Alternatives are becoming core in the investors` portfolios. One of them is a mutual fund called a small alternative investment fund (further mentioned as SAIF). This collectively pooled private financial tool gathers the investors` funds aiming to contribute the gathered mutual funds in line with the predetermined investment policies drawn up for the sake of the benefit of the investors. Below you will find the main requirements for a small alternative investment fund.
Requirements for a small alternative investment fund: key considerations
- A set of obligations for opening an investment fund covers the formation of the company itself, which normally takes 5 working days. It is essential to take into account that at this stage of registration, you should have at least 2 board members in your fund.
- This is followed by getting official permission to register this fund from the financial regulatory organ of the country – for instance, in Estonia, this is the Estonian Financial Supervision Authority, in the United Kingdom – this is Financial Conduct Authority. Generally, since the receipt of an application, the applicant will receive a reply from the regulator within 60 days. The time necessary for application processing, however, is contingent on how fast the obligations are complied with by the applicant.
- Apart from authorization permitting fund registration, the company should ensure efficient counteraction to the illegal circulation of funds and the contribution of money to terrorist activities. For this purpose, it is obligatory to acquire an additional fund manager’s license issued by the Financial Intelligence Unit, which also takes about 2 months. Under this license, a SAIF has the possibility of attracting private clients as well.
- The last step is entering the data of the fund itself into the Commercial Register, this is a hassle-free procedure taking only up to 5 working days.
Official papers necessary for the fund formation
The official papers that are to be prepared along with the application for opening are the following:
- Partnership Deed;
- Original Deed of Trust;
- Certificate Confirming Registration;
- Copy of the Placement Memorandum;
- Contacts and other details of the company;
- Memorandum and the Articles of Association.
- Data of the senior management and shareholders;
- Company office address and other data of the Registered Office;
- Other information in the respect of the intended activity of the business.
The benefits of establishing an investment fund
- The formation of a SAIF is highly beneficial for its ability to attract retail clients in the absence of public offers.
- The complete procedure of registering a fund normally requires approximately two months. (As mentioned above, the time taken for registration is contingent on how quickly the requirements for investment fund are complied with by the applicant)
- After registering and receiving a permit to open a SAIF, investors obtain a right to safely manage stocks, currencies, bonds, virtual currencies, real property, and other financial assets that will be placed in their portfolios to bring more profit.
- Also, investors with such permission will be able to contribute assets in venture capital, as a SAIF can be easily tailored to certain projects, which can be used as an efficient instrument to pool capital from other investors.
- There is no obligation that investors in SAIFs should be solely professionals or citizens of one country, these financial tools allow to invest for everybody.
- The last but not least benefit of opening a fund is privacy. When an individual is authorized to open and operate a small fund, all data of both investors and the volume of their contributions will be completely confidential.
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