Investment services

With increasing access to EU financial markets, Gibraltar is a key centre for large corporations keen to move into the EU market on a tax efficient basis. Gibraltar is an important centre for the provision of investment services, offering not only the fiscal advantages of an international location but also a concentration of expertise and activity within a well regulated environment.

Full service – A full spectrum of investment services is available in Gibraltar through private banks, portfolio managers, investment managers, advisors and stockbrokers. These are applicable to institutional and private investors alike. Gibraltar has been approved by Liffe and Eurex for derivatives trading.

Funds

Gibraltar has emerged as a popular alternative jurisdiction for investment funds and their managers, offering robust fund legislation, favourable tax advantages, within an EU framework, efficient regulation, the flexibility of a small jurisdiction and quality infrastructure. Gibraltar’s funds and investments infrastructure has developed over the past decade. Gibraltar’s main attraction to investors is as an EU domicile, which provides entry to the single market in financial services, thereby enabling passporting throughout the member states of the EU.

During this time Gibraltar has become home to a broad spectrum of domestic and international companies, including banks, fund administrators, accountants, investment managers, stock brokers, company managers, auditors and lawyers who comprise Gibraltar’s funds service industry. Gibraltar also presents political and economic stability, a professional workforce trained to UK standards and full employment rights for EU/EEA and Swiss citizens.

Gibraltar – a unique AIFM jurisdiction within the EU.

Asset Management

Asset Management firms wishing to establish themselves in Gibraltar have the option of establishing themselves as a firm under the Financial Services (Markets in Financial Instruments) Act 2006, or the Financial Services (Alternative Investment Fund Managers) Act 2013.

Under the Financial Services (Markets in Financial Instruments) Act 2006 there are three different categories of authorisation by the Financial Services Commission (FSC);
(i) unrestricted,
(ii) money-holders and
(iii) arrangers.

These categories have different application fees and different minimum regulatory capital requirements.
Gibraltar has a quick and efficient regulatory process. Prior to submission of an application, it is usual for the applicant and/or professional advisers to meet with the FSC in order to discuss points of principle and/or clarification. All application requirements, fee details and forms are available to be downloaded from the FSCs website at www.fsc.gi

The Alternative Investment Fund Managers Directive (AIFMD) was transposed into Gibraltar law on 22 July 2013 and investment management firms which fall within the Directive can avail themselves of the European passport and market across EU member states.

Investment management firms are taxed at the corporate rate of tax of 10%. In addition, senior executives or managers who possess skills that are necessary to promote and sustain activity of particular economic value to Gibraltar or the firm, can obtain a special tax status known as High Executive Possessing Special Skills (HEPSS). This allows the individual’s personal tax liability to be capped at £30,000 if the individual earns over £100,000 per annum. Funds in Gibraltar may be managed by a third party investment manager or “self-managed” by the fund directors. The investment manager or adviser may be from any jurisdiction provided that it complies with the law of the jurisdiction from which it operate

Alternative Investment Funds

Gibraltar Government transposes the EU Alternative Investment Fund Managers Directive into Gibraltar law.

Albert Isola, Minister with responsibility for Financial Services, has signed regulations that transpose the EU Alternative Investment Fund Managers Directive (AIFMD) into Gibraltar law. The commencement date for this legislation is 22 July 2013. The rationale for this Directive is to establish commonality in the requirements that govern the authorisation and supervision of AIFMs within the EU. AIFMD is a new regulation, affecting investment managers, particularly those within the EU but also those that are external to the EU and who wish to market their funds within the EU. It determines how such investment managers can conduct their marketing activity. Albert Isola commented, “This legislation provides Gibraltar with an excellent opportunity and competitive advantage which should provide for further growth in this key area of our financial services industry. I am also very pleased to recognise and record my grateful thanks to my predecessor Gilbert Licudi who has been instrumental in our achieving this important milestone and whose drive and determination ensured that we met the transposition deadlines, working with the drafting team, FSC and the Funds Industry representatives.”

Experienced Investor Funds

The Experienced Investor Fund (EIF) regulations were introduced in August 2005.

An EIF is an authorised collective investment scheme exclusively for investment by experienced investors and is designed to invest in a wide range of traditional or alternative asset classes.

