Gibraltar: Finding The Right Home

Redomiciliation Of Hedge Funds Into Gibraltar
Last Updated: 1 July 2008
Article by Rolf Majcen

Interesting framework and EU membership are making Gibraltar an attractive domicile for hedge funds. If a promoter or fund manager wants to have his hedge fund, which, for instance, has been constituted in the Caribbean, registered as an Experienced Investor Fund (EIF) under the laws of Gibraltar to transfer it into a tax-advantaged domicile of the European Union, he does not have to liquidate the fund in the country of its incorporation. Exactly for such cases different corporate laws open opportunities for "redomiciliation".


By means of redomiciliation, hedge funds which have been established as companies, are able to move to Gibraltar from the country of their incorporation without liquidation and fresh registration, as long as redomiciliation is provided for in the charter, statutes or memorandum and articles, or other instruments constituting or defining the foreign company and if permitted to do so by the applicable law in the jurisdiction of their incorporation. Needless to say, foreign funds constituted as investment partnerships or unit trusts do not qualify for redomiciliation of their registered office as companies and it would be necessary to reconstitute such funds in Gibraltar as EIF afresh, indeed as a new partnership or unit trust. Thereafter it will be concentrated on hedge funds, which have been established in the corporate form of a company.

Legal basis

The principal regulations governing redomiciliation are, under company law the Companies (Re-Domiciliation) Regulations 1996 amended as of 2005 combined with Circular No. 20 of Companies House dated as of 2nd January 2007 and the Financial Services (Experienced Investor Funds) Regulations 2005.

Experienced Investor Funds (EIF) are not subject to any restrictions on their investment or borrowing powers, do not have to meet any requirements in respect of minimum net assets; they can be established for a single shareholder, can be listed on international stock exchanges and clearing is possible via Clearstream Banking S.A.

Redomiciliation to Gibraltar can be managed with a relative simple procedure. By redomiciling, the funds maintain their legal form and will be registered by way of continuation as companies under Gibraltarian law.

Gibraltar – rising financial centre with well regulated financial industry

The IMF (International Monetary Fund) assessed Gibraltar's compliance with respect to international standards in banking, insurance, and anti-money laundering and combating the financing of terrorism in March 2006. In its subsequent report dated as of May 2007 it attests that Gibraltar is a well-regulated financial sector with a good reputation of the Financial Securities Commission for cooperation and information sharing. The assessment also found a high standard compliance with the BaselCore Principles for banking supervision. Gibraltar authorities take a practical approach to implementing AML/CFT controls.

By means of redomiciling the fund domicile can be brought into the EU, where, when it is well-timed, can result in some cost savings (for example where an offering memorandum requires amendment, as this can be done as part of the update of the documentation during redomicilation). Advantages that accrue can not only be used for better marketing strategies (increase of attractiveness for institutional clients due to EU membership) but also for economic purposes (for example applicability of European Savings Directive, Parent Subsidiary Directive).

Further arguments for redomiciling to Gibraltar are the optimal fiscal environment, the European time zone and a geographical location that makes it easy to hold meetings. A range of low-budget-flights airlines fly to Malaga several times a day from where it takes about an hour to get to Gibraltar. Moreover, the airlines Iberia and British Airways connect Gibraltar Airport daily with Madrid or London and further destinations for departure are projected.

It is interesting to note how German Federal Financial Supervisory Authority (BaFin), in coordination with Deutsche Bundesbank, construed provisions of solvability regulations (Solvabilitätsverordnung (SolvV)) in respect of the requirements of equity capital (equivalence of securities commissions) on 13th December 2007: they noted inter alia that Gibraltar is an associated territory like the Channel Islands and the Isle of Man, but has a special status, as EU-law applies in whole and therefore Gibraltar is for reasons of solvability regulations not a "third country" but associated to EWR.

Relevant States for redomiciling into Gibraltar

According to Gibraltarian law the following states are classified as states from which a redomiciliation into Gibraltar is possible:

  1. EEA States;
  2. Anguilla, Bermuda, British Antarctic Territory, British Indian Ocean Territory, Cayman Islands, Falkland Islands, Guernsey, Isle of Man, Jersey, Montserrat, Pitcairn, St. Helena, Turks and Caicos Islands, British Virgin Islands;
  3. States which are members of the British Commonwealth;
  4. Liberia, Panama, Singapore, Switzerland, Cyprus, Malta, Hong Kong, the United States of America

If the power for redomiciliation does not exist in the company's constitutional documents a shareholder resolution can be passes to amend the documents accordingly.

