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
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.