Offshore international investment fund is a structured investment vehicle.
It is a dedicated vehicle for making investments worldwide. This investment vehicle is usually regulated in one or several jurisdictions. Offshore jurisdictions are usually chosen to keep more privacy and flexibility within the fund as well as to command exclusivity. Ultimately, it is the exclusive club of experienced investors where only very few may be offered to join the investment opportunity taking place nearly anywhere in the world.
How do you create your own fund?
Fund is the ultimate investment vehicle. Here are some of the considerations typically made in 7 steps:
1. Decide Jurisdiction of the fund: should it be – onshore or offshore?
The most important first step is to decide on the jurisdiction of the fund. The fund may be based onshore or offshore. There are many different jurisdictions to choose from. Some of the jurisdictions may have very particular offerings and the founders of the fund need to be clear on their specific requirements and expectations.
Pricewise the jurisdictions also vary. Some may be extremely expensive, while others may be priced in a more reasonable manner.
2. Review Regulatory requirements for launching a fund
Fund is a financial vehicle intended for investing. Typically, it requires to be registered with the FCA (Financial Conduct Authority in the UK) or an equivalent regulatory government authority overseas.
Extensive legal requirements are expected to be satisfied. Most of these requirements centre around the person being a fit and proper person to run the fund.
3. Structure your investment fund
Not a lot of people realise that the most fundamental structure of the fund is a corporate legal entity. However, there are additional considerations that need to be made in relation to how the owners of the fund may derive the most benefit once the fund becomes a highly profitable investment vehicle.
4. Consider the tax residence of the owner and investors the fund is intended to attract
Some founders of the funds appear to disregard their own tax residence and status and the investors’ status that they are intending to attract.
A poor choice of jurisdiction usually means that certain investors will not be permitted to invest by their own home countries’ tax and legal regimes. Therefore, this needs to be considered very carefully.
5. Make a choice: is it closed or an open fund – what is the minimum entry criteria
Some of the funds are intended to be closed funds and only intended to very few highly selected investors. Other funds would only wish to attract highly sophisticated investors with the high entry criteria and substantial investment threshold.
While other funds are intended to attract nearly anyone willing to invest.
Therefore, it is important to put initial thoughts as to how these goals and concerns need to be reflected in the fund’s founding structure.
6. Decide how the compliance criteria of the fund is to be satisfied
Every jurisdiction has their own very specific compliance manuals in relation to how very specific requirements need to be met to allow the fund to function in a compliant and feasible manner.
There are two aspects:
- The requirements to meet jurisdictions’ anti-money laundering compliance guidelines and obligations;
- The best company secretarial practice to receive and recognise investments made into the fund by the investors.
These two aspects need to be thoroughly considered when establishing an investment fund.
7. Find an expert who can help you guide you through the process so that you could reap the benefits almost instantly
As you approach each and every jurisdiction, you will not be short of available experts and expertise. However, the most problematic is to connect and draw all the necessary dots together to make a complete and functioning product ready to run from day one.
I specialise in tax, structuring and wealth management of ultra high net worth individuals’ assets and legal requirements for high net worth families, my sole purpose is to help you establish and set up a working investment vehicle.
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Saule Voluckyte, M.A.E.S, LL.B, FAIA
I have been working exclusively with UHNWI in Mayfair, London since January 2008. I built specialist knowledge and expertise required to serve ultra high net worth individuals investing, operating and relocating to the UK or Switzerland.
Within the industry, I am the single adviser who is able to traverse the different areas of expertise and bring a comprehensive approach across: global structuring, UK immigration, international taxation and FOREX to develop their global wealth strategy, while they build, grow and expand their wealth worldwide.
Previous experience as one of the senior advisors for the government, made me a go-to person when delicate and uncomfortable scenarios involving heads of state need to be handled with care and preserve privacy.