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To FOREX (FX) or not to FX, that is the question! (Part 4)

April 22, 2014 - by Nida U.

(Part IV) Setting up Mutual Fund

We have arrived to my last post, and here I will explain to you how to set up Mutual Fund in Belize. Mutual Fund is collective investment vehicle, it is like, I said before, your option three, if you are planning to pool funds from investors into one account and manage this account accordingly. If IBC was not the option for you, and neither was brokerage license you probably are looking to set up Mutual Fund.

Belize has a comprehensive Mutual Funds Act, adopted in 2000, which regulates offshore mutual fund registrations. To start with, You should download and peruse a full text of this legislation from our Downloads section: http://www.incorporatebelize.com/belize-downloads.php

All the success of the licensing under the Mutual Funds Act mostly depends on the character, professional experience and business background of the applicant, which is YOU. This is why you need to be familiar with legislation, you need to know what you want and if this is the vehicle you are looking to set up!

Mutual fund and Investment Managers are basically two separate business companies (IBCs), and we, licensed and registered agent, provide you with our agent services, i.e., minimum local presence or business address and government fees for your IBCs, and fees for your Fund and Manager licenses. We will guide you through accordingly and help you with all application forms and needed preparation as much as we can, but I have to emphasize the importance of your own input, because this is what the IFSC will be looking at!

Another option is where we offer our Fund administrator services, this is in case you want to have the Fund but don’t have anyone experienced enough to administer it! Administration fees typically range between 0.12% and 0.25% of net assets, subject to a minimum annual fee of $18’000. The actual rate of the administration fee depends on several factors, such as the type, diversity and complexity of the fund and its assets, complexity and frequency of the required calculations and reporting, number of shareholders, share classes and series, sources involved at value calculations, and similar factors.

To set up private or professional fund, costs can be anywhere between US $ 4000 to US $ 14000 or more, depending on complexity. To set up a Public fund costs quiet a bit higher. To License and register Investment Manager anywhere between US $ 3500 to US $ 5500 even more, depending on complexity. So you are looking at between US $ 8000 to US $ 20,000.

A number of tasks will have to be completed when setting up a Mutual Fund. Financial forecasts and substantial amount of information will be required from each potential applicant. The below must be followed when setting up a Mutual Fund in an international financial services jurisdiction:

  • Preparation of the investment plan
  • Deciding on the Structure of the mutual fund
  • Drafting of the prospectus
  • Drafting of the mutual fund charter
  • Drafting of agreements with professionals
  • Appointment of bankers, custodian and auditors
  • Formation of fund equity (shares)
  • Regulatory filings and approvals, and
  • Distribution and marketing of the prospectus

This is a fairly long, complicated and costly process which heavily depends on applicant - yourself.

After the fund is lunched we don`t get involved in your business. Our role is mainly providing your Fund minimum local presence. I suggest you have look at the Mutual Funds Act (2000), Mutual Funds Regulations (2000) and Mutual Funds Policy Guidelines (2001) on the IFSC website:
http://www.ifsc.gov.bz/legislation/

You can read more about Mutual Funds here:
http://www.incorporatebelize.com/offshore-mutual-funds.php

Thank you for reading my post! And you are welcome to leave comments, feedback, suggestions for other posts or contact me for more information.

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