Funds

The Financial Supervision Act 1988 ("FSA”), sets out the statutory framework for the regulation of Collective Investment Schemes (“schemes” or “funds”), more commonly known as unit trusts, mutual funds or open-ended investment companies. The FSA sets out 3 classes of scheme:-

• Authorised Schemes under Section 3 of the FSA
• International Schemes under Section 11 of the FSA
• Recognised Schemes under Sections 12 and 13 of the FSA

Authorised Schemes

Any scheme established in the Island which is promoted to the general public in the Island (or the UK by virtue of the Island's designated territory status) must be authorised by the Commission under Section 3 of the FSA. Authorised Schemes are subject to detailed regulation concerning their structure and operation.

International Schemes

Any scheme established in or operated from the Isle of Man which is not an Authorised Scheme is an International Scheme under Section 11 of the FSA. International Schemes may not be promoted to the general public in the Isle of Man.

• Full International Schemes - The Commission does not prescribe the types of schemes which can be full international schemes. The Commission aims to provide a flexible regulatory framework in which new innovative products which meet the needs of the market place operators can be developed. Full international schemes are not subject to any direct approval or authorisation process.
  The manager and custodian of a full international scheme are Authorised Persons for the purposes of the FSA. In granting permission for the manager to manage the scheme, the Commission reviews the constitutional documents of the scheme. The Commission does not, and is not required to, comment on the investment objectives or strategy of the scheme or its suitability for any investor or any class of investor. Investors in such funds are not protected by any statutory compensation arrangements in the event of the fund’s failure.

• Specialist Funds - The Specialist Fund (SF) is a sub-category of International scheme which is available only to specialist investors who are generally institutional investors and high net worth individuals. The minimum investment in a SF is $100,000.
  A SF is not subject to approval in the Isle of Man and investors in such funds are not protected by any statutory compensation arrangements in the event of the fund’s failure. The Commission does not vouch for the financial soundness of the fund or for the correctness of any statements made or opinions expressed with regard to it.

• Qualifying Funds - The Qualifying Fund (QF) is a sub-category of International scheme which is available only to qualifying investors who are non retail investors.
  A QF is not subject to approval in the Isle of Man and investors in such funds are not protected by any statutory compensation arrangements in the event of the fund’s failure. The Commission does not vouch for the financial soundness of the fund or for the correctness of any statements made or opinions expressed with regard to it.

• Professional Investor Funds - The Professional Investor Fund (PIF) is a sub-category of International scheme which is available only to professional investors who are generally market professionals and who have net assets in excess of $1 million. The minimum investment in a PIF is $100,000.
  A PIF is not subject to approval in the Isle of Man and investors in such funds are not protected by any statutory compensation arrangements in the event of the fund’s failure. The Commission does not vouch for the financial soundness of the fund or for the correctness of any statements made or opinions expressed with regard to it.

• Experienced Investor Fund - The Experienced Investor Fund (EIF) is a further sub-category of international scheme and is subject to a form of regulation that is aimed at the “Experienced Investor”. An “Experienced Investor” is defined as “a person who, in relation to any EIF, is sufficiently experienced to understand the risks associated with an investment in that fund”.
  An EIF is not subject to approval in the Isle of Man and investors in such funds are not protected by any statutory compensation arrangements in the event of the fund’s failure. The Commission does not vouch for the financial soundness of the fund or for the correctness of any statements made or opinions expressed with regard to it.

• Overseas Fund - Overseas Funds are constituted or incorporated outside the island and managed or administered from the Island. Such schemes are unregulated schemes in the IOM in that they are exempted from the legal and regulatory requirements that apply to other international schemes. Overseas Funds are notified to the Commission.
  An Overseas Fund is not subject to regulation or approval in the Isle of Man and investors in such funds are not protected by any statutory compensation arrangements in the event of the fund’s failure. The Commission does not vouch for the financial soundness of the fund or for the correctness of any statements made or opinions expressed with regard to it.

• Exempt International Schemes - Exempt International schemes are not subject to the provisions of section 11 of the FSA. They must have less than 50 investors and their relevant constitutional documents should expressly prohibit the making of an invitation to the public to subscribe in any part of the world.
  Exempt International Schemes are regarded as private arrangements and are not subject to regulation.
  Recognised Schemes
  Collective Investment Schemes which are managed in or authorised under the law of another country or territory outside the Island may not be promoted to the general public in the Island unless they have been granted recognition by the Financial Supervision Commission under Sections 12 or 13 of the FSA. Once granted recognition a Recognised Scheme may be promoted to the general public in the Island.
  Further information about the regulation of collective investment schemes can be obtained in the Commission's Online Handbook.
  You may search our lists of licenceholders.