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New Exemptions for Fund Managers

Who is this briefing targeted at?

This briefing is primarily targeted at start-up fund managers, family offices and multi-family offices. This briefing may also be relevant to “onshore” fund managers who are looking to establish parallel operations outside of the European Union. This briefing is focussed on the structuring of specialist funds which are only suitable for specialist investors and which require a minimum initial investment of at least US$100,000.

Acting as manager, asset manager or investment advisor to a fund is a typically a regulated activity in the Isle of Man and is licensed by the Isle of Man Financial Services Authority (IOMFSA). However, Isle of Man law now allows for the establishment of a person to act as exempt manager, exempt asset manager and/or exempt investment adviser without having to be regulated by the IOMFSA.

Exemption for Managers, Asset Managers and Investment Advisers

An Isle of Man company can be established to act as exempt manager, exempt asset manager or exempt investment adviser to one or more Isle of Man specialist funds. Management fees chargeable by exempt persons in respect of services to specialist funds are exempt from value added tax in the Isle of Man.

An Isle of Man administrator will need to be appointed to provide services to the exempt person and the specialist fund. The administrator will need to be regulated by the IOMFSA and will need to hold Class 3(2) and Class 3(9) permissions, together with relevant Class 4 permissions. The administrator will be responsible for the following matters, among other things:

• acting as administrator to the specialist fund;
• notifying the IOMFSA at least 20 business days prior to the commencement of services to the exempt person and confirming, as part of that notification, that it has considered and determined adequate and appropriate the exempt person’s systems and controls;
• providing administration services to the exempt person, including maintenance of the exempt person’s records, including in relation to their compliance with anti-money laundering and countering the financing of terrorism legislation; and
• notifying the IOMFSA of any matter relating to the exempt person which may have a material impact on the specialist fund.
• A director of the administrator (who must be an individual) must also be a director of the exempt person.

Appleby (Isle of Man) LLC, a Member Firm of the Association, have kindly allowed us to link in their briefing sheet on the Exempt Manager.

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13th February, 2018

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