EIF need a fund administrator based in Gibraltar

Attention should be paid to the fact that the transfer of hedge funds into Gibraltar is not only subject to corporate law but also to fund law: Hedge funds that want to move and that need a flexible framework for their investment policy will envisage the Experienced Investor Fund ("EIF"). An EIF is required to appoint an authorised administrator that has physical presence and staff in Gibraltar. Moreover an EIF is required to appoint at least two Gibraltar resident licensed directors. There is a range of highly qualified administrators in Gibraltar which are able to provide fund directors authorised by the Financial Securities Commission.

Capita Financial Administrators (Gibraltar) Ltd. is by far the largest fund administrator in Gibraltar with over 50 funds under administration. They are set up to administer hedge funds, property funds, private equity and fund of funds, in particularly for funds domiciled in Gibraltar, Cayman Islands, BVI and Bahamas. Capita Financial Administrators (Gibraltar) Ltd. is part of Capita Group PLC, which is presently the largest outsourcer in administration in the UK and also listed in FTSE 100 (

The need to have an administrator with its registered office in Gibraltar means that hedge funds which want to move are not completely free to determine the date, upon which they can act under Gibraltarian law; in a instance the existing administration-agreement has to be checked in respect of the terms of termination and the time the termination can be effected with at earliest. Occasionally long cancellation periods may be agreed with the foreign administrator. In order to determine the target date of redomiciliation some kind of "fine tuning" may also be necessary as it has to be considered that the financial period for the first financial statements of an EIF cannot exceed than 18 months.

Depositary and Prime Broker

The custodial arrangements for EIFs are more permissive. An EIF is not required to have a depositary where a) the fund is a closed fund or b) the fund is a hedge fund and an approved prime broker is appointed. Where an EIF has a depositary, whether or not pursuant to a requirement, the depositary shall be such person as the Financial Services Commission may authorise to act as depositary; in practise usually a credit institute based in Gibraltar will be appointed (many first class international banks have established subsidiaries in Gibraltar), however a registered office in Gibraltar is not required. Funds that would like to maintain their foreign custodian must ascertain that the Financial Services Commission has no objections.

Process of redomiciliation

Gibraltar is "user-friendly" and there are no bureaucratically delays. For successful redomiciliation just a few formalities and the presentation of some evidences are necessary. Administrators (or rather the law firms appointed by them) do the work and take care of filing the application for redomiciliation to the Registrar at the Companies House in due course. The Registrar is responsible for registration and redomiciliation and finally certifies that a company has established its domicile in Gibraltar.

An application for redomiciling into Gibraltar shall be accompanied by the respective original resolution of the company; this must resolved to transfer the company to Gibraltar and to register it as an EIF under the laws of Gibraltar. Moreover the resolution has to contain in particular:

  • the name of the company and the name, if different, under which registration as a redomiciled company is seeking
  • the jurisdiction of incorporation of the company and the name and address of the competent authority in that jurisdiction in respect of that incorporation
  • the date of incorporation
  • the address of the registered office in Gibraltar (usually the address of the administrator, which has been appointed to administer the EIF)

It is also required that the company has notified the competent authority in the jurisdiction of original incorporation about its intention to move to Gibraltar. Moreover an original certificate of good standing in respect of the company issued by the competent authority in the jurisdiction of incorporation has to be filed. That is a certification about the date of incorporation and about the fact that the company is in compliance with registration requirements of that authority. In addition the Registrar must be presented with satisfactory evidence that no proceedings for insolvency have been commenced against the company.

Furthermore, if the hedge fund quoted on a recognised stock exchange, the governing body of that exchange needs be presented with evidence of the redomiciliation. All information and evidence required shall be in the English language and a registration fee of GBP 100 has to be paid.

Clever timing saves costs

As a redomiciliation requires adherence to the provisions of company law and fund law, constitutional documents as well as offering memorandums have to be amended to conform with Gibraltarian jurisdiction requirements. Constitution consists of two parts: Memorandum of Association and Articles of Association. The Memorandum contains provisions for the external relationship of the company, the Articles rule internal affairs. At this stage relevant costs can be prevented: If, in the jurisdiction of incorporation, amendments of constitutional documents or offering documents are intended to be done anyway, they would charge costs, a few hundred Euros where there are minor amendments and some thousands Euros where amendments are more onerous. There will be a reduction of the total cost of the redomiciliation, if the amendments are not done in the jurisdiction of incorporation anymore but are instead processed as part of the redomiciliation, as those fees would have been charged in the jurisdiction of incorporation at any rate; notionally, those expenses can be deducted from the total amount of expenses of redomiciliation as quasi "fixed costs", whereby the effectively remaining costs of a redomiciliation will be reduced significantly.

Change of Administrators

Both administrators, the existing foreign administrator and the new Gibraltarian one, play an important part in the redomiciliation process. Whereas it is the existing foreign administrator that primarily supervises and takes measures to comply with the formalities, prepares board resolutions and settles a high frequency of documents, the Gibraltarian administrator has to act according to its jurisdictional requirements and takes care that all documents that are required can be filed timely with the Registrar and with the Regulator. From an administrative perspective, one of the most important steps of the whole process is the transmission of the shareholder register with the evidence of the shareholders and their holdings.

