Mutual Fund and Hedge Fund Act
Mutual Fund and Hedge Fund Act | Seychelles
The newly amended Mutual Fund and Hedge Fund Act, 2007 provides for the Seychelles mutual fund and hedge funds.A mutual fund means a company, unit trust or partnership that collects and pools investor funds for collective investment purposes or with the aim of spreading investment risks, and issues equity interests to enable investors in the mutual fund to receive or have the right to receive a portion of profits or gains derived from the investments, and includes: (i) an umbrella fund whose equity interests are split or segregated into different funds or sub-funds; and (ii) a hedge fund.
Features
The most significant features of the Seychelles Mutual Funds Act, are as follows:
Cost effective
The Funds can be set up and operated at a more reduced cost compared to many other jurisdictions, giving value for money.
Lighter regulation
The regulations for private and professional funds (hedge funds) are lighter
Overseas Fund Administration can be appointed
Mutual funds licensed in a recognized jurisdiction can operate in Seychelles as an exempt foreign fund.
Accounts can be prepared by approved overseas auditors (from Singapore, Hong Kong, South Africa, UK and USA).
Exemptions and concessions
Exemption to Licencsed Funds and Exempt Foreign Funds will apply for 20 years as at the date the Mutual Fund Act came into force - Business Tax Act, Immovable Property (Transfer Restriction) Act, Social Security Act, Stamp Duty Act, Trades Tax Act,Goods and Services Act, Immigration Decree, Exchange Control Act and Foreign Earnings (Regulations) Act.
TYPES OF SEYCHELLES MUTUAL FUNDS
Private Fund
A Private Fund is a mutual fund which has specified in its constitutional documents that:
it may not have more than 50 investors; or
where invitations to the public to invest in the equity interest of the fund are prohibited
Professional Fund
A Professional Fund is a fund whose constitutional documents specify that the acquisition of equity interests is: (i) only available to “professional investors” and (ii) that the minimum individual investment per investor shall not be less than US$100,000 or its equivalent in any other convertible currency.
Public Fund
A Public Fund is a fund that offers equity interest through a written invitation to the public and which is not a private or professional fund. The two requirements for Public Funds are:
Every Public Fund shall at all times have not less than two natural person directors (in the case of a company), two natural persons as general partners or two natural persons as directors of one or more general partners (in the case of limited partnership) and two natural persons as trustees or two natural persons as directors of corporate trustees (in the case of trust).
Every Public Fund shall adopt of an Offering Document approved by the Authority containing the information specified under the Mutual Fund Act.
VEHICLES FOR MUTUAL FUNDS
Any of the following entities can be used as legal structures for setting-up a fund:
A Company incorporated in Seychelles under the International Business Companies Act, 1994, Companies Act, 1972 licensed by Companies (Special Licences) Act, 2003, Protected Cell Companies Act, 2003 or a similar body corporate incorporated in a recognized jurisdiction.
A Limited Partnership registered in Seychelles under the Limited Partnership Act 2003, or a similar partnership registered in a recognized jurisdiction.
A Unit Trust registered in Seychelles under the International Trust Act 1994, or a similar unit trust registered in a recognized jurisdiction.
ADMINISTRATION OF SEYCHELLES MUTUAL FUNDS
The Licensed Mutual Funds can be administered in or from Seychelles by a Seychelles Licensed Fund Administrator or outside of Seychelles by an Approved Foreign Administrator.
Contributed by Lodewijk Hof lhof@hof-consultancy.nl
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