The Experienced Investor Fund: Gibraltar by Isolas

Gibraltar: The Experienced Investor Fund

Contents Section

Page

Jurisdiction

Taxation of Experienced Investor Funds

Regulation of Experienced Investor Funds in Gibraltar

4. 4.1 4.2 4.3 4.4 4.5 4.6 4.6.1 4.6.2 4.6.3 4.6.4

The Experienced Investor Fund What is an Experienced Investor Fund? What is an Experienced Investor? What are the advantages of an Experienced Investor Fund? The Structure of an Experienced Investor Fund Experienced Investor Fund structure type Umbrella Fund Structure What is an Umbrella Fund Structure? What are the advantages of an Umbrella Fund Structure? How is an Umbrella Fund established? What is a Protected Cell Company?

7 7 7 7 8 8 9 9 9 10 10

5. 5.1 5.1.1 5.1.2 5.2

Documents and Agreements Share Capital Founder Shares Redeemable Preference Shares Financial Statements/Net Asset Value of the EIF

11 11 11 11 11

Secretary and Registered Office

Depositary (with broker/clearer)/Paying Bank

Investment Manager/Adviser

Investors

10.

Auditors

11.

Fund Administration

12.

Fiduciary Fund Administration Limited

13. 13.1 13.2 13.3 13.4

Fiduciary Fund Administration Limitedâ&#x20AC;&#x2122;s Services Fund Accounting Registrar, transfer agency and client services Financial Accounting Compliance

17 17 17 17 17

14.

Legal Counsel - ISOLAS

15.

Directors

16.

Fees for the establishment of an Experienced Investor Fund

17.

Administration Fees

18. 18.1 18.2 18.3 18.4 18.5

Other Fees Directorsâ&#x20AC;&#x2122; Fees Audit Fees EIF Renewal Fee (FSC) ISIN/WKN (per class/Cell) Bloomberg Listing

22 22 22 22 22 22

19.

Contact

Gibraltar: The Experienced Investor Fund

1. Jurisdiction Gibraltar is an emerging offshore Funds jurisdiction allowing investment companies to be established in a highly competitive tax environment, together with strict laws that protect client confidentiality. In the recently published 2008 Global Financial Centres Index (GFCI) prepared by the City of London, Gibraltar ranked 25th in the world, one place behind Amsterdam, two places behind Dubai, three behind Washington D.C and four behind the Cayman Islands. Gibraltar also ranked above centres such as the BVI, Monaco, Qatar, Milan and Madrid. This placing reflects to a certain extent, the fact that Gibraltar is a highly regulated jurisdiction, operating internationally recognised, and EU standard anti-money laundering and Organisation for Economic Co-operation and Development (“OECD”) conventions. The Financial Services Industry in Gibraltar is regulated by a statutory body corporate, known as the Financial Services Commission (“FSC”) (www.fsc.gi), and originally established in 1989. The FSC’s commitment to providing financial services regulation in an effective and efficient manner in order to protect the public from financial loss, distinguishes Gibraltar as a quality finance centre whose solid reputation was most recently reflected in the International Monetary Fund (“IMF”) evaluation on Gibraltar’s supervision of Banking, Insurance and AntiMoney Laundering measures which further endorsed Gibraltar’s robust regulatory environment. Gibraltar is a self-governing territory with its own elected government. It enacts laws independently of the United Kingdom and maintains an independent tax status. Gibraltar is a member of the European Union and has been ever since the accession of the United Kingdom on 1 January 1973, by virtue of Article 229(4) of the Treaty establishing the European Economic Community (as amended) (the “Treaty”), which states that the provisions of the Treaty “apply to the European territories for whose external relations a member state is responsible”. Gibraltar is treated as member of the European Union by virtue of the United Kingdom’s membership. Gibraltar imposes no capital gains tax, inheritance tax or wealth tax and does not form part of the EU VAT structure. Withholding tax on payments of dividends to non-Gibraltar shareholders of a Fund are not levied in Gibraltar. There are no exchange controls or unrestricted currency facilities. Such circumstances provide an obvious benefit to Gibraltar as a Funds jurisdiction. Individuals and companies may hold and operate bank accounts in any currency and may purchase real and personal property anywhere in the world. Gibraltar has its own legal system, which is based on the English model, with variations introduced by local statutes termed ‘Acts’, from time to time, in keeping with the development of Gibraltar as a finance centre. All professionals are predominantly UK qualified and in addition to Solicitors and Barristers, other professionals include Chartered Accountants, Fund Administrators, Bankers, Trust Specialists and Investment Advisers.

