Seychelles Private Interest Foundation

Licensed Fund Choices in the Seychelles

There are three kinds of Licensed Fund that one can set up in Seychelles, a Public Fund, a Professional Fund and a Private Fund. The essential differences and distinctions are as follows:

1. A Public Fund is one which is designed to be mass marketed. As it is aimed at the general public a very detailed Offering document must be given to and approved by the Authority before a license is granted. (The authority needs to be sure that all plans and risks of the fund are disclosed upfront to the investors).
2. A Professional Fund is one aimed at qualified/sophisticated Investors. Minimum investment is $100,000 and only qualified investors can invest (ie in the case of an individual, the investor must have a net worth of at least one million USD). Unlike a Public Fund one does not need to file a finely detailed Offering document prior to receiving License approval.
3. A Private Fund is one aimed at the Professional Adviser looking to gather together a consortium of investors from his/her client database. It is limited to 50 investors only. No minimum or maximum investment is required. Again, unlike a Public Fund one does not need to file a finely detailed Offering document prior to receiving License approval.
Private Fund
In my view a Private Fund is by far and away the most suitable kind of Fund structure for what you and Nik have in mind as regards this venture (as outlined). The limitations are as follows:

1. Limited to no more than 50 investors in (though there's no limit on replication of the licensed fund model itself)
2. The constitution documents of which must specify that an invitation to the public to subscribe for shares is prohibited.
3. Not permitted to be able to be registered as a licensed managed investment scheme in "onshore jurisdictions", such as would otherwise be possible with a Lisenced Public Fund

Private versus Public Offerings

A lawyer colleague also recently raised the question of what is "promotion" from an onshore eg UK legal perspective. Certainly if the client was to write to the adviser and ask" what Properties or Funds do you know of at the moment worth investing in" - and the adviser were to respond suggesting an investment in this (proposed) Property Fund then that is unlikely to amount to a "Public Offering" such as might offend the usual onshore Managed Investment Promotion laws.

If, on the other hand, the adviser were to write to a bunch of his clients to tell them about "this wonderful Fund opportunity" that he has just found about, then we are probably getting into grey territory. Thus, in our view, to protect the Promoters (and the Investors/the Fund against an attempted freezing by onshore regulators) it would be highly advisable in this instance for each investor to enter via an IBC. With one Offshore Company doing business with another Offshore company it would be very difficult for the onshore regulators to claim jurisdiction in the pursuit of a freezing application.

The Main Benefits of a Licensed Managed fund Structure in the Seychelles

• Seychelles is a well regulated and respected jurisdiction (OECD, FATF and IMF compliant)
• The progress and growth of the jurisdiction has been very steady over the past 14 years (averaging 10% + growth every year)
• The laws in Seychelles are extensively researched in that comparable jurisdictions laws are considered at length before new laws (creating new or improved products/services) even hit the drawing board
• Seychelles is very politically stable (no threats of political riots etc as the standard of living is very high)

The Seychelles as an Offshore Jurisdiction is very favourable in that:

• Seychelles has a very stable, democratic AND tolerant society
• The country pays its own way and is not dependent on others for financial assistance
• Seychelles is an independent country and not beholden to any super-power such as US, UK, Aus EU etc
• Seychelles Financial Services Sector is extremely efficient, ethical and competent

The Seychelles Mutual Fund Act itself is very favourable in that:

• Investors are well protected (eg the Authority can take action to protect investors' interests as required)
• It's an easy Act to understand
• Seychelles is a well regulated well respected jurisdiction
• The new Act is an enabling law- it is designed to ATTRACT new Funds, not to tighten the regulation of existing funds
• A lot depends on negotiation with the Regulator - there's not many places where your Seychelles agent can literally knock on the office door of the Head of the Mutual Fund Regulator and ask for a personal meeting
• Seychelles is based in a very favorable timezone at +4GMT which gives Seychelles overlapping contact with the business days of Australia, Asia, UK and Europe
• Privacy is guaranteed by law - the Mutual Fund Authority in Seychelles is prohibited by law from disclosing anything to do with its activities to 3rd parties - see s.28(1) of the Legislation attached.
• Seychelles has excellent facilities in terms of Service Providers, Communications, Hotels, Service Businesses etc
• Much depends on the quality of the application, the applicants and the professional reputation of the local service provider representing the applicant (in your case the application will be presented by the ONLY International Lawyer in Seychelles, a long serving and well regarded Professional, which can only be to your benefit)
• The Regulator has true flexibility in determining whether to grant a license or not to a particular applicant, meaning that each application will be treated individually on its own particular merits.

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