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Hedge Fund Countries
In the United States, hedge funds are found in Delaware, Illinois, New Jersey, New York, and Texas. Each state has different tax and regulatory laws. Outside the United States, several countries in the Caribbean and Europe offer a range of benefits to fund managers. Basic administrative fees are similar in all worldwide but regulatory oversight adds to the expense in European countries. These countries offer the best laws and access to legal, tax, accounting, capital market and regulatory services. There are many other lesser known countries that offer a wonderful and inexpensive venue for your hedge fund and there are many other areas of the world that are considered primary offshore financial centers but are not necessarily practical for smaller hedge funds and family offices. Most of these countries have tiered statutory regimes for hedge funds allowing them to start out as private exempt funds and then later upgrading to registered mutual fund status. There are many areas of the world that are considered primary offshore fund centers. In our view, the Cayman Islands is overrated and not suitable for startup hedge funds and smaller budgets. In any event, it is home to some high profile fund disasters, unpopular politicized media, and the 700 or so Enron secret companies. Places such as Singapore or Mauritius are important for more specialized needs. Mauritius is a favored location for managers with funds invested in India because of a tax treaty between those two countries. Mexican investors favor Singapore. Your investors are not as worried about where the hedge fund is located as you think.
Anguilla offers a low-cost and efficient regulatory environment for private investment funds. The laws of Anguilla allow for three (3) types of hedge fund, two (2) of which are important to fund managers starting a small offshore fund. Those types of funds are the Private Fund and the Professional Fund. In Anguilla, a fund may be in the form of an Anguilla domestic company, international business company, limited liability company, limited partnership, partnership, unit trust or protected cell company, protected cell accounts, segregated portfolio company, or segregated portfolio accounts. The corporate entities are extremely useful because they allow for the issuance of series or classes of shares with different rights thus allowing for the creation of umbrella funds and master/feeder structures. The use of an Anguilla domestic company also allows for the use of companies limited by guarantee and shares, as well as private companies. Bahamas The Bahamas is a very low tax jurisdiction. Banking, wealth and asset management are core industries, with around $200bn under management. The island also boasts some 700 mutual funds. Bermuda's reputation first and foremost remains as a pre-eminent offshore jurisdiction for fiduciary (trustee) services. Bermuda is sometimes mistakenly grouped together with the offshore Caribbean jurisdictions when it actually lies just 640 miles from the US East coast,a two-hour flight from New York or Miami. There are no local taxes on income,profits, dividends or capital gains, except payroll tax which is levied on the salaries of employees based in Bermuda. Bermuda is not part of the European Union Savings Directive (EUSD) framework and clients are therefore not required to choose between confidentiality and withholding tax exemption as in other offshore jurisdictions within the EUSD zone. Bermuda's regulatory framework has long been one of its key selling points hedge fund managers consider Bermuda to be one of the best regulated jurisdictions available, with a long track record in the industry.
Any fund that wants to incorporate in Bermuda has to be approved by the Bermuda Monetary Authority. The investment manager, as well as the administrator, prime broker, custodian, and auditors, are subject to BMA approval. Any change of service providers requires the prior consent of the BMA. The authority conducts due diligence on proposed service providers and investment manager personnel, including for instance, background checks in databases to find out whether there has been any legal action or FINRA or SEC disciplinary sanctions against such individuals. In addition, a Bermuda incorporated fund is required to file monthly reports with the BMA, providing financial information such as the fund’s net asset value, change in NAV from the prior month, amounts of monthly subscriptions, and redemptions and number of securities outstanding. The administrator usually makes these filing. Incorporation can take longer in Bermuda because of BMA approval rules; however, the process includes preparation of offering documents and service provider agreements, which as a practical matter have to be ready before the fund can commence operation in any case. British Virgin Islands BVI bearer share companies incorporated prior to 1/1/05 must convert to registered shares or place them in custody with an approved custodian by 12/31/2009. After 12/31/09 it remains possible for companies to issue bearer shares by making application to the BVI Registry of Corporate Affairs. The law change converting bearer shares to registered shares does not require disclosure of beneficial ownership information to the BVI Registrar of Companies or to any other government authority. Only a copy of the company's share register and register of directors is required to be maintained at the registered agent's office and this data is not available to anyone absent owner consent or a court order. Contact us if you need assistance.
