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Curaçao: Offshore Business Sectors

Investment Fund Management

Curaçao, due to its location, is often chosen for funds with a South American distribution bias. Its other particular advantages stem from its close connection with the Netherlands, and its civil law legislative environment. More generally, as a jurisdiction which does not have mutual fund legislation which is 'recognised' in most high-tax states, Curaçao is suited to be the domicile of retail funds aimed at unregulated markets (such as those of South America), or of funds aimed at professional investors, but not of retail funds intending to have distribution in the high-tax (ie, richest) markets.

On the other hand, Curaçao has quite a good position in regard to the USA for professional investors, having been accepted under the IRS 'check-the-box' regulations, so that the Curaçao NV can be treated as a limited partnership for US tax purposes. From this point of view, the more-or-less integrated status of Curaçao into the Kingdom of Holland, and the very comfortable relationship of the islands with their highly communautaire 'mother' country, mean that there is little risk of an EU-inspired attack on the local legislative regime. This contrasts to some extent with the position of the 'common law' jurisdictions, which are increasingly being pressured by the UK to come into line with global politically-correct attitudes.

As a base for investment funds, a civil law jurisdiction arguably has some legal advantages over a common law jurisdiction, since less demanding levels of fiduciary duty and care and skill are required of directors; and derivative shareholder lawsuits are not possible in Curaçao.

The National Ordinance on the Supervision of Investment Institutions and Fund Administrators (NOSIIA) came into effect in 2003.

Under NOSIIA, the Centrale Bank van Curaçao en Sint Maarten (formerly the Central Bank of the Netherlands Antilles) supervises and licenses investment funds. Custodians must be corporate entities whose main business it is to hold and administer investment assets for third parties.

Daily management of the fund must be carried out by at least two individuals and the Supervisory Board, if one is nominated, must be composed of at least three members. No one may be appointed to fill a position in the daily management or on the Supervisory Board without the approval of the Bank. Managers/directors may be either individuals or companies but at least one must be resident in the former Netherlands Antilles.

There are no legal limits placed on the fees of managers.

There are no legal restrictions in Curaçao on the investments which a fund may make or on its borrowings.

Under certain circumstances a fund is obliged to publish its accounts or to make them available to the public.

A fund is not obliged to prepare a prospectus or have it approved by the supervisory authorities. However, as one of the criteria for obtaining a permit to operate, as a fund in or from Curaçao is the adequacy of information supplied to the public, in practice, funds will have to issue a prospectus to inform the public.

See Offshore Legal and Tax Regimes for details of the taxation of investment funds in the Netherlands Antilles.

In 2008 Curaçao was, for the second year in a row, named the top location for hedge fund administration in the Global Custodian Hedge Fund Administration Survey.

State Secretary of Finance of the Netherlands Antilles, Alex Rosaria, congratulated the Curaçao international financial services industry on its placing, observing that: “That’s something to be proud of -- and we are -- but we are not complacent about our achievements. In order to deliver on our promise of a trustworthy international financial center, we have to continue to differentiate ourselves based on our traditional strengths: our sound economic and financial fundamentals, skilled, educated and multilingual workforce.”

 

 

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