Gibraltar: The Experienced Investor Fund

2. Taxation of Experienced Investor Funds Gibraltar collective investment schemes approved by the Commissioner of Income Tax are exempt from tax on its investment income. A collective investment scheme includes (but is not limited to): •

a collective investment scheme licensed or approved by the Chief Executive of the Financial Services Commission; or

•

a collective investment scheme falling within the scope of the Financial Services (Collective Investment Schemes) Regulations 2006

In addition, and as mentioned above, any dividends paid by such a vehicle to a non resident company or individual would not be subject to withholding tax in Gibraltar. Stamp duty is applicable on the initial creation of share capital or subsequent increase of share capital and is charged at a fixed rate of £10. This is considerably different to for example Bermuda where stamp duty is layered at 5%, 10% or 15% (above 1M US$). Note: Investors in a collective investment scheme are advised to seek advice as to the tax implications in their respective jurisdictions. Advice in relation to the same is not provided here and is outside the scope of this Information Booklet.

Gibraltar: The Experienced Investor Fund

3. Regulation of Experienced Investor Funds in Gibraltar Experienced Investor Funds (“EIF(s)”) in Gibraltar are regulated and supervised by the FSC, whose high regulatory standards – combined with the flexibility of a small jurisdiction and the availability of a quality infrastructure at low costs – are increasingly making Gibraltar an attractive Funds location. The key question with regard to the regulation of a Fund such as the EIF, is finding the right balance between ‘investor protection’ in terms of information, valuations of the underlying assets, corporate governance of the vehicle and safekeeping of the assets and investments, whilst allowing the flexibility or creativity of the investment manager in terms of the types of investments that are made. In today’s market conditions, products that may have lower correlation to the markets may become attractive investments or offer unique opportunities and it is important that these are not restricted. It has also become increasingly important to be able to take advantage of opportunities in the market quickly and this is something that the EIF is also geared towards. The approach of the FSC, in order to facilitate these possibilities has been to introduce a system of selfcertification for the EIF, providing automatic qualification. This qualification is acquired once a notification is received by the FSC, confirming that the Fund has been launched within 14 days of its launch, making the procedure one of notification, as opposed to certification. Notification requirements include the completion of a checklist which ensures that the EIF complies with the relevant legislation and requirements. This also ensures that the Fund meets its requirements of having two Gibraltar Directors (who are authorised and licensed by the FSC) a Custodian or Broker (anywhere in the world, but only required if the EIF is open ended) to hold its assets and a Gibraltar based Fund Administrator (who is also licensed) and Auditor. The EIF must also produce annual audited accounts. In this way the EIF can be ‘fast tracked’ through the regulatory process but is also structured to ensure a degree of security and protection for the Investors by the strict licensing of the counterparties to the Fund. The information contained in the relevant offering document must contain certain information and warnings contained in the Financial Services (Experienced Investor Funds) Regulations 2005 (the “EIF Regulations”) and the notification to the FSC must be accompanied by an opinion from Gibraltar Counsel confirming that the EIF has met the requirements imposed by the EIF Regulations. Given these requirements, the FSC is happy that the EIF commences trading as soon as these requirements have been met, and that they are simply notified within the stipulated 14 day period.

Gibraltar: The Experienced Investor Fund

4. The Experienced Investor Fund 4.1 What is an Experienced Investor Fund? Gibraltar’s EIF regime was launched on 5 August 2005 with the publication of the EIF Regulations, a selfcontained piece of subsidiary legislation establishing a stream lined process for authorising and establishing open-ended or closed-ended Funds. It is only suitable to persons that fall under the definition of an “Experienced Investor” as set out in full below.

4.2 What is an Experienced Investor? Under the EIF Regulations, an Experienced Investor is a person or body who, at the time of the investment falls into one of the following categories: •

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 Euro1,000,000 or which is part of a group which has net assets in excess of Euro 1,000,000;

•

an unincorporated association which has net assets in excess of Euro 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 Euro 1,000,000;

•

an individual whose net worth, or joint net worth with that person’s spouse, is greater than Euro1,000,000, excluding that person’s principal place of residence; or

•

a participant who invests a minimum of Euro100,000 in the Fund.

