Valsen Fiduciaries Funds

Seychelles Exempt Foreign Fund

The Financial Services Authority of Seychelles (FSA) regulates Exempt Foreign funds under the Mutual Fund and Hedge Fund Act, 2008. This Act sets out the guidelines pertaining to the application and licensing of mutual funds and other collective investment entities in Seychelles.

About Seychelles Exempt Foreign Fund

The Act also permits foreign investment funds from a recognized jurisdiction to conduct business from Seychelles without needing a Seychelles Fund license.
An Exempt Foreign Fund is a fund that holds a current licence or other authorisation to operate as a mutual fund issued under the laws of a recognised jurisdiction and which is administered by a person holding a Seychelles Fund Administrator’s Licence.


Key Features:

  • Already licensed as a mutual fund in a recognized jurisdiction
  • Need not hold Seychelles fund license
  • Must be administered by a Seychelles licensed fund administrator

Seychelles Exempt Foreign Fund Legal Requirements

Requirements

Description

  1. Applicable legislation

Mutual Fund and Hedge Fund Act, 2008

  1. Supervising Authority

Financial Services Authority of Seychelles (FSA)

  1. Corporate vehicle permitted

Seychelles regulated:-

IBC (International Business Company)

CSL (Special License Company)

Trust

PCC (Protected Cell Company)

LP (Limited Partnership)

Domestic company (Companies Act 1972)

  1. Share capital or equivalent

 
    • Minimum Investment

US$100,000 or equivalent amount in any other convertible currency per investor

    • Minimum investors

None

  1. Directors / Partners / Trustees

    • Minimum number

2

    • Corporate Directors / Partners / Trustees allowed

Yes

    • Local Directors / Partners / Trustees required

No

  1. Fund functionaries required

 
    • Custodian

      • Custodian required

Yes

      • Local custodian required

No

      • Eligible custodian

Financial institution licensed under the Financial Institutions Act, 2004 or

Trustee services provider licensed under the International Corporate Services Providers Act, 2003 or

Any other person as the authority may approve

    • Fund manager / Investment manager

      • Local fund manager required

No

      • Eligible fund manager

Any licensed fund manager worldwide

    • Fund administrator

 
      • Fund administrator required

Yes

      • Local fund administrator required

Yes

      • Eligible fund administrator

Seychelles licensed fund administrator

    • External auditor

      • External auditor required

Yes

      • Local external auditor required

Yes

      • Eligible external auditor

Qualified local auditor

  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

None

  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

USD 1,500

    • Annual license fee

USD 1,500

  1. Estimated license processing duration

3 months

Ongoing Obligations

Requirements Description
Monthly obligations
Office Required
Quarterly obligations
None
Annual obligations
Submit annual audited accounts to FSA within 4 months of the financial year end
Other obligations

Notify FSA within 14 days of any of the following changes:

  • Change in the registered office address
  • Change of its agent in Seychelles
  • Change in name or address of-
    • each director of the fund, if the fund is a
    • each trustee of the fund, if the fund is a trust
    • each general partner of the fund, if the fund is a limited partnership.
  • Appointment, resignation or removal of a Director or officer
Tax Obligations and Other Exemptions
Requirements Description
Business Tax
Mutual funds are exempt from business tax except for funds structured under the Companies (Special Licence) Act, 2003, in which case the tax rate is 1.5% of the income of the fund.
Withholding Tax
No withholding tax is payable on dividends and/or interest payable.
Income and Non-Monetary Benefits Tax
The rate of Income Tax Payable by a citizen employee is graduated at a rate of 15% for income between SCR 8,555.51 to SCR 10,000 and 20% for income between SCR 10,000.01 to SCR 83,000. Any income above SCR 83,000 is taxed at 30%. The rate of Income Tax Payable by a non-citizen employee is graduated at a rate of 15% for income between SCR 0 to SCR 10,000 and 20% for income between SCR 10,000.01 to SCR 83,000. Any income above SCR 83,000 is taxed at 30%. Non-Monetary Benefits Tax payable by an employer (mutual fund) is 20%.
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 on all instruments evidencing transactions in respect of shares or debt obligations and on all transfers of other property to or by the fund. The exemption does not extend to the transfer of or interests in immovable property in Seychelles.
Trades Tax Act
The Act grants exemption from the payment of trades tax (customs duty) on all imported furniture and equipment (including computers, communication equipment) used by the licensee, in its office in Seychelles, in connection with the business of operating a mutual fund.
Immovable Property Transfer Restriction Act
The restriction which requires a non-Seychellois to seek sanction from the Ministry of National Development prior to leasing an immovable property in Seychelles, does not apply to funds and exempt foreign funds.
Immigration Decree
Mutual funds are allowed to employ expatriate employees up to 50% of its total number of employees.
Exchange Control Act
The provisions of the Exchange Control Act do not apply to mutual funds.
Foreign Earnings Act
The Foreign Earnings Act is not applicable to mutual funds in its entirety.

Benefits of a Seychelles Exempt Foreign Fund:

  • A broad range of fund vehicle options are available to choose from, for example Seychelles regulated IBC (International Business Company, CSL (Special License Company), Trust, and PCC (Protected Cell Company).
  • Accounts for foreign funds can be prepared overseas and audited by approved overseas auditors.
  • Seychelles foreign fund law also allows Umbrella funds to operate (i.e. a fund that invests in a range of different fund or sub-funds).
  • Seychelles foreign funds are exempted from taxes on total fund’s income. They are also exempt from withholding tax and stamp duty.
  • Ease and speed of establishment