St. Lucia – An Emerging Mutual Fund Jurisdiction.
- Nicholas John, Barrister-at-Law
n recent months we have seen a significant increase in the number of enquiries about St. Lucia as a centre for mutual funds as more intermediaries become aware of the legislation that exists to facilitate the domiciling and administration of mutual funds in St. Lucia. This naturally has led to an increase in mutual fund business for the jurisdiction.
There are three main reasons why St. Lucia has been found to be an attractive centre for mutual funds. The first is the legislation which makes provision for the licensing of public mutual funds and the registration of private mutual funds established in St. Lucia. The registration regime is particularly attractive as it facilitates what is often referred to as “professional funds” which do not require the detailed licensing process necessary for public funds.
Professional funds, referred to in the legislation as "private mutual funds", is defined as a Mutual Fund where:-
(a) The equity interests are held by not more that 100 persons;
(b) the minimum investment in the Fund is U.S.$50,000 per person; and
(c) only persons who -
(i) have experience in the type of investment in which the fund is interested; or
(ii) have signed a declaration that they, whether individually or jointly with his or her spouse, have a minimum net worth in excess of US$1,000,000; or
(iii) are members of an investment club; or
(iv) are international business companies;
may participate.
A Private Mutual Fund is not required to have any service providers (including directors of corporate entities) in St. Lucia, other than the registered office and registered agent in the case of an international business company or a registered Trustee in the case of a registered international trust. Therefore, each of the investment manager, the administrator, the custodian/prime broker, investment adviser and any other service providers may therefore be located in any jurisdiction.
A Private Mutual Fund is allowed to carry on its business in or from Saint Lucia for a period not exceeding 21 days without being registered. Thus registration can be deferred until the fund is established and operating.
A Private Mutual Fund is entitled to be registered if it provides proof satisfactory to the Minister that:-
(i) it is a private fund within the means of the Act, namely that it meets the criteria above; and
(ii) it is lawfully constituted under the law in force in St. Lucia.
The requirement to be lawfully constituted under the laws of St. Lucia can be met by setting up an international business company under the International Business Companies Act or establishing a trust registered as an international trust under the International Trusts Act.
The International Business Companies Act prescribes a very efficient regime for international business companies, which can be incorporated on the same day that the constitutional documents (the memorandum and articles of association) are filed with the Registrar of Companies. The same applies to international trusts. It should be noted that the filing process can be completed electronically in less than an hour using the Pinnacle St. Lucia online registry system
Both international business companies and international trusts are tax-exempt entities in St. Lucia and there are no restrictions regarding the use of the word ‘fund’ in the name of the company or trust.
The second reason for the increased interest in St. Lucia is that many practitioners in the mutual funds business are now realising that a lot of the small and medium size funds which in the more established jurisdictions would be classified as public funds, can now be established in St. Lucia as a private mutual fund. This classification avoids the high costs and bureaucracy associated with operating a public fund in those jurisdictions. Therefore St. Lucia is now positioning itself as a jurisdiction to establish and to re-domicile small to medium size funds which qualify as private funds under St. Lucia’s law.
The third reason for St. Lucia’s attractiveness is the reasonable cost of establishing a fund company is St. Lucia and carrying out fund administration from St. Lucia, especially when compared to what pertains in the more established jurisdiction. Practitioners have realised that they can achieve great cost savings without compromising the quality and standard of service.
