Belize: Review Of The Mutual Funds Legislation Of Belize

As previously reviewed in this publication, the Mutual Funds Act has the stated intention to provide for the regulation, authorization and control of mutual funds, their managers and administrators carrying on business in or from within Belize. In furtherance, this article provides an in-depth review of the three types of Mutual Funds and their requirements. Also discussed is the creation of a sub-class of Public Funds and the appointment of a Registrar.

The Act encompasses the regulation of three types of Mutual Funds. These are:

1. Public Funds
2. Private Funds
3. Professional Funds

A "Public Fund" is defined as one, which offers its shares for subscription or purchase to members of the public. The definition of a "Private Fund" is a mutual fund which has less than fifty investors and the constitutional documents of which prohibits the offering of its shares to the general public. A "Professional Fund" is one which is offered only to professional investors and the initial investment in which, in respect of each investor, is not less than $100,000.00 in the United States currency or the equivalent in any other currency and is designated as a professional fund by regulations.

The Mutual Funds Regulations enacted in 2000 creates a sub-class of Public Funds, described as "a selective public fund" where all interest in the public fund are offered by a person entitled to provide investment services under the Laws of Belize or a recognized country or jurisdiction.

The Act and Regulations set out very strict requirements for the operation of mutual funds and the criteria for qualification of administrators and managers.

Firstly, all Mutual Funds carrying on its business managing or administering its affairs in or from Belize must be registered under the Act.

Likewise, a manager or administrator of mutual funds must obtain a license for conducting such business in Belize unless they are not resident or domiciled in Belize or operate from another jurisdiction and have received the written permission from the Minister to conduct such business.

The requirements for the establishment of Mutual Funds is differentiated between on the one hand Public Funds and on the other Private and Professional Funds. In respect of Public Funds a standard application form must be filled out and documents provided which set out the nature and scope of the business, proof that the applicant is lawfully constituted (e.g. company’s Memorandum and Articles) notice of registered office, address for service in Belize and name and address of registered agent. In addition an application fee of US$500 is to be paid. Accounting records of each financial year must be kept at its principal place of business or registered office available for inspection and examination by the Registrar.

A Private or Professional Fund is required to submit proof that it is a private or professional fund (as defined by the Act) notices of its registered address, address for service and address of registered agent in Belize. The application fee is US$350. In both instances, Ministerial approval of the Fund is required during the registration process.

The Registrar of Mutual Funds has the duty to supervise mutual funds, managers and administrators in accordance with the provisions of the Act. The Registrar, Mr. Gian Gandhi, was appointed in April 2000, bringing to this post a wealth of experience in law and offshore services. He is the current Director of International Financial Services and was the former Solicitor General of Belize.

Along with the appointment of the Registrar, a committee has been established called the Mutual Funds Advisory Committee, members of who have acquired expertise in the offshore services industry and who also have adequate knowledge and experience in the mutual funds industry.

They are charged with the duty of advising the Minister responsible on matters relating to the Mutual Funds Industry and making recommendations on the same.

Other features of the Mutual Fund Act contribute to ensuring that all Funds are closely regulated and professionally administered. These include:

1. The auditing of financial statements for Public Funds;
2. The publication of a prospectus signed by or on behalf of the Board of Directors, which discloses all information reasonably required by investors and their rights;
3. In respect of Public Funds constituted outside of Belize, a certificate of compliance issued by the appropriate authority in that jurisdiction, must be filed with the Registrar in Belize annually; and,
4. Where any person willfully misrepresents in any documents required to be filed under the Act, or makes any statement knowing same to be false or misleading the penalty prescribed is liable to a fine of not less that US$5,000 or not more than US$50,000.

The recent amendments to the Mutual Funds Act of 1999 in Belize, as described above, further expand the offshore and financial services sectors in Belize.