Openness to Public

Another classification of offshore funds concerns the extent to which they are open to public, by this rating they are divided into following categories:

Public Funds - Offshore funds that offer their investment shares to general public; the type of fund that needs the highest degree of regulation, and must be registered before engaging in any business activity in or from within the offshore jurisdiction.

Public Fund must publish a prospectus, and also produce and distribute audited annual financial statements. Also, there are very stringent requirements concerning all the persons involved with the promotion and management of a fund. Most Mutual Funds Acts require that a prospectus for a public mutual fund shall provide full and accurate disclosure of all such information, as investors would reasonably require and expect to find for the purpose of making an informed investment decision.

Private Funds – offshore mutual funds which by their constitutional documents have restricted the maximum number of investors to very limited number, or have specified that all invitations to suvscribe for the funds' shares shall be made on a private basis. Meanwhile, the 'private basis' embodied in the most offshore Mutual Funds Act does not allow to send too large number of potential investors.

Professional funds – one of mutual fund categories, the shares of which are made available only to “professional investors”, and the initial investment in which is quite substantial (for example, US$ 100,000).

Professional funds' registration procedure is much simpler than for public funds, and the registration procedure is called “recognition”. In the British Virgin Islands, the recognition of a professional or private fund requires completion of the relevant application, provision of the proofs or documents that supposedly qualify the fund as private or professional, provision of the details of the fund, the details of its managers, administrators, custodians and other professionals involved, and their places of business. The application should be accompanied by the prescribed fees. During the recognition procedure of a private or professional fund, most of the attention of the Registrar will be paid towards the particulars of the managers, administrators and other professional parties involved with the fund.

The “professional investor” is any person who has declared his net worth to exceed millions of US dollars, and has consented in writing to be treated as a professional investor. So, this is a person who is probably either an investment professional, or a person who has declared that his net worth is substantial and has declared he knows what he is doing.

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30/09/2006
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