Isle of Man Regulated Fund

Introduction

The Regulated Fund is an Isle of Man fund which has detailed regulations applying to it. Managers cannot be appointed to such a fund without the Isle of Man Financial Services Authority's ('the Authority') prior consent. A Regulated Fund may be constituted as either an open-ended investment company or a closed-ended investment company

A closed-ended investment company will be a collective investment scheme if:

• it meets the provisions of section 1 of the Collective Investment Schemes Act 2008; “its units are not listed or admitted to trading on a securities market supervised for the purposes of market abuse by an Ordinary Member of the International Organization of Securities Commissions”; and
• “its units are promoted by, or on behalf of, its board in such a way that it is intended to be available for participation by the public or any section of it”.

Open-ended Investment Company means a collective investment scheme under which —

• the property in question belongs beneficially to, and is managed by or on behalf of, a body corporate having as its purpose the investment of its funds with the aim of spreading investment risk and giving its members the benefit of the results of the management of those funds by or on behalf of that body; and
• the rights of the participants are represented by shares in or securities of that body which —
  • the participants are entitled to have redeemed or repurchased by, or out of funds provided by, that body; or
  • the body ensures can be sold by the participants on an investment exchange at a price calculated by reference to the value of the property which the shares or securities represent;

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.

Local Office

The applicant must have premises acceptable to the authority. The premises should be able to facilitate confidential interaction between the applicant and its clients, and provide for safe and confidential storage of documents.

Auditor

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

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 Isle of Man Financial Services 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 Commission, 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.