Cayman Islands allow for four (4) types of hedge funds, two (2) of which are important to fund managers starting a small offshore fund. Those types of funds are the Category 4(3) Fund and the Category 4(4) Fund. The Cayman Islands is one of the world’s lowest tax domiciles with no personal or corporate taxes. Registering in the Cayman Islands does not involve much due diligence by the Cayman Islands Monetary Authority during the incorporation process, but is not necessarily cheaper or faster overall. Cayman does not require monthly reports or prior consent to change service providers, but before a fund can commence trading, it has to be registered with CIMA under the Mutual Funds Law (subject to some exceptions). This means identifying all service providers to the fund and providing certain information about the fund and the offering of its securities, and CIMA has to be notified of any subsequent changes. However, currently the Cayman Islands does not require a fund to file regular reports with CIMA. Gibraltar caters mainly to the banking, fiduciary and wealth management needs of southern Spain and Portugal. Gibraltar is a small jurisdiction (bank deposits total $3.5bn) and has no real fund management industry.
Guernsey offers a comprehensive range of financial services for banking, wealth and fund management, and fiduciary administration. It is developing as a leading private banking hub, and the latest figures show deposit and fund levels are at an all time high. Hong Kong has yet to hit former glory but continues to be the region's key financial centre for banking, asset management and low- tax trust and company admin. Over 60 of the world's largest banks are here.
Isle of Man is still a small player but has been one of the most successful offshore centers for growth. Three industries are zero-rated for tax in the Isle of Man: shipping, insurance and fund management. The island plans to become a low tax hub for e-commerce companies.
Jersey boasts a well-established banking, wealth management, fiduciary and fund financial services industry for experts. It joined Guernsey in defense against heavy-handed attacks on financial regulation and has refused to play ball unless other countries do so too. Around £250bn is invested in financial institutions and finance contributes around 60 per cent of government tax revenues.
Liechtenstein has been one of the most secretive financial centers. Luxembourg is also one of the biggest offshore banking and wealth management centers, with strict client confidentiality and secrecy rules. Panama, located between Central and South America with less than three million inhabitants, has become a ‘hot spot’ for wealth and fund management. Panama has a territorial tax system. Income arising in Panama is taxable, but income arising from a non-Panamanian source is not taxed (that includes foreign source income that is remitted into Panama). Interest arising or accrued in Panamanian bank accounts is exempt. Switzerland The concept of "Swiss banking", an expensive luxury for high-net-worth individuals, is nevertheless under fierce competition from cheaper jurisdictions such as Panama and the Channel Islands. Poor equity markets and general performance are making many ask if Swiss wealth management is ultimately worth the cost.
Hedge Fund Startup Process and Procedures You should know how the hedge fund startup process works. We provide an initial consultation, create a detailed business plan, provide state and SEC filings, draft your offering documents, handle compliance issues, prepare your policies and procedures manual (if needed), advise on your operating structure, offer Chief Compliance Officer training, and a marketing plan for your business. Call (307) 213-4732 for a consultation to discuss your needs. In this consultation, you will speak toHannah Terhune, a veteran hedge fund and tax attorney.
Why Hire Us? We have advised investment advisers, financial planners, and accountants on matters such as investment adviser registration, investment advisory agreements, investment suitability, state/federal compliance issues, the avoidance of client and regulatory complaints, and potential conflicts of interest.
Small- to medium-size clients often rely upon us as an "outsourced" legal counsel and compliance adviser. We provide these services to many investment advisers at a great savings over the cost of hiring and maintaining a legal department. We regularly assist the legal and compliance departments of medium to large size investment advisory firms. We represent large advisors with significant internal legal capabilities who seek to leverage our extensive experience in complex issues and the latest developments. We have been an active counselor in numerous transactions involving the purchase, sale, or merger of investment advisory practices.
We regularly provide advice regarding securities, derivatives, tax, ERISA, litigation and other legal matters to a variety of registered investment companies and hedge funds. Additionally, we provide assistance with the formation and operation of mutual funds, hedge funds, venture capital funds, and other private equity and commodity pools. We also provide compliance services, including analysis and development of compliance policies and procedures, compliance audits, and draft disclosures and responses to SEC examinations and document requests.
