Skip to main content

GIBRALTAR – OVERVIEW

Regulatory Landscape

Gibraltar’s finance sector is dynamic, continually evolving to accommodate the needs of emerging new industries, technology and entrepreneurs whilst always catering for the needs and protection of consumers. The Gibraltar Financial Services Commission (GFSC) regulates the financial services industry in Gibraltar.

A FUNDS FRIENDLY JURISDICTION

The foundations for Gibraltar’s attractiveness as a jurisdiction of choice for fund domiciliation were laid in 2005 with the implementation of the Experienced Investor Funds (EIF) Regulations. Coupled with an effcient tax regime and good regulation, Gibraltar positioned itself as the finance centre of choice for those looking to re-domicile, or establish, a fund within a jurisdiction that regulates to European and UK standards. Gibraltar’s funds legislation continues to provide an effcient, pragmatic and safe framework and so with it, Gibraltar opens its doors and welcomes new business to the jurisdiction with a regulator, the GFSC, that understands the industry. This is further evidenced by the dual regime allowing EIFs to opt out of the provisions of AIFMD whilst maintaining the self-managed structure irrespective of the Fund’s AUM.

THE FUNDS OFFERING

PRIVATE FUNDS

Highlights
  • Registered with the Gibraltar Financial Services Commission
  • 50 investor limit
  • Investor criteria as determined by the fund
  • No requirement to appoint administrator, local directors or auditor
  • No requirement to use a Gibraltar bank
  • Ability to structure as a private company limited by shares or as a limited partnership
  • No limitation of underlying asset class, investment parameters or restrictions
  • The Fund can be launched in A very short period of time (approx 4 weeks, and in some cases quicker)
  • The Fund cannot be listed
Structure

A private fund can be established using the following vehicles:

1. Limited Company – This is a standard company managed by its board in accordance with its prescribed strategy as set out in its offer document. The company can have several share classes. The ordinary shares are typically the voting non-participating shares issued to the ”founders”. Participating Shares are participating non voting shares issued to the investors. Nominal shares are non-voting and non participating and merely created for share capital maintenance.

2. Limited partnership – The limited liability partnership is managed by the General Partner. The General Partner would typically be established as another Gibraltar Ltd. The investors would be limited partners and would be limited to participating in the fund assets in proportion to their respective capital accounts.

Investment

Gibraltar law does not limit the underlying investment class, the investment parameters or restrictions. The limits are self-imposed on the fund by itself. The only requirement is that the fund’s offer document be clear and that there is full and frank disclosure. In other words you can establish the entity exactly how you need it.

Regulated

The Fund is required to register with the Gibraltar Financial Services Commission but it is not an authorised entity. Please see link to the website where in the event that you proceeded with this matter GFSC – Gibraltar Financial Services Commission – Regulated Entities.
The Fund cannot be listed.

Investor Limit and Criteria

There is no restriction as to who can participate in the fund and can be determined by each fund dependant on their specific needs. However, the fund needs to cognisant of the 50 investor limit when considering these limits.

Image of Structure Boxes

EXPERIENCED INVESTOR FUNDS (EIFs)

Highlights
  • Authorised Fund regulated by the Gibraltar Financial Services Commission
  • No investor limit
  • Investors required to be Experienced Investors (very similar to professional investors – there is the ability to allow investors to invest €50k if they’ve received investment advice)
  • Requirement to appoint legal counsel, administrator, 2 directors that hold a consent from the GFSC and auditor
  • No requirement to use a Gibraltar bank
  • Ability to structure as private company limited by shares, limited partnership, protected cell company and protected cell limited partnership. The cellular structures allow you to operate separate segregated strategies amongst different cells (both assets and liabilities are segregated)
  • No limitation of underlying asset class, investment parameters or restrictions
  • The Fund can be launched in very short period of time
  • The Fund can be listed
  • In the context a self managed fund the Fund itself can exempt itself out of the provisions of AIFMD (open ended – £100million including leverage) under Gibraltar’s Dual Regime. This gives the Fund the ability to continuing operating as a self managed structure without the de minimis thresholds (in other words can raise in excess of £100million)
Structure

An EIF can be established using the following vehicles:

1. Limited Company – This is a standard company managed by its board in accordance with its prescribed strategy as set out in its offer document. The company may have several share classes. The Ordinary shares are the voting non-participating shares issued to the ”founders”. Participating Shares are participating non voting shares issued to the investors. Nominal shares are non-voting and non participating and merely created for share capital maintainence.

2. Limited partnership – The limited liability partnership is managed by the General Partner. The General Partner would typically be established as another Gibraltar Ltd. The investors would be limited partners and would be limited to participating in the fund assets in proprotion to their respective capital accounts.

3. Protected Cell Company – A protected cell company allows you to establish numerous cells (aka sub-funds) that offer different strategies and terms whilst having completely segregated assets and liabilities. For the purposes of the law the entity is still one legal person. We typically provide that each participating share class is directly and solely linked to their respective cell.

