St. Lucia offers a very flexible and minimally registered regime for those looking to set up a private mutual fund. Compared to other jurisdictions, the fees and regulations are very reasonable and allow for up to 100 investors compared to the typical 50 in most other jurisdictions, such as BVI and St. Vincent. Similarly, the minimal investment amount is only USD 50,000 rather than the customary USD 100,000.
What is an Offshore Private Mutual Fund?
The International Mutual Funds Act, No. 44 of 1999, herein the 'Act', defines a Mutual Fund and allows for mutual funds to be established as a:
- Unit Trust
- Company; or
Under the International Mutual Funds (Amendment) Act, 2002, a Private Mutual Fund is defined to be a Mutual Fund where:
- The equity interests are held by not more that 100 persons
- The minimum investment in the Fund is USD 50,000 per person; and
- The only persons qualified to participate:
- Have experience in the type of investment in which the fund is interested; or
- Have signed a declaration that they, whether individually or jointly with his or her spouse, have a minimum net worth in excess of USD 1,000,000; or
- Are members of an investment club; or
- Are international business companies
By contrast, an International Mutual Fund must hold a valid licence and have a fund administrator based in St. Lucia (typically more than 100 members, each with more than USD 50,000 investment, are required).
Requirements for Registration
The Act does not prescribe any limits on the investment policy of a St. Lucia Mutual Fund, nor does it dictate portfolio requirements.
A Private Mutual Fund is not required to have any service providers (including directors of corporate entities) in St. Lucia, other than the registered office and registered agent in the case of an International Business Company (IBC); similarly, an International Trust only requires a registered Trustee. In addition, the investment manager, administrator, custodian/prime broker, investment adviser and all other service providers may be located in any jurisdiction.
Unlike other Mutual Funds, a Private Mutual Fund does not require a license to carry on mutual fund business from St. Lucia, however, it does need to be registered with the International Financial Services.
A Private Mutual Fund is allowed to carry on its business in or from Saint Lucia for a period not exceeding 21 days without being registered. Thus, registration can be deferred until the Fund is established and operating.
A Private Mutual Fund may only be registered if it provides proof satisfactory to the Minister that:
- It is a Private Fund as defined by the Act and meets the criteria above; and
- It is lawfully constituted under the law in force in St. Lucia.
The requirement to be lawfully constituted under the laws of St. Lucia can be met by setting up an IBC under the International Business Companies Act or establishing an International Trust under the International Trusts Act.
The International Business Companies Act prescribes a very efficient protocol for IBC's (and Trusts), which are both tax-exempt entities and can be incorporated on the same day that the constitutional documents (the Memorandum and Articles of Association) are filed with the Registrar of Companies.
Dual Registration Possible
Where a Private Mutual Fund is registered in jurisdiction other than St. Lucia, it may apply for registration if it satisfies the following requirements:
- It is a Private Fund within the meaning of the Act;
- It is lawfully constituted under the law of another jurisdiction; and
- A written description of the nature and scope of its business are submitted to the Minister.