Gibraltar: Growth In The Gibraltar Funds Industry

Last Updated: 8 July 2009

Following the introduction of the Experienced Investor Fund regime (EIF) a couple of years ago there has been a substantial growth in the Gibraltar funds industry. The number of funds established has been growing at a compound rate and funds now range from $1Million to over $1Billion. The funds invest in all areas of the world including America, Europe, Eastern Europe and the Middle East with investors in a number of different jurisdictions.

Funds established now include, Hedge Funds, Funds of Funds, Property Funds, Private Equity Funds, Funds investing in oil production; Feeder Funds; funds involved in lending secured on property assets; funds investing in Alternative energy (solar, wind farms, bio fuels); funds investing in alternative investments including funds investing in the art market; charitable funds.

The EIF regime allows funds (see below) to be established within a matter of days and with Gibraltar based in Europe the fund has unique fiscal and regulatory advantages over a number of other offshore jurisdictions, not least being able to take advantage of the Parent Subsidiary directive.

The quick and easy regulatory notification process, the possibility of setting up PCC funds and Gibraltar's position within the European Union are all factors that are certain to make Gibraltar a very interesting and competitive jurisdiction for the set up of funds.

The Experienced Investor Fund regime in Gibraltar has not only proven an extremely versatile way of setting up a fund within the European Union but has unique advantages in terms of set up time and taxation. Probably the most exiting and competitive innovation in the Gibraltar fund industry is the possibility to set up funds for experienced investors that are highly versatile and lightly regulated. An EIF fund can be set up and become operative within days, for it is sufficient for the fund to incorporate, appoint service providers, appoint two local directors whom are authorised by the Financial Services Commission ("FSC"), produce a prospectus and hold a board meeting to launch itself as a fund. There is no need to go through the often protracted of obtaining a license. However, it must notify the FSC of its launch within 14 days, and provide certain documentation as well as a, one off, license fee of £2,500.

To qualify for this regime, subscription must be restricted to investors who are deemed to be experienced under the Financial Services (Experienced Investor Funds) Regulations 2005 (the EIF Regulations). Investors who have a net worth of 1m aside from their residential property or whose normal business activity includes investment related activity or those investing a minimum of €100,000 in the fund. Significantly, these definitions are individual and not cumulative so it is sufficient for an investor to invest €100,000 for it not to have to prove any of the other conditions. There is no minimum or maximum number of investors required for an EIF. Unlike in other jurisdictions there is no requirement for the promoters of the fund to be licensed. This is because each fund must have two directors who are authorised by the (FSC) to act as EIF directors. Those roles are to ensure proper governance of the fund. Where the fund is a unit trust with a corporate trustee or where the fund is a limited partnership with a corporate general partner, two directors of the corporate general partner or trustee must be authorised. It is sufficient for the fund administrator to perform the normal "know your client" and client acceptance procedures to be able to set up a fund in Gibraltar.

Although many funds in Gibraltar are managed solely by their boards of directors, an EIF may choose to appoint an investment manager in Gibraltar or in any other jurisdiction. It is sufficient under Gibraltar law that the investment manager or adviser be licensed or be entitled to give investment management advice in its home jurisdiction. A Gibraltar licensed to provide an investment management or adviser is a full European Union licence. This means that the license can be passported anywhere within the European Union. As such, the normal capital adequacy requirements that exist in other European jurisdictions also apply to the Gibraltar managers or advisors. A Gibraltar investment a physical presence and staff in Gibraltar.

An open ended EIF must have a depositary and may appoint brokers to assist with their trading activity. However, neither the depositary nor the brokers need be locally based. Indeed, funds have been established with depositaries and/ or brokers in various countries in Europe, the Bahamas, Switzerland, Canada and America.

