the creation of new share capital in a company incorporated under the 1931 Companies Act.
Payroll Tax
Mutual funds are exempt from payment of Payroll tax.
Social Security
An employer is required to make earnings-related social security contributions. The general rate is 12.8% on weekly earnings in excess of GBP 118.
Transfer Tax
Mutual funds are exempt from payment of transfer tax.

Benefits of a Isle of Man Specialist Fund:

  • Ease and speed of establishment
  • Flexible structuring of the entity
  • Favourable compliance restrictions
  • Friendly regulatory environment
  • Favourable tax obligations