"We never had to deal with any bureaucratic delays in Gibraltar and the relocation from the Bahamas to Gibraltar was both simple and cost effective in the execution"

In 2005, we had three Futures Funds (two global diversified futures funds and a specialized commodity futures fund), with one based in Luxembourg and two domiciled in the Bahamas. I now would like to describe the reasons why we decided to move the funds from the Bahamas to Gibraltar.

On 1st July 2005 the European Union Savings Directive (Directive 2003/48/EC, the "EUSD") came into effect. Around that time we received confirmation that, as the Bahamas was not a signatory to the EUSD, all funds domiciled there would be deemed to fall within its scope. The only way a fund could then exempt itself was based on a specific asset test, as outlined in the EUSD. The principal asset test is that a fund is excluded from the EUSD if less than 40% of its investable assets are invested in interest bearing securities, which include interest bearing cash deposits. If over 40% of such assets are held in interest bearing securities then the EU-based administrator, as paying agent, is required to report the interest element of any gains made on redemptions made either by EU resident individuals or individuals from a number of other countries, as agreed between these countries and the EU ("affected persons"). In relation to our Futures Funds, which invest principally in derivatives, much of the investments are, by its nature, deposited in cash. Thus our Bahamas funds were "within the scope" of the EUSD, and the EU-based administrator therefore was needed to report gains made by affected persons.

At the time when the EUSD became effective and, independently thereof, when Austrian legislation abolished the unequal fiscal treatment of domestic and foreign funds, we found that the EU-based administrator of our Bahamas Funds could not live up to our expectations. The administrator could not promptly deliver fund data which were urgently needed by us to avoid fiscal disadvantage of our Bahamas funds under both, the EUSD as well the Austrian law; the requirement of the EUSD is for a paying agent to report only interest (not capital) gains made on redemption by affected shareholders. But when a paying agent has no information concerning the proportion of the income which derives from interest payments, the total amount of the income shall be considered an interest payment!!

We were not happy that the administrator could not calculate data that we needed to avoid fiscal disadvantage for our funds. That had forced us to look for a new administrator who could meet our requirements.

We evaluated a good number of administrators, but finally it was Capita Financial Administrators from Gibraltar with which we entered into a business relationship. Capita offered the most comprehensive package and a modern technical environment for our special business needs, especially in regard to the requirements of EUSD and Austrian tax rules.

Irrespective of the change of administrators, we wanted to change fund domicile. This was primarily due not only to the impact of the EUSD, but also from a marketing perspective to attract more international institutional clients. In the summer of 2005 we could not determine if and when the Bahamian authorities became a signatory to the EUSD, which would have been brought our Futures Funds "out of scope". At this time the Bahamas had not signed up to the EUSD and it did not appear likely that they would sign up, at least not in the short to medium term.

At first we thought to move the funds from the Bahamas into the Cayman Islands. Cayman was a signatory to the EUSD, had become the world's most important hedge fund center and the redomiciliation process was advised as an easy one.

However, during that time we also reviewed information that Gibraltar had revamped its fund regulations just a few months prior and that it operated within a regulated "Experienced Investor Fund Regime" that was in tune with the requirements of the modern hedge funds industry. That welcoming information was so exciting that we decided to look into Gibraltar more closely. We suddenly realized that in moving to Gibraltar, we could bring the funds from the Caribbean into the European Union, the advantages being, Europe with its time zone, the proximity to investors and operational partners and the geographical location which makes it easy to hold meetings. EU-status caused that there was no interest payment for Gibraltar domiciled hedge funds according to the EUSD, our funds were therefore classified as "out of scope" (as it applies for our Luxembourg domiciled futures fund)! Gibraltar joined the European Union in 1973 by virtue of the UK's accession to the EU under the provisions of Article 299 Section 4 (ex-Section 227) of the Treaty establishing the European Community; the cited rule extends the provisions of the Treaty to those "European territories for whose external relations a Member State is responsible." Due to the EU-status Gibraltar politically distinguishes from Jersey, Guernsey, or the Isle of Man, for which, by virtue of Article 299 Section 6 lit c) of the Treaty, that status of membership to the European Union does not apply.

We studied the relevant Financial Services (Experienced Investor Funds) Regulations 2005 and the Companies (Re-Domiciliation) Regulations 1996 in detail and finally realized that they answered all of our expectations.

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.

Redomiciliation of our funds into Gibraltar could be managed with a relatively simple procedure. Offering memorandum as well as memorandum and articles of association had to be adapted to the laws of Gibraltar, other minor formalities combined with the verification of the funds technicalities and the discontinuation of the company in the Bahamas was necessary. That was pretty much that was required! By redomiciling, the funds maintained their legal form and were registered by way of continuation as companies under Gibraltarian law. The change of domicile did not affect any of the accounting aspects, as the company remained in existence, but just within a different jurisdiction.

Experienced Investor Funds (EIFs) are Gibraltar's premier vehicle for alternative investments. The strength of the EIF-regime is that it is internationally competitive while maintaining the level of regulation. It offers a fast-track procedure that enables funds to be swiftly and easily set up or redomiciled which brings Gibraltar into line with jurisdictions such as the Cayman Islands or the BVI.

Both administrators, the outgoing one and Capita, the new one from Gibraltar, played an important part in the process of redomiciliation. Whereas it was the outgoing administrator that primarily supervised and took measures to comply with the formalities, prepared board resolutions and drafted the necessary documentation, Capita took care of the Gibraltarian requirements and ensured that all the required documents were duly filed with the Registrar and with the Regulator. From an administrative perspective, one of the most important steps of the whole process was the handover of the shareholder register with the data of the shareholders and their holdings.

With the support of the different Gibraltar service providers the whole redomiciliation was completed within a few weeks and already in January 2006, we had a fresh, dynamic and individual investment structure, an Experienced Investor Fund with two share classes located within the European Union and outside the scope of the EUSD! ... In October 2008 both share classes of the EIF were authorized for public distribution in Austria. ... In March 2009 the Gibraltar EIF will sent another event as the company will be converted into a Protected Cell Company.

To sum up, I can say that our experience with Gibraltar is very positive, be it as a fund domicile or as a domicile for fund administration. Gibraltar is an easy place for funds to be established and to be redomiciled to. Its ambitious international fund administration sector which is headed by the very experienced Capita Financial Administrators (Gibraltar) Ltd (part of Capita Group plc, a FTSE 100 company), serves a large number of small and medium-sized asset and alternative investment managers. Gibraltar is very user-friendly, we never had to deal with any bureaucratic delays and the relocation from the Bahamas to Gibraltar was simple and also cost effective as we planned it out carefully.

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.