Announcements to resign as director of the board of directors and appointments of new directors are coupled with the change of administrators, as well as the termination/new arrangement of D&O insurances, where applicable, and compliance in respect of different disclosure requirements according to relevant stock exchange regulations, in case the redomiciling fund is quoted. Furthermore it has to be ascertained that the existing auditors and the new Gibraltarian auditors as well as the hedge fund's legal representatives in its jurisdiction of incorporation and the new one in Gibraltar are informed about the process of redomiciliation to be able to take all actions that require their assistance.

Notification of the Regulator

Parallel to the requirements according to companies' law, which finally culminate in the Registrar issuing the certificate of registration, all activities according to fund law are in progress to be able to file in the complete notification of the establishment of the fund with the Regulator. If the fund-set-up is ready (offering memorandum, bank accounts, election of prime broker respectively depositary, manager, administrator, auditor, contribution of the board of directors of the company, legal advisor) the Gibraltarian administrator files the relevant documentation with the Regulator. A copy of the offering documents and an opinion of a lawyer of at least 5 years professional standing and who is also a Barrister or Solicitor of the Supreme Court of Gibraltar, that the fund complies with the relevant provisions, has to be attached. The Regulator will be enabled by the preparatory work of the administrators (compliance, due diligence) to authorize an EIF without doing complex examination processes of its own.

The authority does not only rely on the work of the administrator but also on the drafting of the offering documents being done by lawyers and having a senior lawyer issuing a legal opinion on the fund's compliance with the regulations who has to take the responsibility for the correctness of his opinion.

Regulations in the domicile of incorporation

There are also regulations, different from country to country, which have to be complied with in the jurisdiction of incorporation. For the most important hedge fund domiciles the legal position is rather simple as primarily procedural- and registry rules have to be observed.

The laws of The Bahamas, for instance, provide that a licensed investment fund may transfer from The Bahamas to another jurisdiction and shall advise the Securities Commission of The Bahamas of such transfer at least fourteen days prior to the effective date of the transfer. The fund shall notify particulars (as name of the fund, investment fund license number) and the effective date of transfer and jurisdiction accompanied by a copy of the certificate of continuation under Gibraltarian law issued by the Registrar General of The Bahamas as well as a certificate of continuation issued by the Gibraltarian Registrar (Article 19 (1), (2) Investment Fund Act, 2003 as well as regulation 49 combined with Schedule 8 of the Investment Fund Regulations 2003).

Also the relevant regulations of Cayman Islands and British Virgin Islands (BVI) are similarly liberal in respect to redomiciling with continuation of the legal form to foreign jurisdictions.

Legal capacity with effect from the issue of the Certificate of Registration

The Gibraltarian Companies House checks the sufficiency of the documents. If all requirements are met the Registrar incorporates the investment fund company and gives a Certificate of Registration. As fund law has to be complied with for companies denominated as EIF, registration takes place in cooperation with the Regulator. With effect from the date of the issue of the Certificate of Registration the hedge fund is redomiciled and has legal capacity under Gibraltarian law.

The Certification of Registration shall be conclusive evidence that all requirements of the law and the relevant regulations about the redomiciliation have been complied with and that the fund is a company authorized to be so registered and duly registered under the provisions of section 365 (2) Companies Act. In the Gazette a notice has to be published containing the name of the fund and, among other things, the State from which it has redomiciled.

There are also special provisions after the date the Registrar issued the Certificate of Registration: The directors have to satisfy the Registrar by a date six moths after the date the Registrar issued the Certificate of Registration that the fund has ceased to be a company domiciled in the country of its incorporation or in which it was previously domiciled; that is because a company expressly can only have one domicile.

Brief summary

Redomiciliation of hedge funds denominated as investment fund companies is relatively simple when meeting the necessary requirements. Gibraltar offers hedge funds that intend to change domiciles, the Experienced Investor Fund (EIF), which is a modern fund vehicle that is not subject to any restrictions on its investment or borrowing powers. Attention should be paid to the fact that hedge funds can only transfer to Gibraltar if a fund administrator that is based in Gibraltar is to be appointed.


Rolf Majcen is Managing Director of FTC Capital GmbH in Vienna ( FTC is specialised in systems development for Managed Futures with a track record stretching back to 1994. All FTC´s trend-following trading systems are proprietary systems. FTC´s product portfolio includes both highly diversified managed futures funds as well as those that are specialised in certain markets (e.g. commodities). FTC funds are regular winners in international performance rankings. The hub of all FTC communication is its website, which provides a comprehensive platform and an extensive archive for all matters related to system trading and alternative investments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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