Isle of Man Authorised Scheme

Introduction

Authorised Collective Investment Schemes ('Authorised CIS') are retail funds authorised by the Isle of Man Financial Services Authority ('the Authority').

• Type A schemes are analogous to undertakings for collective investment in transferable securities “UCITS”; and
• Type B schemes are schemes which are not limited to operating under investment and borrowing powers which are analogous to those under the UCITS directive, including funds of alternative investment funds “FAIFs”.

Authorised funds are formally authorised and may be marketed to the general public in the Isle of Man. They are subject to prescriptive regulation: for example, the types of fund that are eligible for authorisation are prescribed - securities funds, money market funds, property funds, various derivatives funds, feeder funds, umbrella funds, etc. Authorised schemes are retail-focused and may be sold directly to the general public in the Isle of Man and in the United Kingdom, Jersey, Guernsey and Ireland. Arrangements are also in place with Hong Kong, Australia and Japan. They benefit from an Isle of Man investor compensation scheme.

Legal Requirements

Categories

Entity Requirements

The entity making the application is:
a) Company
b) Limited partnerships,
c) Unit trust or

Director’s Requirements

The license will need at least 2 (two) natural person Fit and Proper Directors of any jurisdiction.

Shareholder requirements

• The investment dealer will need at least one shareholder.
• Corporate shareholding is allowed and 100% foreign ownership is permitted.

Compliance Officer

The License must establish and maintain an appropriate and effective compliance function within the firm which operates independently of all operational and business line functions and senior or supervisory management.

Licensed Principle

The Applicant must employ at least one individual who is licensed as a principal. The Principle must:
a) Have sufficient educational or other qualifications or experience;
b) Have sufficient authority within the company;
c) Be a fit and proper person, to supervise the business for which the company that has nominated him is licensed or is applying to be licensed

Fund Manager

The Applicant must employ a fund manager with local requirement The proposed manager and proposed fiduciary custodian/trustee must hold a licence allowing it to act in this role to an Authorised CIS. The proposed manager must be based in the IOM and hold a financial services licence with the relevant Class 3 permissions.

Custodian

• The applicant must have a custodian approved by the authority.
• A Custodian licensed and approved locally the minister.
• A Custodian licensed and approved under the laws of a recognized country or jurisdiction.
• A person with a written permission from the Minister to carry on Business as a Custodian. The proposed fiduciary custodian/trustee may be located in the IOM or outside the IOM, subject to it being:
• a body corporate that —
1. is incorporated in a jurisdiction with which the Authority has a co-operation agreement that includes provisions in relation to collective investment schemes;
2. is authorised to act as a trustee or fiduciary custodian for retail collective investment schemes in its jurisdiction of incorporation; and
3. receives the Authority's approval to act as such in relation to Authorised CIS.

Auditor

The License, within one month after becoming licensed, shall appoint an external auditor who is acceptable to the IOM FSA

Insurance

The applicant must have indemnity insurance coverage or a fidelity bond acceptable to the regulator

Minimum Capital Requirements

Ongoing Obligations

• Licenses are to be renewed annually after the date of registration. On application for renewal of a Licence, the Bermuda Monetary Authority , if satisfied that the applicant is a licensee of good standing, may grant the renewal on payment by the applicant of the annual renewal Licence fee
• Filing of Audited Accounts: The licensee shall for the financial year beginning on the day on which it commences to carry on securities business; and for each subsequent year submit to the authority, within ninety days after the end of the financial year, audited financial statements prepared in accordance with international accounting standards, and which contain such additional information as may be prescribed.
• The License must maintain appropriate policies of insurance for the purpose of indemnifying such licensee against any liability that may be incurred as a result of any act or omission by the licensee or any of its officers or employees in the conduct of the licensee’s securities business.