4.3 What are the advantages of an Experienced Investor Fund? An EIF offers many advantages in terms of the ease and speed of Fund set up as well as a great degree of flexibility for Investors in terms of the mix of asset classes they can include. The EIF is unrestricted in what it can invest in (there are no restrictions or ‘eligible assets’ such as exist in other jurisdictions). Promoters and Administrators can use Gibraltar’s EIF legislation to set up Hedge Funds or Funds that can use hedge strategies in an easier and cheaper way for private clients and for external asset managers. As already set out, the requirement is simply to notify the regulator within 14 days of its launch, and supply the Fund’s offering documents and the opinion from Counsel stating that the EIF complies with the EIF Regulations. This effectively means that the Fund can be launched as quickly as soon as the offering document is ready, and the counterparties to the Fund have been chosen and appointed.

Gibraltar: The Experienced Investor Fund

4. The Experienced Investor Fund

continued

4.4 The structure of an Experienced Investor Fund A typical EIF structure is shown below

Director(s)

Promoter

Secretary

Legal

Administrator

Experienced Investor Fund

Custodian (with broker/clearer) and/or Paying Bank

Investment

Auditors

Investor(s) Experienced Investor(s)

4.5 Experienced Investor Fund structure type EIFs can be created using two different structures. These will be considered in turn below. Additionally, the EIF Regulations have been amended to allow a legal entity established in an EEA State, subject to FSC approval, to be set up as an EIF. However, this possibility in not explored any further in this Information Booklet and shall not be discussed in further detail. In summary, an Umbrella Fund structure is set-up as a Protected Cell Company under the Gibraltar Protected Cell Companies Act 2001 (covered in more detail below). This effectively allows for one single legal entity to be established with different and completely segregated cells, or ‘Sub-Funds’ (“Cell(s)”) which are traded as individual investment funds. Each Cell can be used for specific investment objectives or strategies, or even for specific clients, as and when required. Cells within an Umbrella Fund could be utilised until the purpose of their creation is achieved at which point the specific Cell could be closed and assets distributed to the Investors of the Cell as appropriate. The number of Cells that can be created under Gibraltar law is unlimited and these are versatile, in that each Cell can cater for specific strategies, or even specific holdings for particular Investors, as well as having differing investment objectives. A single Fund structure, on the other hand, involves the creation of an individual Fund, which may be open ended or closed ended, and created as a specific purpose investment vehicle. The Fund would be used, based on its individual tailoring requirements, until the purpose of its creation has been achieved after which the Fund could be closed and assets distributed to the Investors of the Fund as so required.

Gibraltar: The Experienced Investor Fund

4. The Experienced Investor Fund

continued

4.6 Umbrella Fund Structure 4.6.1 What is an Umbrella Fund Structure? Typically, an Umbrella Fund structure establishes multiple funds aimed at different groups of Investors with differing needs and requirements, such as risk profile, taxation and/or domicile reasons. In this structure, investment is made directly to the required Cells allowing various classes of shares to be issued to different Investors in respect of separate Cells. 4.6.2 What are the advantages of an Umbrella Fund Structure? From the investment manager’s point of view, an Umbrella Fund streamlines what would otherwise be separate marketing and administration costs and as a result, Umbrella Funds are clearly at an advantage, in that they will cost less to run, less to establish (multiple strategies) and can be marketed more easily (under one name) than traditional single entity portfolios. Since the Fund is already up and running, new strategies can be introduced very easily and very quickly by the Board, allowing for Investors to take advantage of opportunities as and when they arise. The particulars of a Cell can be drafted and added to the existing offering document and unclassified shares simply allocated to the new structure allowing for subscriptions to, for example, Cell A (through the issue of ‘A’ shares) Cell B (through the issue of ‘B’ shares) etc. From a cost and operational perspective, through the use of an Umbrella Fund structure, the pooling of the day-to-day management and administration of the Fund and its portfolios into one legal entity creates economies of scale which in general, lead to lower operational and transaction costs and save the investment manager costs relating to regulatory duplication. It also provides a versatile package which would be attractive to a wide range of Investors, who would of course still have to qualify as Experienced Investors. Umbrella Fund structures can be extremely flexible. Generally, shares held in Cells may be switched between Cells at no cost and/or for a minimal transaction fee. With an Umbrella Fund, Investors gain access (through investment into the Cells offered by the Umbrella Fund) to a balanced and flexible investment strategy through a single legal entity. Under Gibraltar law, provided the requirements of the Protected Cell Companies Act are complied with, the assets attributable to each Cell are ring-fenced and will only be available to the creditors of the Fund who are creditors in respect of that Cell and shall be protected from creditors of the Fund who are not creditors in respect of that Cell. Non-cellular assets and liabilities are those not attributable to any of the Fund’s Cells. The assets and liabilities of a Protected Cell Company are therefore divided between those which are cellular and those which are non-cellular. A typical Protected Cell Investment Company structure is illustrated below

