Anguilla provides advantages for hedge funds

Anguilla provides advantages for Hedge Funds and IBCs

In 2004, Anguilla added legislation that provided for mutual funds, captive insurance and protected cell companies. The IBC (International Business Company) Act provides all the necessary features of this entity with enhanced shareholder protections.

INCORPORATION

Anguilla has an online company formation system, ACORN, which allows for the incorporation of IBCs, and other corporate entities, as well as the filing of annual returns and all other statutory documents over the internet. Only licensed practitioners i.e. holders of a company management (registered agent), trust or offshore banking license or their approved overseas agents, are allowed access to the system. At the end of the incorporation process, the incorporator receives a digital certificate of incorporation which can be used to open bank accounts. There is no need to take any documents to the Companies Registry for stamping. These are automatically generated by the ACORN system and service providers simply have to collect the hard copy of the articles of incorporation bylaws which will all bear the Registrar's stamp, from the Registry.

Shares and share capital

Shares may be issued as registered shares or bearer shares or both and may be issued to corporations or natural persons. IBCs can be formed with any authorized share capital and in any currency approved by the Registrar. The government fees do not increase based on share capital and shares may be issued with no par value. Shares may also be issued in fractions.

Share registers

IBCs must maintain registers of shareholders and directors. However, there is no requirement to file them with the Registrar.

Registered office/registered agent

Each IBC must have a registered office and registered agent. Only licensed practitioners can provide this service.

Directors and company secretary

An IBC must have at least one director but there is no residency requirement. Directors have all powers provided for in the bylaws except those reserved to the shareholders by the Act. Directors may be corporations or natural persons. There is also no requirement for a company secretary.

Shareholders� meetings

Meetings may occur outside of Anguilla, wherever and in whatever manner determined by the shareholders. Meetings may occur by telephone or other electronic means.

In practice, all companies formed in Anguilla are ordinarily incorporated by a trust company. Because all companies are required to have a licensed registered agent, and only trust companies are so licensed, in practice they control the incorporation procedure.

Technically any person may incorporate an IBC or a CAC by subscribing and filing the Articles of Incorporation, but as all IBCs and CACs are required by law to maintain a registered agent at all times, in practice the registered agent will invariably deal with the incorporation procedure. Similarly any person may form an LLC by subscribing the Articles of Formation, but because all LLCs are required at all times to have a registered agent, this process is usually undertaken by that agent.

All IBCs must be incorporated as companies limited by shares. A CAC may be incorporated as either (1) a company limited by shares, (2) a company limited by guarantee, or (3) a company limited by shares and by guarantee.

 

The corporate constitution of an Anguillan company depends upon which statute it is incorporated under.

         For an International Business Company, they are the Articles of Incorporation and the by-laws. The Articles of Incorporation are publicly filed upon incorporation, but they are a relatively perfunctory document containing very little information beyond the name of the company, the registered office and registered agent, and particulars of the authorised share capital. The regulation of the company's affairs is primarily delegated to the by-laws which are a private document not accessible by the public which are maintained at the company's registered office.

         For a private company registered under the Companies Act, they also consist of the Articles of Incorporation and by-laws.

         For a limited liability company, they are the Articles of Formation and the LLC agreement. Similar to IBCs, the Articles of Formation are publicly filed upon registration, but they are a relatively perfunctory document containing very little information beyond the name of the company, the registered office and registered agent. The principal regulation of the company's affairs is primarily delegated to the LLC agreement which is a private document not accessible by the public which are maintained at the company's registered office.

 

The Articles of Incorporation (or Formation) of a company are filed with the Companies Registry but are not available for public inspection. However, the by-laws or LLC agreement are private, and not available to the public. In each case, the constitutional documents may be amended without a court application, but where the document is publicly filed, the amendment will normally need to also be publicly filed before it becomes effective.

For IBCs and CACs the Articles of incorporation and by-laws will bind the company and each member of the company as if they had been executed by them personally. There is no equivalent provision for LLCs.

In addition to raising capital from their members by way of equity, Anguillan companies may raise capital by way of debt, either in the form of loans or by issuing debt securities. Companies are not required to file financing statements in Anguilla when borrowing money.

Anguilla offers a low cost and efficient regulatory fund environment for private investment funds. 3 types of funds allowed, the two of interest to small offshore fund operators being Private and Professional Funds. A fund may be in the form of Anguillan company, Intl business company, LLC, limited partnership, partnership, unit trust or protected cell company, protected cell accounts, segregated portfolio company, or segregated portfolio accounts. This allows for the issuance of series or classes of shares with different rights, thus allowing for the creation of umbrella funds and master/feeder structures.

Private Funds

This refers to a mutual fund whose constitutional documents specify that it will have no more than 99 members. Private funds are recognised under the Act. The documents must also specify that the making of an invitation to subscribe for or purchase shares issued by the mutual fund are not offered to the public. Exemption from recognition is given to a family trust fund as defined in the Act.

There is no restriction on the amount of investment by individuals who may constitute a private fund.

Professional Funds

This refers to a mutual fund whose shares are made available only to professional investors and the initial investment in which, in respect of each of the persons constituting a majority of such investors, is not less than US$100,000 or its equivalent in any other currency. Professional funds are recognised under the Act. Professional investors are required to state in writing that they consent to being treated as a professional investor.

There is no restriction on the number of investors who may constitute a professional fund.

A mutual fund may also be recognised as a professional fund if it was carrying on business or engaged in an activity as a mutual fund on the date of the coming into force of the Act; the initial investments in respect of the majority of each of the investors in the mutual fund have been not less than US$100,000 or its equivalent in any other currency. Furthermore, the shares of the mutual fund are, after the date of the coming into force of the Act, made available only to professional investors.