A Private Fund is a Collective Investment Scheme (CIS) that can be offered privately to any identifiable group: it can accept up to 50 participants (investors). There are no restrictions on the type of investor that can subscribe as long as the investor belongs to an identifiable group.
Terms of a CIS
Typically, the participants tend to be families, groups of employees or groups of individuals or friends wishing to run their investments in a fund structure.
Private funds are set up as a company under the Companies Act but are not regulated or authorised by the FSC. As long as the appointed directors follow the investment objectives as stated in the offering document of the private fund, there are no other statutory investment restrictions. This allows private schemes to be established cost-effectively and quickly.
Criteria for a CIS setup
- the appointment of at least two directors to assume responsibility for the fund;
- a professionally drafted offering document, setting out bow the fund operates, the investment strategy and the risks involved;
- the issuance of two share classes: ordinary shares with voting rights, and preference shares, which participate in the gains and losses of the fund; and
- the fund set lip as being open-ended or close-ended