An EIF must issue a prospectus that is consistent with industry standards and which will allow an investor to make an informed investment decision. The prospectus/private placement memorandum (PPM) will contain all the usual information one sees in such a document including the fees payable by the fund (both initial setup and ongoing), the investment objectives, borrowing or investment restrictions, if any, (or if there are no restrictions the fact that there are none) and the risks associated with such investment. The prospectus/PPM is a private document except if the fund is incorporated as a public limited company. There is no legal requirement to use a public limited company for a fund in Gibraltar even if the fund has more than 50 investors.

One of the key unique selling points of the Gibraltar fund is the authorisation process. As noted earlier, no regulatory preapproval is needed for launch. Within 14 days of an EIF's launch it is sufficient for the fund to incorporate, appoint its service providers, produce its prospectus and hold a board meeting to launch itself. It must notify the FSC of the launch along with a copy of the prospectus, the memorandum and articles, a legal opinion from senior Gibraltar counsel stating that the fund was set-up in accordance with the EIF regulations and other relevant legislation, a form signed by the administrator and the license fee.

This means in effect there is no regulatory down time and the fund may be launched as quickly as necessary.

The FSC will then review the submitted documents and as with all other jurisdictions may come back with questions or comments. An ongoing requirement is for an EIF, the directors, (especially the authorised directors) and the administrators are to ensure ongoing compliance with the EIF regulations, Gibraltar legislation and with corporate governance requirements.


An EIF must have a fund administrator that is authorised and has a presence in Gibraltar (there are a number to choose from companies). In addition to the two Gibraltar based EIF directors, the fund must also appoint auditors that are registered in Gibraltar. (Three out of the four "big four" auditors are based in Gibraltar as are several other firms that have ample experience in fund audit.) Although any internationally accepted accounting standard might be used for the audit, many Gibraltar funds are audited under IFRS or UK GAAP.


There are no restrictions on borrowing or owning investments. A fund may invest in any class of investment and at any percentage given that this is a fund that is targeted to experienced investors who are informed and are able to bear the risks of such investments. The fund may, however, impose certain restrictions on itself. These are disclosed in the prospectus and, of course, must always be adhered to.


Gibraltar funds may obtain an exemption from the Commissioner of Income Tax on any tax on investment income. There is no capital gains tax, inheritance tax, or wealth tax in Gibraltar. There is a stamp duty of £10 on the creation of share capital of a company and on any increase in share capital. Furthermore, there is no tax in Gibraltar on dividends from quoted securities or on income from trading listed securities. Indeed, a fund may find it more beneficial not to apply for the certificate of exemption from the Commissioner of Income Tax in certain cases and to rely on the regular internal tax regime of Gibraltar which will in the majority of cases not tax any income or gains earned by the fund. There is no withholding tax on payments from a Gibraltar fund to its non-Gibraltarian investors.

Parent Subsidiary Directive

As Gibraltar is part of the European Union, companies and funds can benefit from the European Parent Subsidiary Directive. This means that payments to a Gibraltar company from subsidiaries in certain European jurisdictions (such as Luxembourg) will not be subject to withholding tax. This is another one of Gibraltar's unique selling points and it is particularly relevant in private equity and real estate funds.

The valuation methods for EIFs must be disclosed within the prospectus. There are no particular rules on valuations other than their disclosure.

Protected Cell Companies

An additional advantage of Gibraltar as a jurisdiction is that it is possible to set-up a fund in Gibraltar as a Protected Cell Company (PCCs). PCCs are companies, which can segregate their assets into cells, which are statutorily, protected and are remote from each other in bankruptcy. This means that if one cell incurs a liability, the creditors of that cell will be unable to satisfy their debt from assets attributable to another cell. This is particularly useful to investment mangers that wish to set-up several funds with several strategies under one vehicle and save with economies of scale. Investors can invest in one or more cells according to their investment strategies.


The quick and easy regulatory notification process, the possibility of setting up PCC funds and Gibraltar's position within the European Union are all factors that are certain to make Gibraltar a very interesting and competitive jurisdiction for the set-up of funds.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.