Cell B

Cell C

Medium Risk Strategy

Low Risk Strategy

Cell A High Risk Strategy

Gibraltar: The Experienced Investor Fund

Cell D

Umbrella Fund

Low Risk Strategy

4. The Experienced Investor Fund

continued

4.6.3 How is an Umbrella Fund established? An Umbrella Fund would be established as a protected cell company (“PCC”) (as discussed below) in order to facilitate legal establishment and segregation of the Cells’ assets and liabilities. 4.6.4 What is a Protected Cell Company? During 2001, Gibraltar launched its Protected Cell Companies Act 2001 (the “PCC Act”) in order to allow the establishment of a new type of legal entity in Gibraltar. A PCC is a single corporate body, consisting of a company (the “Core”), with an internal “umbrella” structure consisting of any number of subdivisions that allows for the legal segregation of assets and liabilities into different Cells. Business transacted through a Cell is ring-fenced from the activities of the other participants. The overriding principle is that the assets of a Cell should only be available to the creditors and shareholders of that Cell and the concept of “ring-fencing” is fundamental to a PCC. When a PCC has been created, the Board fall under a statutory duty to keep cellular assets separate and separately identifiable from non-cellular assets and to keep cellular assets attributable to each Cell separate and separately identifiable from cellular assets attributable to other Cells. This avoids the risk of crosscontamination between the Cells. A PCC may, in respect of any of its Cells, create and issue shares (‘cell shares’) the proceeds of the issue of which (‘cell share capital’) shall be comprised in the cellular assets attributable to the Cell in respect of which the cell shares were issued. Each Cell comprising the PCC is autonomous of the Core and can operate either independently, or in unison with one or more Cells. However, the PCC transacts business with the outside world on behalf of the Cells. Even though there is a sense of autonomy, every cell “shares” the memorandum and articles of association of the PCC. In terms of ongoing management, a PCC has, and can only have, a single Board of Directors. Likewise, it holds a single annual general meeting of its shareholders and files a single annual return as well as statutory accounts (and pays only one filing fee). The PCC Act requires that the name of a protected cell company shall, include the expression ‘Protected Cell’, PCC’ or any cognate expression approved in writing by the Registrar of Companies.

Gibraltar: The Experienced Investor Fund

5. Documents and Agreements From an operational and administrative point of view, an EIF would have one offering document (commonly provided in the form of a private placement memorandum) , one fund administration agreement, one custodian agreement, one directorship agreement (signed by each Director), one investment management agreement (or investment advisory agreement) one depositary agreement relating to a paying bank or custodian and a final document regulating the EIFs relationship with its Auditor (normally set out in a letter of intent from the Auditor).

5.1 Share Capital Regarding return to Investors, the return in a particular scheme is related to the net asset value (“NAV”) of the Fund or Sub-Fund (i.e. the Cell) which in turn is primarily determined by the performance of the portfolio of investments held by that scheme. Regarding the share capital of the EIF, its authorised share capital could, for example, be structured in the following manner: 5.1.1 Founder Shares The Fund’s ordinary shares would be designated “Founder Shares”, carrying voting rights in the Fund and normally held by the investment manager/promoter or any other party in a fiduciary capacity. The holder of the Founder Shares would have no right to participate in the risks and rewards of the Fund but would, however, carry the right to vote at general meetings of the Fund. 5.1.2 Redeemable Preference Shares Redeemable preference shares issued to Investors in the Fund would be designated “Participation Shares”. The holders of these Participation Shares would have the right to participate in the risks and rewards of the Fund but would not, ordinarily, carry the right to vote at general meetings of the Fund, except where, for example, the business of the meeting includes the consideration of a resolution for reducing the capital or for the sale of the undertaking of the Fund or for altering the Fund’s objects. The holders of Participation Shares would not normally have the power to change the investment objective of the Fund. 5.2 Financial Statements/Net Asset Value of the EIF The financial statements of the Fund would be presented to state the assets and liabilities and income and expenditure of the Cells and would state the NAV in relation to the same. For illustrative purposes the following is an example of a balance sheet of a Cell could be presented: 4