One of the attractions of Gibraltar as a fund domicile is that no regulatory approval is required before a fund can begin to raise capital and commence with its investment activities. A fund may be launched based on a legal opinion that confirms that the fund has met all legal and structural requirements for its operations, and provided that the fund’s documentation is submitted to the regulator for registration within 10 business days of its launch. An EIF can market its shares or units to experienced investors and begin trading, from the time the EIF is officially launched.

The advantages of an EIF are:
• pre-launch approval mechanism
• no investment or borrowing restrictions
• may be self-managed
• expedited start-up process and competitive start-up costs
• no limit to the number of investors
• reasonable ongoing operating costs
• tax neutrality
• benefit of EU directives
• an EIF may be structured under a variety of formations

Common EIF structures include:
• a Gibraltar limited company, unit trust or limited partnership
• other form recognised by the FSC
• a Protected Cell Company

An Experienced Investor must fulfil any one of the following conditions in order to be considered an Experienced Investor:
• 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
• a body corporate which has net assets in excess of €1,000,000 or which is part of a group which has net assets in excess of €1,000,000
• an unincorporated association which has net assets in excess of €1,000,000
• the trustee of a trust where the aggregate value of the cash and investments which form part of the trust’s assets is in excess of €1,000,000
• an individual whose net worth, or joint net worth with that person’s spouse, is greater than €1,000,000, excluding that person’s principal place of residence
• a participant who has a current aggregate of €100,000 invested in one or more experienced investor funds
• a participant who invests a minimum of €50,000 in an experienced investor fund and who has been advised by a professional adviser to invest in the fund and the fund’s administrator has received confirmation of such advice
• a participant who is a professional client, as defined under the Financial Services (Markets In Financial Instruments) Act 2006
• a participant in a fund that has re-domiciled to Gibraltar where the Authority has permitted the inclusion of such participant either in respect of a specific fund or generally in respect of funds or a category of funds from a certain jurisdiction

EIFs and their managers complying with the authorisation process of the Alternative Investment Fund Managers Directive (AIFMD) will receive a pan European marketing passport thus enabling Alternative Investment Fund Managers (AIFMs) to passport the Alternative Investment Funds (AIFs) they manage and market them to professional investors across the EU.

UCITS

UCITS – Undertakings for Collective Investment in Transferable Securities

A Gibraltar fund may be licensed in accordance with the laws on UCITS where the intention of the fund is:
• to operate with the sole object of collective investment in transferable securities or in any other liquid financial assets
• raise capital from the public and invest on the principles of risk-spreading
• issue units which are at the request of holders redeemed, directly or indirectly, out of those assets

A UCITS in Gibraltar may be established as:
• a Gibraltar open-ended investment company
• a Gibraltar unit trust comprising a trustee and an independent manager
• a contractual fund which is an unincorporated body established by a management company under which the participants agree to share in the assets of the fund

A UCITS fund can be structured as an umbrella scheme under which the contribution of the participants and the profits out of which payments are to be made are pooled separately in relation to separate parts of the scheme.

A UCITS fund structured as a common fund is required to appoint an authorised UCITS management company and a licensed depositary in Gibraltar. A standard arrangement would be for the UCITS fund to engage a UCITS management company, which in turn would contract with service providers such as an investment manager, administrator and distributor. A UCITS fund structured as an open-ended investment company may opt to be self-managed by its directors. In which case, the fund will contract directly with its service providers in its own name. A UCITS management company is able to passport its services from the member state where it is domiciled to another member state where it wishes to provide services.

UCITS benefit from a full EU marketing passport. This passport allows a UCITS established in one member state to market its shares or units in other member states by following a simplified regulator-to-regulator notification procedure. A Gibraltar UCITS intending to distribute its shares/units in another member state is required to submit to the Financial Services Commission (FSC) a notification letter of its intention to market in a target member state. The FSC will then verify and transmit the request to the relevant competent authority of the member state where the Gibraltar UCITS wishes to raise capital or distribute its shares/units. Once the transmission has been confirmed by the FSC, the Gibraltar UCITS may begin its activities in that member state.

Source for page : http://gibraltarfinance.gi/