We have acted as counsel to limited liability companies, commodity pools, and open-end and closed-end funds registered with the SEC. We represent broker-dealers and other securities professionals in their capital market transactions and regulations, advising them on all aspects of U.S. federal and state securities and commodities laws, including regulation by the national securities exchanges, the NASD and other self- regulatory organizations, and assisting them with respect to regulatory audits, continuing education, licensing, and enforcement matters.
More Reasons to Hire Us When you engage us for hedge fund you get a unique combination of securities, tax, and international experience, focused on the trader niche. We have established a leadership position with traders. We are one destination for all your very special hedge fund and trader tax needs. We think we have the best set of offering documents based on the current and ever changing federal, state and offshore securities, commodities, and tax laws. We aim and deliver quick turnaround times, because we understand that our customers want to begin their money management business as soon as possible. We conceive, structure, and deploy the best tax saving strategies into your hedge fund vehicle (for the benefit of the manager and their investors) and your management company. Investors value tax-savings strategies and we utilize all our special knowledge and ideas in this area. Our customers value our one-stop relationship. We will help you start your business and continue to assist you. Our tax services division handles accounting, software, and tax compliance, including all tax matters (tax planning and tax returns). Only one thing counts with us and that's our customer relationships!
Legal Development Process The legal development process is one that requires careful planning. A variety of regulatory issues intersects concurrently when developing a hedge fund: tax, registration, entity type and classification, jurisdiction, security type, and so on. The wisest course of action for those thinking about developing a hedge fund is to consult with qualified legal counsel before taking definitive steps.
Due to the many regulatory issues that must be complied with, it is best to define the structure of your fund properly before commencing any form of fund development or engaging the services of administrators or service providers. The legal development process normally begins with a planning consultation with an attorney experienced in forming hedge funds. This is where important determinations such as registration, jurisdiction choice, and utilization of safe harbors are made. The consultation may expose areas (outside the legal process) that need further planning, thus requiring the manager to deal with those issues before proceeding. After clearing up any such issues, a full engagement is entered into and the legal development process begins.
The hedge fund and investment manager are formed in their appropriate jurisdictions. This enables the fund manager to begin the process of opening bank and brokerage accounts and setting up the administrative functions of the hedge fund. After the entities are formed, the legal team gathers the necessary information to form the operating agreements for the entities and then the offering documents, first in draft stage and then finalized for distribution to prospective investors. The process of setting up a hedge fund usually can be completed within 60-90 days, though registration as an investment adviser, specialized circumstances, or delays in providing information can lengthen the process.
CapitalManagementServicesGroup.com is recognized by discriminating fund managers and traders as being the foremost tax and legal authority in the business. Attorney Hannah Terhune's education and experience are unsurpassed in the area of hedge funds creation and management platforms, and the complex body of tax laws related thereto. Ms. Terhune's exensive knowledge and experience have made her an indispensable resource for serious fund management and trading professionals. Ms. Terhune's articles on the subjects have appeared in over 100 publications worldwide. Chances are, if you have read about the above matters, Ms. Terhune has written about them. Give us the opportunity to use that knowledge and experience for you. CMSG provides the best services and support needed for hedge fund projects and associated activities in one convenient place, saving you time and energy. No need to coordinate work between different firms; we handle the entire process from start to finish. We offer hedge fund and money management accounting, tax services, tax preparation, consulting, entity and retirement plan formation services. Our professionals provide the highest quality services at competitive rates. But don't take our word for it, give us a call and let us prove what we can do for you.
Personal Consultations and Fees You get answers to your specific questions by speaking directly to Hannah Terhune, an experienced hedge fund attorney. Ms. Terhune's hard-earned knowledge and experience can be put to work to save you unnecessary steps and costly wasted effort. The consult is an invaluable opportunity to speak to Hannah one-on-one, and learn how to achieve more in less time. As a result, you can anticipate that the return on your investment will far outweigh the costs associated with our unsurpassed services. Of course, fees are a necessary part of the consultation. Ms. Terhune's credentials reflect an invaluable resource that combines a well-informed professional practitioner with sound ethical judgment that cannot be over-estimated. The expertise required to recommend best solutions and provide sound advice should never be taken lightly. We are confident that when you are finished with your consultation, you will be impressed and more informed about your business plans than ever before. Call (307) 213-4732 or Click Here to Request Services.
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