Gibraltar: The Experienced Investor Fund

5. Documents and Agreements

continued

EXPERIENCED INVESTOR FUND BALANCE SHEET

TOTAL â&#x201A;Ź000 Current Assets 142,500

Financial assets at fair value through the income statement

270

Cash at bank Amounts receivable on subscriptions

Other assets

Total assets

142,882

Current Liabilities Financial liabilities at fair value through the income statement

Amounts payable on redemptions

Investment managers fees

600

Administration fees

100

Custody fees

Other liabilities

Total liabilities

805

Net assets attributable to holders of redeemable preference shares

142,077

Redeemable preference shares in issue

100,000

Net asset value per redeemable preference share

14.20

The Income Statement of the Fund would be produced based on the transactions undertaken at the cell level (in accordance with the balance sheet as shown above). An illustrative Income Statement has not been included in this Information Booklet.

Gibraltar: The Experienced Investor Fund

6. Secretary and Registered Office Fiduciary Management Limited, a company part of the Fiduciary Group of companies, would charge a set fee for the provision of secretary and registered office at a rate of approximately £2,000.00 per annum (for the year after formation). This fee would include incorporation costs, the annual registration fee payable to Companies House Gibraltar. Fiduciary Management Limited would charge additional fees on a time spent basis for any additional services provided to the Fund on a time spent basis at regular commercial rates.

7. Depositary (with broker/clearer) Paying Bank An EIF would typically employ one or more independent depositaries (e.g., a bank or a prime broker) to provide safekeeping of cash and securities that the Fund owns and to provide certain other services. The Depositary typically pays the Investment Manager/Adviser’s fees, allocates capital to the Investment Manager/Adviser’s capital account pursuant to performance-based compensation arrangements, and pays withdrawals of the Investment Manager/Adviser’s capital upon request by the Investment Manager/Adviser. Many high street names and Swiss Banks have a presence in Gibraltar to supply this service. It is not a requirement for the EIF’s Depositary to be based in Gibraltar, but this does make sense in relation to PCC structures.

Gibraltar: The Experienced Investor Fund

8. Investment Manager/Adviser To align the economic interests of the Investment Manager/Adviser and the Investors, the Investment Manager/Adviser typically can make a significant investment in the Fund. Also, a significant portion of the compensation of the Investment Manager/Adviser is typically based upon the performance of an EIF. As an example, in addition to a typical fixed management fee of 1 to 2% of the assets of the EIF, the Investment Manager/Adviser typically receives a performance fee or allocation of 20% or more of the EIF’s profits each year. Performance compensation calculations vary from Fund to Fund. For example, some Funds provide for payment or allocation of a percentage of any increase in NAV over the year, while other Funds also provide for a performance threshold or “hurdle rate” (a minimum rate of return before a performance fee or allocation is assessed), and/or a “high water” mark (which accounts for un-recouped prior losses). Using one or more EIFs to provide Investment Management services may be a viable strategy for an Investment Adviser to achieve its business objectives. Also in the case of PCC Umbrella Structure, separate managers of advisors may be appointed to each Cell or Sub-Fund. If the objective of the Investment Manager is to increase assets under management it is also possible to use a more limited private Fund vehicle to expand the Investment Adviser’s product line beyond traditional separate account management and thereby expand its client base fund size. Because of the pooling of client funds in an EIF, an Investment Adviser can, in effect, efficiently and economically manage client accounts that individually would be in amounts less than the Investment Adviser’s minimum account size. For such Investors, an EIF (like a Mutual Fund) is a means to obtain professional management (and, depending on the nature of the Fund, increased diversification) at an affordable price.

9. Investors Investors in an EIF can purchase ownership interests in the Fund, which entitle the Investors to a share of the Fund’s profits. It may be the case that the Investors may wish the right to vote at meetings of the EIF. In this instance, the Investors would hold ordinary shares, (as described above) as Founder Shares. Alternatively, they may only wish to participate in the risks and rewards of the scheme but would not carry the right to vote at meetings of the EIF, therefore ordinary shares could be issued for Investors removing voting rights. EIFs typically require a significant investment from each Investor, and restrict the transferability of an Investor’s interests in the EIF, while also providing for only limited rights to redeem those interests and withdraw capital. This of course is completely flexible and is determined and adjusted on a case by case basis.