4. Limited Partnership Protected Cell – A protected cell limited partnership operates in the same manner as a limited partnership (see above) but with the ability to create cells for the purposes of segregating assets and liabilities as is the case for a protected cell company (see above).

Investment

Gibraltar law does not limit the underlying asset class, the investment parameters or restrictions. The limits are self-imposed on the fund by itself. The only requirement is that the fund’s PPM be clear and that there is full and frank disclosure. In other words you can establish the entity exactly how you need it.

Regulated

The EIF is an authorised fund regulated by the Gibraltar Financial Services Commission. Please see link to the website where the fund will be listed in the event that you proceeded with the application GFSC – Gibraltar Financial Services Commission – Regulated Entities. Despite being regulated there is little regulatory downtime. The Fund is deemed authorised at the point resolving to launch the Fund as EIF and the lawyers provide a legal opinion confirming that it complies with the Regulations.

In the context a self-managed fund, under Gibraltar law, the Fund can exempt itself from the provisions of AIFMD under Gibraltar’s Dual Regime. This would give the Fund the ability to continuing operating as a self-managed structure without being restricted by the de minimis thresholds.

The Fund’s shares can be listed.

Investor Limit and Criteria

There is no limit to investors in terms of numbers. However, all investors are required to be Experienced Investors. Experienced investors are defined as follows:

“3.(1) An “experienced investor” is a person or body who, at the time of the investment, falls into one of the following categories–

(a) a person or partnership whose ordinary business or professional activity includes (or it is reasonable to expect that it includes) acquiring, underwriting, managing, holding or disposing of investments, whether as principal or agent, or the giving of advice concerning investments;

(b) a body corporate which has net assets of more than €1 million or which is part of a group which has net assets of more than €1 million;

(c) an unincorporated association which has net assets of more than €1 million;

(d) the trustee of a trust where the aggregate value of the cash and investments which form part of the trust’s assets is more than €1 million;

(e) an individual whose net worth, or joint net worth with the individual’s spouse, is more than €1 million, excluding the individual’s pension fund assets and principal place of residence;

(f) Omitted

(g) a participant who invests, or in aggregate has investments of, at least €100,000 in one or more experienced investor funds and–

(i) is a certified high net worth investor, certified sophisticated investor or self[1]certified sophisticated investor; or

(ii) does so on the basis of solicited advice;

(h) a participant who invests at least €50,000 in an experienced investor fund where–

(i) the participant was advised by a professional adviser to invest in an experienced investor fund; and

(ii) the experienced investor fund in which the investment is made receives confirmation of such advice;

(i) a participant who is a professional client, as defined in the Financial Services (Investment Services) Regulations 2020; or

(j) a participant in a fund that has re-domiciled to Gibraltar where the GFSC has permitted the inclusion of such participant either in respect of a specific experienced investor fund or generally in respect of experienced investor funds or a category of such funds from a certain jurisdiction.

(1A) Despite falling within one of the categories in sub-regulation (1), a pension fund (or its trustees) only qualifies as an experienced investor if, at the time of the investment–

(a) each beneficiary of the pension fund qualifies as an experienced investor under regulation

3(1)(a) or (e); or

(b) the investment, when aggregated with the pension fund’s other investments in experienced investor funds (if any), does not exceed 10% of the total assets of the pension fund.

(1B) For the purposes of sub-regulation (1A), “trustee” includes a director of a company which is a trustee of a pension fund or the manager of a pension fund which is not established under trust.”

Service providers

There is a legal requirement to appoint legal counsel, an administrator, 2 directors with consent from the GFSC, and an auditor. We can help with suitable introductions. It should be noted that there is no legal requirement to use a Gibraltar bank.

An administrator would typically provide fund accounting services; registrar,
transfer agency and client services; financial accounting and AML Compliance.

EIFs structured as pcc

Shareholders subscribe for Cell specific shares and only have recourse to the assets of the Cell that they subscribe for. The PCC Act provides that the Cells are fully segregated from one another. This is both assets and liabilities.

Image of Company Structure

If you would like to proceed to obtain a fixed fee proposal for your project please complete the Fund Questionnaire. The information provided in this questionnaire will be reviewed, confidentially, by our team. These questionnaire will enable us to assess: (a) to assess the risk profile of your project; and (b) to assess the expected amount of work. Once we have reviewed this questionnaire, we will contact you within one business day to advise whether or not we are able to proceed. If we are able to proceed, we will also provide you with a fixed fee proposal, our engagement letter and terms of business. This will include a request that the payment of a deposit.

FUND QUESTIONNAIRE

Triay was established in 1905 and is a recognised market leader in a number of specialist practice areas.

FINANCIAL SERVICES TEAM

Our Financial Services Team is ranked as Tier 1 by Legal 500 and has a wealth of experience having advised investment funds, investment fund managers, investment fund administrators and asset managers/brokers on the initial structuring and restructuring of licensable/licensed entities and ongoing regulatory matters such as licensing, passporting, the establishment of branches, distribution issues, the redomiciliation of licensed entities and the transfer of regulated businesses.

Contact a Lawyer