The Seychelles Mutual Fund and Hedge Fund Act 2008 is a modern and comprehensive piece of legislation that replaced the Mutual Fund Act 1997. The new Act brought about significant changes. Possibly the most significant change lies in the administration of the mutual fund which can now be performed from any "recognized jurisdiction".

The Act defines a mutual fund as a company, unit trust or partnership that collects and pools funds for collective investment purposes including hedge fund purposes or with the aim of spreading investment risks, and issues equity interests enabling investors in the mutual fund to receive or have the right to receive a portion of profits or gains derived from the investments and includes (i) an umbrella fund whose equity interests are split or segregated into different funds or sub funds and (ii) a hedge fund.

Mutual Fund Administration

The Seychelles Mutual and Hedge Fund Act 2008 prescribes for the mutual fund administration to be conducted from

a) within Seychelles by a licensed fund administrator or

b) from outside of Seychelles by an approved foreign administrator (a licensed fund administrator from another recognized jurisdiction)

Under the Act, "recognized jurisdictions" currently include Austria, Australia, Belgium, Bahamas, Bahrain, Bermuda, British Virgin Islands, Canada, Cayman Islands, Cyprus, Denmark, France, Germany, Gibraltar, Guernsey, Holland, Hong Kong, Isle of Man, Ireland, Japan, Jersey, Luxembourg, Malaysia (including Labuan), Mauritius, New Zealand, Singapore, South Africa, Switzerland, United Arab Emirates, United Kingdom and United States of America.

Type of Seychelles Mutual Funds and Hedge Funds

The Seychelles Mutual Fund and Hedge Fund Act prescribes four different types of funds:

Professional Funds

A Professional Fund means a mutual fund; the equity interests which can only be acquired by professional investors and in respect of which the initial minimum investment per investor is not less than $100,000 or its equivalent in any other convertible currency.

A Professional Investor means a person -

a) whose ordinary business or employment involves, whether for his own account or the accounts of others, the acquisition or disposal of property of the same kind or substantially the same kind as the property of the relevant fund;

b) who has a net worth, whether individually or jointly with his spouse, exceeding $1,000,000 or its equivalent in any other convertible currency, and has signed a declaration to such effect and consenting to be treated as a professional investor;

c) a bank licensed under the Financial Institutions Act, 2004 or under the corresponding law of a recognized jurisdiction;

d) a mutual fund licensed under this Act or under the corresponding law of a recognized jurisdiction;

e) an insurance company licensed in Seychelles or under the corresponding law of a recognized jurisdiction; or

f) a securities dealer or stock broker licensed in Seychelles or under the corresponding law of a recognized jurisdiction.

Private Funds

"Private Fund" means a mutual fund; a) the constitutional documents of which specify that it will have no more than 50 investors or b) the constitutional documents of which specify that an invitation to the public to subscribe for or purchase equity interests in the mutual fund is prohibited.

Public Funds

A Public Mutual Fund is defined as any mutual fund which is not a private fund or a professional fund (namely funds offered to the general public)

Exempt Foreign Funds

Exempt Foreign Funds are those holding a current license or other authorisation to operate as a mutual fund issued under the laws of a recognised jurisdiction. The Act allows foreign funds to receive an exemption from the licensing authority and operate from within Seychelles without a Seychelles Fund license if the fund is: a) administered by a person holding a Seychelles fund administrator's license b) incorporated or otherwise established and domiciled outside Seychelles c) listed on a recognized stock exchange or has initial minimum investments of $100,000 or its equivalent per investor.

Mutual and Hedge Fund Vehicles

Another distinct advantage of mutual and hedge funds licensed in Seychelles are the variety of options for fund vehicles:

• Seychelles International Business Companies (IBC) - tax exempt
• Seychelles Special License Companies (CSL) - has access to the growing Seychelles DTA tax treaty network including the excellent Seychelles/China DTA. - 1.5% on CSL income
• Seychelles International Limited Partnerships (LP) - tax exempt
• Seychelles International Trusts (unit trusts) - tax exempt
• Companies, unit trusts or limited partnerships constituted in a recognized jurisdiction - tax exempt

Other Fund Features

Taxes - In addition to enjoying favorable tax status via the various fund vehicle options, Seychelles licensed funds are fully exempt from business tax on the income of a fund (except if using a CSL to access treaty benefits in which case the income tax would be 1.5%) as well as from withholding tax (dividends, interest, royalties, capital gains) and stamp duty.

Auditing - auditing of accounts of Seychelles funds and fund administrators may be audited by approved overseas auditors including those qualified and belonging to recognised bodies in Australia, Canada, Hong Kong, Singapore, South Africa, UK and USA.

Efficient Application and Approval - recognising the short window of opportunity often presented for hedge funds, the licensing authority desires to speed the approval process for those deemed "fit and proper" and with properly completed applications; especially for those applying for a private or professional fund license.

Time Zone - Seychelles being located at GMT +4 falls within overlapping business hours from the Europe to Asia.

Costs - Seychelles mutual funds can be established and administered for less than most competing jurisdictions.

Value - factoring all of the above, Seychelles offers the best value of any country/jurisdiction in the world for the establishment and administration of a mutual fund or hedge fund.

Contact us today for more information or complete the Fund Questionnaire to receive a quotation.