Gibraltar: The Experienced Investor Fund

10. Auditors An EIF must have an annual audit of its financial statements performed by an Auditor registered under the Gibraltar Audit Registration Board. The audit should be conducted in accordance with internationally recognised audit and accounting standards. The financial statement period would be for 12 months unless it was the first financial statement or a change to the period. In this case the period would be no longer than 18 months. Most, if not all of the world’s leading Auditors have a presence in Gibraltar.

11. Fund Administration The administration of an EIF must be performed by a Gibraltar resident authorised collective investment scheme administrator. The typical services that a Fund Administrator would perform consist of the following key areas: •

Fund accounting;

•

Registrar, transfer agency and client services;

•

Financial accounting; and

•

Compliance.

Gibraltar: The Experienced Investor Fund

12. Fiduciary Fund Administration Limited Fiduciary Fund Administration Limited (“FFAL”) is a private company limited by shares that is registered in Gibraltar under registration number 98617. FFAL is licensed by the FSC to carry on business as a Collective Investment Scheme Administrator, licence number FSC00947B. Like Fiduciary Management Limited, FFAL is a member of the Fiduciary Group of companies. The Fiduciary Group provides, amongst other services, trust structures, family office administration, wealth management, fund administration, real estate investment, tax advisory and succession planning advice. The Fiduciary Group is affiliated to ISOLAS, Gibraltar’s oldest law firm. At the heart of both businesses are the robust relationships that have been built with their clients, often over successive generations. Fiduciary Group’s head office is situated in Gibraltar along with offices in the UK and Switzerland. Many of the Group’s clients are international; so much of their work involves cross-border issues and multi-jurisdiction transactions. The relationship between FFAL and ISOLAS allows clients to have a singular point of contact for Fund services and solutions being offered from Gibraltar. Fiduciary and ISOLAS are located in the same building and at a moment’s notice they are able to bring together the legal team, along with compliance, company administration, fund administration representatives, as well as tax advisors and accountants that may be involved with the Fund. This is especially useful and important during the set up of a new Fund when input from all parties is required. FFAL’s administration expertise was strengthened during September 2008 when Stuart Stark joined the Group as Fund Accounts Manager. Stuart has over 15 years experience within the fund administration sector. Stuart’s previous employment positions include 12 years working as Administration Services Team Leader with Gartmore Fund Managers International Limited, a Jersey based subsidiary of the Gartmore Group. At Gartmore, Stuart’s main task was to manage all back office and support operations for the world’s first umbrella fund, Gartmore Capital Strategy Fund Limited, first established in 1981. Stuart has also worked for Maples Finance Jersey Limited as Administration Manager assisting in developing the fund business and working within a project team to develop an Oracle based Transfer Agency platform, and more recently Mourant International Finance Administration as Investor Services Manager providing services to large hedge fund clients based in London.

Gibraltar: The Experienced Investor Fund

13. Fiduciary Fund Administration Limited’s Services 13.1 Fund Accounting •

Fund accounting services on a multi-currency and multi-cell format (as and when required) and to maintain principal books and records and calculate the NAVs for Funds under administration.

•

Calculation and arrangement for the disbursement of the management fees, performance fees, administration fees, directors’ fees and other such fees, costs and expenses in accordance with the Funds respective offering document and other such agreements as entered into by the respective Funds.

•

Calculation and publishing the NAV as directed by the memorandum and articles of association of the Fund, offering documents, or as otherwise directed by the Fund Directors, Investment Manager or Agents. Pricing information would be determined by the Fund Administrator after receiving from the Fund or its Investment Manager the pricing procedure instructions and necessary data. After preparation, the NAV, on a monthly basis, or otherwise as instructed, would be communicated to the Investors, Directors, Investment Manager and other such persons as instructed and agreed.

13.2 Registrar, transfer agency and client services •

Accounting for the receipt and arrangement for the distribution of monies, and processing and recording in the Fund’s share register, details of fund subscriptions, exchanges/transfers and redemptions in connection with the Fund under administration as and when received, and communicate the same with Fund’s Investors’ as and when required.

•

Maintaining a register of holders of shares in funds under administration and subject to all applicable laws and any necessary consents or approvals, hold the Register open for inspection at the office of the Fund Administrator during usual business hours.

•

Establishing banking and/or custodian relations for the Fund under administration and accounting for the receipt of moneys invested and moneys which may be returned to shareholders redeeming shares.

