Isle of Man Exempt Scheme

Introduction

Exempt Schemes (as defined in Schedule 3 to the CIS Act) are unregulated schemes which

• are private arrangements,
• can have up to 50 investors and
• whose constitutional documents must expressly prohibit the making of an invitation to the public to subscribe in any part of the world.

Exempt-type schemes are schemes established outside the IOM that are equivalent to the unregulated IOM Exempt Scheme. Principal Characteristics

• The fund’s constitutional documents must prohibit offerings to public anywhere in the world.
• There must be fewer than fifty participants.
• Under certain circumstances, the manager, administrator, custodian or trustee of an exempt scheme, if any, need not be licensed in the Isle of Man.
• Otherwise, there are no specific requirements as to permitted investors, permitted investments, financial statements, functionaries, etc.
• The exempt fund may have an offering document but none is required.

Legal Requirements

Categories

Entity Requirements

The entity making the application is:
a) an Isle of Man Company incorporated under the Companies Act 1931
b) an Isle of Man Company incorporated under the Companies Act 2006
c) Protected Cell Company
d) Limited Liability Partnership
e) Company

Director’s Requirements

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

Shareholder requirements

• The fund 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 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. 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

Isle of Man Manager licenceholder Applicant can be of any jurisdiction.

Custodian

Regulated in the Isle of Man or in a suitable jurisdiction

Promoter

A regulated promoter must be appointed if sales to “certain persons”(1) are allowed through non regulated financial advisers

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

• Quarterly statistical information must be provided within 15 business days of each quarter end (March, June, September and December);
• An annual Compliance Declaration must be submitted:-.
• . 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.
  • 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
• 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