The development of Gibraltar as an international finance centre has meant that the colony has had the opportunity to develop the range and quality of services required for the formation of offshore funds. The full range of investment management services is available through independent management companies which have specialist investment management operations, although considerable sub-contracting of the administrative function often takes place.

Unlike the offshore islands of the United Kingdom, Gibraltar is a member of the European Union. Other than the Common Agriculture Policy, VAT and Customs directives, all other EU directives apply to Gibraltar.

The enactment of the Directive on Undertakings for Collective Investment in Transferable Securities ("UCITS") into local legislation will permit Collective Investment Schemes ("CIS"), licensed in Gibraltar to be marketed directly into the EU without the need to establish a presence in each Member State where the fund is to be marketed. The proposed legislation is expected to attract renewed interest in Gibraltar as a base for establishing CIS, particularly in view of the favourable tax regime available.


The basic principle of the UCITS Directive is to ensure protection for investors and to harmonise competitive conditions between UCITS from different Member States. Gibraltar has already enacted the EU UCITS Directive as part of the Financial Services (Collective Investment Schemes) Regulations, 1991. The Directive gives EU funds the right to be marketed in any other Member State as long as they comply with various conditions. It sets out a broad regulatory and administrative framework, enabling UCITS to be marketed in other Member States without being subject to more onerous restrictions than their local competitors. Facilities must be available in the targeted member state for the repurchase of units, for making payments to unit holders and for providing them with required information.

Further amendments to the Gibraltar Regulations are expected, the principal purpose of which will be to provide the regulatory framework within which CIS will no longer have to seek authorisation in each Member State where they want to carry on business. The authorisation provided by the home state will be valid across the entire EU. The proposed amendments will lay down the requirements both for CIS established in Gibraltar wishing to market their products in other Member States and CIS established in another Member State wishing to market their products in Gibraltar.


CIS in Gibraltar are regulated by the Financial Services (Collective Investment Schemes) Regulations, 1991 (the Regulations) and licensed and supervised in accordance with the Financial Services Ordinance, 1989 (the Ordinance). The Financial Services Commission (the Commission) is charged with the general administration of the Ordinance and its Regulations which provide a comprehensive framework for the licensing and ongoing supervision of CIS. The Ordinance is designed to prohibit unauthorised persons from being officers of CIS and regulates such officers and CIS.


The manager, custodian and trustee of a CIS are each required to hold a licence under the Ordinance in relation to services provided as an officer of such CIS on the Rock.

In order to obtain a licence to act as an officer of a CIS certain information has to be provided to the Commission. In general the Commission will require the applicant to furnish information concerning the CIS to which his function relates. The Commission, in deciding whether or not to issue a licence, will consider the protection of the public and whether or not it is in the best economic interests of Gibraltar.

Those officers who are responsible for a CIS must follow the regulations established in supplementary legislation under the Ordinance.

No CIS can be marketed in Gibraltar except by persons licensed under the Ordinance. An application for a licence must be made jointly by the manager and the trustee or custodian and should be addressed to the Commission and must be accompanied by prescribed particulars. The Commission will only issue a licence if it is satisfied that the applicant will carry on investment business with integrity, prudence and with the professional skills necessary for the range and scale of business it proposes to undertake.

Under the Ordinance, the Commission has the power to issue such directions in writing as it considers necessary to protect the interests of the unit holders, appoint any person whom it considers suitably qualified to investigate the affairs of any person who carries on or is suspected of carrying on investment business and revoke a licence or revise its terms.


Investment and borrowing powers

The regulations governing CIS include provisions which restrict investment and borrowing powers. The investment restrictions vary according to the type of CIS and these are specified for securities (stocks and bonds) funds, money market funds, umbrella funds, feeder funds and funds of funds.

Type of units

A CIS may issue accumulation or income units. In the case of an accumulation unit, income is accumulated within the value of the unit rather than being distributed to the unit holder.


The arrangement for payment of distributions is normally set out in the CIS particulars and this will also be governed by Articles contained within the Regulations. CIS particulars will normally contain details concerning the payment of interim and final distributions.

Purchase And Redemption Of Units

The price at which units may be purchased or redeemed must be based on the net asset value of the CIS. There are two prices quoted for CIS, the bid price (the price at which the unit can be sold) and the offer price (the price at which the investor purchases a unit). The bid and offer prices are determined in accordance with the Regulations.

Distribution and Marketing

An officer of a CIS may not issue an advertisement unless the requirements of the Ordinance are satisfied. All advertisements must be approved by the trustee or custodian. The legislation sets out other stipulations in respect of advertisements:

  • They should not be misleading.
  • They must not imply the approval of the Commission.
  • Any synopsis should be fair.
  • They must not compare performance with other investments.
  • They must contain risk warnings.


A CIS that has its head office in Gibraltar is required to maintain in Gibraltar proper accounts and records in respect of its entire business and its annual accounts must be audited by an approved auditor.

The annual return of a CIS must be filed with the Commission within four months of the year end and must contain a copy of the audited annual accounts, trustee's report and manager's report.


It is usual for a CIS to apply for exempt company status. An exempt company is one that is resident in Gibraltar either by virtue of its incorporation or is managed and controlled here and usually registered under the Companies Ordinance, and been awarded a tax exempt status by the authorities. Resident exempt companies are required to pay an annual fee of o225 and non-residents o200 if they are not registered under the Companies Ordinance or o300 if they are registered. Exempt companies can only transact any trade or business in Gibraltar with the approval of the relevant authorities. There is no capital gains tax in Gibraltar. Directors' meetings of a CIS may be held in Gibraltar without incurring any Gibraltar taxation as long as they do not spend more than 30 days in Gibraltar in any one tax year. The criteria required for exempt status are more fully set out in our brochure "COMPANIES IN GIBRALTAR".


Gibraltar has significant attractions to offer as a base for establishing a wholesale or retail CIS. Apart from the fact that it offers a tax free/low tax environment in which investment income can accumulate, it has the added advantage of being within the EU. As a result, the imminent enactment of the EU UCITS Directive will enable Gibraltar CIS to be marketed directly into the other Member States.

Coopers & Lybrand Gibraltar can provide a wide range of services to the Gibraltar CIS. These range from the incorporation and registration of the CIS to the provision of administrative services as well as audit services and tax advice.

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

Coopers & Lybrand is a member of Coopers & Lybrand International, a limited liability association incorporated in Switzerland.