13.3 Financial Accounting •

Arranging for the preparation of the annual financial statements of the Fund under administration using International Financial Reporting Standards, or any other such reporting standards that the Fund may require.

•

Appointing, corresponding and dealing with, on a day-to-day basis, the auditors of the Fund under administration.

13.4 Compliance •

Reviewing, monitoring and ensuring continued compliance with applicable legislation for the Fund under administration and ensuring that only fit and proper persons, corporations and other legal entities are permitted to form, maintain and/or invest in a Fund under administration in order to protect the integrity of the Fund under administration and Gibraltar’s Fund sector.

•

Reviewing money wired in or out of the Fund’s bank accounts as well as related applications and taking the necessary actions to satisfy the Fund’s obligations relating to the Gibraltar’s anti-money laundering legal requirements and/or other money laundering requirements for the Fund in question.

Gibraltar: The Experienced Investor Fund

14. Legal Counsel - ISOLAS A leading international law firm, and the oldest law firm in Gibraltar, ISOLAS offer their clients solid professional advice based on experience and expertise. ISOLAS offer their clients the benefit of commitment, continuity and the close personal interest expected of a long-established law firm and are consistently ranked as one of the leading law firms in the jurisdiction by major international legal directories.

14.1 People Partner Profile - Albert Isola Albert has extensive experience in all aspects of the establishment and management of Funds. Albert has regularly made presentations at many Gibraltar Government Wealth Management and Fund seminars on the establishment and operation of Experienced Investor Funds and Gibraltar Investment Management Companies. Albert is well regarded for his work with ultra high net worth individuals working with them in their businesses internationally, advising in respect of a wide variety of investment strategies and structures, tailored to meet the needs of his clients. Memberships •

Honourable Society of the Inner Temple

•

The Gibraltar Bar Council

•

The International Bar Association

•

Member of the Gibraltar Parliament (1996-2000)

•

Reform Club, Sotogrande

Background 1992 Partner, Isola & Isola 1985 Called to the Bar of England and Wales and the Gibraltar Bar Contact email: albert.isola@isolas.gi

Gibraltar: The Experienced Investor Fund

14. Legal Counsel - ISOLAS

continued

Associate Profile - Joey Garcia Joey is part of the Commercial and Funds team at ISOLAS. He was called to the Bar in 2004 and represents the fifth generation of ISOLAS lawyers to come through the family firm. Joey is a junior member of the Society of Trust and Estate Practitioners, and also sits on the Gibraltar Bar Council Committee and is a member of the Gibraltar Funds Industry Association which deals with developments in the area of Gibraltar Funds. Joey has advised international banks on share ownership schemes and custodian arrangements and private clients on the structuring of Gibraltar domiciled Funds and corporate structures. Recently Joey has been involved in the structuring and launching of the latest members of the Fiduciary Group: Fiduciary Wealth Management Limited and Fiduciary Fund Administration Limited. He is also currently enrolled with the Chartered Alternative Investment Analyst Association. Joey acts as legal advisor to a number of Funds and has been instructed in the set up and restructuring of multiple EIF’s in Gibraltar developing various Fund projects from a concept stage to launch. He has also introduced an online client facing interface for the management of Fund related legal issues which allows clients to keep on top of the development of their projects and set specific timelines and deadlines for completion. Joey has been involved with the Gibraltar Finance Centre as a moderator on the Gibraltar Funds Seminar Program in Munich, and spoken at the Finance Centre Seminar on Funds in London. Joey has also published articles with various publications including the Hedge Fund Magazine, the International Fund Investment magazine, the International Financial Centres publication (IFC, 2008), the Investors Services Journal and ‘The Lawyer’s’ yearly offshore special reports. Memberships •

Honourable Society of the Inner Temple

•

Gibraltar Association of Stockbrokers and Investment Managers

•

Gibraltar Funds Industry Association

•

The Gibraltar Bar Council (Committee member)

•

The Society of Trustee and Estate Practitioners

•

Chartered Alternative Investment Analyst Association

Contact email: joey.garcia@isolas.gi

Gibraltar: The Experienced Investor Fund

15. Directors It is a requirement imposed by the EIF Regulations that every EIF must at least have at least two EIF licensed directors resident in Gibraltar. FFAL can provide Director services on request.

