Mutual Funds Overview

Investments Overview

Offerings of Investments are provided for under the Investment Dealers (Licensing) Ordinance 2001 (IDLO) and the Mutual Funds Ordinance 1998 (MFO) which give the Financial Services Commission (the Commission) responsibility for the licensing, supervision and regulation of Investment Dealers and Mutual Fund and Mutual Fund Administrators respectively.

Investment Dealers and Mutual Funds are also regulated by the Commission in accordance with The Financial Services Commission Ordinance 2007; Proceeds of Crime Anti-Money Laundering and Prevention of Terrorist Financing Regulations 2010; the Anti-Money Laundering and Prevention of Terrorist Financing Code 2011; and the Company’s Ordinance as amended.

Mutual Funds

A Mutual Fund as defined in the Mutual Fund Ordinance 1998 (MFO) is a company, unit trust or partnership that issues equity interests, the purpose or effect of which is the pooling of investors’ funds with the aim of spreading investment risks and enabling investors in the mutual fund to receive profits or gains from the acquisition, holding, management or disposal of investments.

Categories of Mutual Funds

Categories of Mutual Funds under the MFO are:

• Registered Mutual Funds are constituted under TCI law and may only issue equity interests to investors who meet prescribed qualifications or the equity interests of which are listed on a stock exchange recognised by the TCI.
• Recognised Mutual Funds are constituted outside the TCI and the equity interests of which are listed on a stock exchange recognised by the TCI.
• licenced Mutual Funds do not qualify as registered or recognised but are otherwise approved.
• Exempt Mutual Funds include funds in which the equity interests are held by not more than fifteen investors who may appoint or remove the fund administrator by majority vote, and funds that are only authorised to issue equity interests to qualifying professional investors provided that the fund is administered from within the Islands.
• Qualifying professional investors are defined in the Mutual Funds Regulations 2001. An application for agreement and such other information must be submitted in order for the Commission to agree that the mutual fund is an exempt mutual fund.

The Mutual Fund Ordinance 1998 provides for the licensing of Mutual Fund Administrators and Restricted Mutual Funds Administrators.

It is an offense for a person to conduct mutual fund administration in or from within the Islands without a licence issued under the MFO and similarly for an operator to cause a mutual fund to carry on business or attempt to carry on business in or from within the Islands unless such fund is registered, recognised, licenced or agreed to be an exempt mutual fund.

A person who commits an offence in either instance is liable for a fine of $100,000.00.