Gibraltar: Law of Offshore
Investment Fund Management Law
The Financial Services Commission is responsible for the regulation of investment funds in Gibraltar under the Financial Services Ordinance (as updated); the Financial Services (Collective Investment Schemes) Regulations 1991 set up regulatory regimes for different types of fund, and implemented the EU UCITS Directive (85/611/EU).
Investment funds in Gibraltar are usually formed under a trust deed either as unit trusts or mutual funds, or under the Companies Ordinance as private or public companies. A public investment company (PIC) must have a minimum paid-up capital of GIP50,000 (at the time of writing) and if it is not listed on a recognised exchange its head office must be in Gibraltar.
Funds formed to be UCITS (Undertakings for Collective Investment in Transferable Securities) which under EU rules can be freely marketed throughout the Union under the Single European Passport provisions, must be open-ended and are limited to certain types of transferable security:
- those listed on a stock exchange in the European Union;
- those traded on another regulated market in the European Union;
- those listed on an approved stock exchange or traded on an approved, regulated market outside the European Union;
- recently-issued securities; and
- approved, publicly-traded debt instruments.
The authorities do not demand that the administration of a fund must be carried out in Gibraltar, as long as there is a sufficient strength of management in Gibraltar to allow for effective supervision. There is a requirement however that the trustee of a fund and the manager should be in separate organisations and should act independently, even if they have a common parent.
Application and annual license fees are payable. Fund managers have traditionally been able to apply for a tax-exemption certificate (no tax payable) or for a qualifying certificate (tax payable at a rate between nil and 35% as agreed with the authorities (however, for changes to this, see Offshore Tax Regimes).
In 2005 Gibraltar introduced Experienced Investor Funds (EIFs) under the Financial Services (Experienced Investor Funds).
In April 2005 it emerged following the 30th Annual Conference of the International Organisation of Securities Commissions (IOSCO) that the Gibraltar Financial Services Commission's application to be accepted as an Ordinary Member of the Organisation had been approved.
IOSCO members regulate more than 90% of the world's securities markets, and IOSCO is seen as the world's most important international cooperative forum for securities regulatory agencies.
In December 2005, the Gibraltar Government and the UK Government concluded an agreement relating to the passporting of Investment Services.
The agreement enables investment services firms established in Gibraltar to passport (that is to market and sell) their products and services into the UK market. The investment services passporting agreement came into effect in May 2006 when Gibraltar had passed some necessary legislation.