16. Fees for the establishment of an Experienced Investor Fund Our proposal for the establishment of an EIF is detailed as follows:

•

Assisting in set up and launch of the Fund and corporate structure;

•

Drafting, filing and certifying memorandum and articles of association of the Fund;

•

Drafting of Fund’s offering memorandum (client input would be required in relation to the establishing of investment objectives, strategy, risks and restrictions);

•

Appointing the Fund Administrator;

•

Drafting of Directorship Agreement(s);

•

Appointing the Fund’s Directors (two directors are required to be licensed by the FSC);

•

Appointing the Auditor;

•

Reviewing all documentation from a Gibraltar legislative standpoint;

•

Establishing the Fund as an EIF.

Gibraltar: The Experienced Investor Fund

16. Fees for the establishment of an Experienced Investor Fund continued Our fee proposal for the establishment of a PCC for the purpose of setting up an EIF, including the services as detailed above, is as follows: GBP(£) Legal Counsel

15,000 - 35,000

Administrator’s fee

1,000

Maximum

Corporate Secretary fee

2,000

Including provision of secretary and registered office for the first year of operation.

FSC EIF Regulatory fee

2,500

Fixed Fee, with a £100 P.A. renewal fee

Fees are calculated on an individual case by case basis and the structure of the EIF along with the amount of time required in drafting the EIF’s offering and constitutional documents will determine the overall legal fees. In order to assist us in providing you with a tailored fee estimate, please complete our Fund Questionaire which can be requested via email: joey.garcia@isolas.gi

Gibraltar: The Experienced Investor Fund

17. Administration Fees The fee for the provision of administration of the EIF will be based on a basis points system subject to an annual minimum fee. This fee will depend on a number of factors mainly on the regularity of the calculation of the NAV by the Fund Administrator. FFAL will provide you with a Fund Questionnaire Form that will allow them to determine an accurate proposal. As an outline estimate, the Fund Administration fee will be between 10 and 30 basis points per annum based on the NAV of the Fund (or the Cells of the Fund) under administration. The Fund Administration fee will also be subject to a minimum fee of approximately £12,000 per annum.

18. Other Fees 18.1 Directors’ Fees As mentioned above, the EIF requires two EIF licensed directors that has been licensed by FSC for such a purpose. Individuals normally charge an annual fee for the provision of directorships for this service, the cost for each Director would normally be GBP £5,000. This is subject to discussion with the relevant Director, and dependent on the Directors role.

18.2 Audit Fees Gibraltar has a number of reputable audit firms with international profiles that could provide audit services for an established Fund. In accordance with the EIF Regulations, an EIF is required to be audited by an Auditor registered in Gibraltar. As a general rule Gibraltar Auditors charge in the region of GBP £5,000 per company being audited (i.e. the legal company). This fee can be negotiated, and is included by way of example of the fees that can be charged for such services. We would not expect fees to exceed the stated amount.

18.3 EIF Renewal Fee (FSC) There is a fixed renewal fee of GBP £100 per annum, payable to the FSC.

18.4 ISIN/WKN Application (per class/cell) FFAL can apply for an ISIN/WKN code for each class or Fund cell for this we would charge GBP £500 fixed fee on successful completion of the application.

18.5 Bloomberg Listing Bloomberg is the leading global provider of data, news and analytics. Bloomberg listing and media services provide real-time and archived financial and market data, pricing, trading and news for financial and legal professionals and individuals around the world. Fiduciary Fund Administration Limited can register the Fund on Bloomberg. This would involve providing information to Bloomberg initial regarding the Fund (structure, type, etc.) and then publishing the NAV once calculated using a unique Bloomberg ticker code. This service would be free.

Gibraltar: The Experienced Investor Fund

19. Contact Please feel free to contact us with any queries in relation to this Information Booklet, or in relation to any other queries you may have. Queries should be addressed by email to:

Joey Garcia

Stuart Stark

ISOLAS

Fiduciary Fund Administration Limited

Tel: +350 200 78363

Tel: +350 200 76651

Fax: +350 200 78990

Fax: +350 200 42510

Email: joey.garcia@isolas.gi

Email: stuart.stark@fiduciarygroup.com

www.gibraltarlawyers.com

www.fiduciarygroup.com

Important! This Information Booklet is only intended as a general statement and no action should be taken in reliance on it without specific legal advice. ÂŠIsolas, 2009

Gibraltar: The Experienced Investor Fund

Portland House Glacis Road PO Box 475 Gibraltar Tel +350 200 78363 Fax+350 200 78990 www.gibraltarlawyers.com