March 26th, 2019
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HOW CAN A FUND BE STRUCTURED?

There are many different forms and setups of companies, “fund” defines the use of such a setup, not the corporate form.

The corporate form for setting up a fund it can be:

A company, (governed by directors), with investors, shareholders, who purchase shares.

A company, SPC (governed by an investment managing company holding the managing share), with investors, (shareholders) who purchase shares of the SP segregated portfolio.

A partnership, (governed by a general partner), with investors, (partners), who acquire interests

A trust, (governed by a trustee), with investors, (beneficiaries), who acquire units.

The choice is determined by you based on the wishes of your investors.

However companies are the most common vehicle for investment funds.

Mutual funds can be either:
open / closed ended
master feeders
multi-series.

An open ended structure issues shares, (sells to investors), and redeems shares, (buys back shares from investors), at the direction of a shareholder.

A closed ended structure is an investment scheme that does not give investors the right to redeem their shares.

New shares are rarely issued, (capital calls or special subscription periods may be allowed). This structure is suitable for illiquid securities or long term strategies such as equities.

Master feeder structures are very common for funds that have a domestic “feeder”, an offshore “feeder” and an offshore “master”.

Typically the master fund holds the portfolio of funds and each feeder invests into the master.

Multi-series funds can be constructed as either an umbrella fund or a segregated portfolio company structure (SPCs).

Both allow the opportunity to create multi-portfolio structures with segregation of assets and liabilities.

In a SPC, however, there are no cross liabilities between the segregated portfolios.

A multi-series umbrella fund offers no statutory protection for assets of one series from creditors of a different series.

Before any incorporation of a fund, it is important to asses need of the investors and selects the right level of the regulatory frameworks.

Some funds are highly regulated and some funds are not regulated.
Some can Invest in Alternative and others cannot. While some funds have no risk spreading rule some or others may be limited.
Not every investor can invest in one or another vehicle. Therefore it is important to choose the one which will be adapted to the type of investors.

Once such choices are made, the promoter will select the right form of entity to incorporate his fund.

Some funds can be formed in contractual form and consequently as an Investment Fund represented by a Managing Company like segregated portfolios company (SPC) or in the form of a company, namely as an Investment Company whose capital is variable.

Some Investment Fund can be incorporated as a limited partnership (LP), depending on their assets under management the Manager does not need to be regulated.

All of these choices taken at incorporation will dictate how the funds or its manager will be able to distribute it and market it.

There are certain things that must be done and decisions that must be made before either the starts working on any of the above or the Fund can be set up.

Appointment of various service providers including prime broker, payment bank, administrator, custodian, if required, auditor, and attorney.

Of these, the first that you should select is the Adviser.

You need to select an Adviser like Gemana who is familiar with the fund industry and, as with all service providers, getting recommendations from people in the industry and references is extremely important. Draft documentation, which MUST be complete and absolutely accurate and must cover all possible situations.

OUR INCORPORATION SERVICE

With decades of experience and global expertise, Gemana may assist third parties in their duties and in negotiation between third parties (contracts, transactions, banks, etc).

MANAGEMENT

Investment Managers may already have an investment company formed in another jurisdiction, if so, this can be used as the Management Company, and it is not a requirement to set up up management regulated company by as per fund structure any company can be use.

If there is no existing management company (regulated or not), bnased in UAE and licensed as Corporate Services providing “CSP”, Gemana can help the Investment Managers who want to establish their Management Company (Regulated or not) in: the Emirates (DIFC or ABGM), Cayman, Switzerland, Luxembourg or Malta. We offer a full range solutions based on our expertise with the government authority for licensing.

FUND FORMATION

Advisory upon Incorporation

Drafting or Review of the fund documentation

Coordination between the service providers

Assistance and guidance with the initial fund formation

Assistance and guidance on private equity fund closings

Review of offering documents and other constitutional documentations.

Access to a wide network of contacts (Auditors, Lawyers, Tax Advisers, Banks etc).

INVESTOR SERVICES

Provision of share registrar, fund sponsor, transfer agent, paying agent and settlement functions.

Maintenance of the register of investors and related documents.

Maintenance of capital account balances for partnerships.

Processing of all subscriptions, redemptions, transfers, switches and capital calls.

Know-Your-Customer and Anti-Money-Laundering identification procedures.

Assistance with the investment and payment process.

Investor communication.

Investment Manager reporting.

Tax Reporting Services.

Provision of share registrar, fund sponsor, transfer agent, paying agent and settlement functions.

Maintenance of the register of investors and related documents.

Maintenance of capital account balances for partnerships.

Processing of all subscriptions, redemptions, transfers, switches and capital calls.

Know-Your-Customer and Anti-Money-Laundering identification procedures.

Assistance with the investment and payment process.

Investor communication.

Investment Manager reporting.

Tax Reporting Services.

SECRETARIAL

Performing Company incorporation.

Meeting facilitation, to include preparation and distribution of Board packs and attending Board and Shareholder meetings in person or via telephone.

Maintaining compliance with the registrations and filing requirements of the Fund/Company within its domicile.

Submission of applications to relevant authorities for confirmations relating to taxations, consents etc.

Arrange the execution of agreements and documents in consultation with the client and/or lawyers.

Arrangement of the execution of agreements and documents in consultation with the client and/or lawyers, plus execution of secretarial certificates and other documents as Company Secretary.

Investor communication.

INDEPENDENT DIRECTOR

Since these scandals have erupted, governments have introduced reforms for publicly held companies and stock exchanges have introduced new rules and regulations and corporate governance guidelines.

The basic function of directors is to oversee the affairs and activities of the company. The company is a legal person – it has shareholders who legally own the enterprise.

It has an elected committee (known as the board of directors) who exercise delegated authority (as agents of the shareholders) to manage the enterprise in accordance with formal rules, specifically the memorandum and articles of association (or constitution) but also the provisions of company and other laws in the jurisdiction in which it is established).

With decades of funds directorship and experience in global fund ruling, we can provide an independent director services to help the board in fulfill the law obligations, and help the board to run effectively the fund.

OUR RUNNING SERVICE

An experienced team to oversee and manage your company in UAE, record and report on financial transactions, interface and solve the daily financial needs of the company according to the management inputs.

FUND ACCOUNTING

Fund Accounting

NAV Calculation

FATCA / CRS for Funds

Reporting

General Partner accounting services

Setup and administration of a Management Company

AML / KYC procedure

Assistance in audit procedures

Investor Services

CRS and COMPLICANCE

CRS is designed to support and give effect to the Automatic Exchange of Information (AEOI) which is a globally coordinated standard inhibiting offshore tax avoidance and evasion; it does however mean that there is a major increase in reporting requirements for mangers.

We are licensed in Tax Consulting and with decades of tax experience and global expertise, we can answer your questions, explain your obligations, and help you to plan effectively in the CRS, FATCA reporting.

Applying new account opening procedures

Performing detailed due diligence reviews to determine single and multiple tax residencies

Contacting pre-existing investors where there is insufficient data to determine tax residency

Reporting on all accounts held by a reportable individual or entity (plus accounts that are classified as undocumented)

© 2018 Gemana Services & Management FZE
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