An investment fund is an investment company that, at its sole discretion, raises and invests third-party investors' money in various financial instruments traded at stock and financial markets. Creating such a fund in a foreign jurisdiction is an attractive business opportunity.
The essence of creating an investment fund is to pool various investors' money to enable participation in larger projects and invest it in such projects on the most favorable terms. When it comes to foreign investment funds, it is important to note that they can be created in almost any country of the world. However, low-tax European and offshore jurisdictions are the most popular due to tax considerations.
The advantages of registering an investment fund in such jurisdictions consist in the reduction of the tax burden or zero tax burden, utmost protection of information about the fund’s founders, beneficiaries and assets and freedom to choose an investment policy, which means the ability to invest in a wide variety of instruments and projects.
To create an investment fund in any of the offshore or low-tax jurisdictions, it is necessary to obtain permission to engage in this activity and submit annual financial statements. This is primarily due to the fact that the fund raises money from third parties, accumulates and manages it. It should be noted, however, that if the fund is public, then it will be subject to requirements that are somewhat stricter than those applicable to private ones.
Несколько слов о процедуре получения разрешения на создание инвестиционного фонда
As mentioned above, state regulation normally does not focus on the activities of the fund as such but on the activities of its manager. Before the fund is created, its manager must prove their integrity, competence, qualification, work experience and financial standing since it is the manager who will manage the fund’s monetary assets, monitor its operations and be liable for their decisions. It is important to note that the need to prove all the above characteristics is not a mere formality. This issue is solved in two ways: either by engaging a hired manager who already has the necessary permission or by independently obtaining the required permission.
The fundamental principles underlying the operations of an investment fund that spark high interest in this activity include the centralized management of the fund which helps accumulate monetary assets in one location; monitoring of the fund’s operations by one person; confidentiality — since there are usually no requirements to disclose the names of the fund’s beneficiaries; reliability — the founders determine the rules for the sale and purchase of shares in the fund themselves; profitability — the ability to invest in almost any assets and projects.
There are several jurisdictions that are most attractive for creating an investment fund. These include such offshore states as the Cayman Islands, BVI and Jersey as well as low-tax European jurisdictions such as Cyprus and Luxembourg. The latter are the most attractive for non-professional investors since non-professional investment activities necessitate having mechanisms designed to protect the deposits of the investment fund’s investors that are available in Europe and not available in offshore jurisdictions.