Investment Management

Gibraltar funds do not require a Gibraltar-based investment manager or advisor. NonEU managers of Gibraltar funds are also not required to be licensed under equivalent standards to AIFMD or MiFID. However an investment manager managing an EIF must comply with the legislation from its home jurisdiction.

If a manager is based in Gibraltar or any other European jurisdiction, it will ordinarily require a MiFID or an AIFMD license in order to conduct investment management or fund management business. At the time of writing, Gibraltar is also developing a Small AIFM regulatory regime for those managers managing AIFs that fall below the in-scope requirements of AIFMD. Once the Small AIFM regulatory regime is introduced, existing MiFID fi rms who conduct the business of managing AIFs through a MiFID license will be required to hold a Small AIFM license.

A Gibraltar firm carrying out core investment services will require authorisation under MiFID. Investment services include receipt or execution of orders relating to fi nancial instruments, portfolio management and the provision of investment advice. There are three basic categories of license:

Category

 1

2

3

Activities

  • arranging deals
  • discretionary portfolio management
  • holding client money
  • deal on own account, both as agent and as principal
  • arranging deals
  • discretionary portfolio management
  • holding client money
  • arranging deals
  • discretionary portfolio management

Capital Requirement

  €730,000  €125,000  €50,000

 

In addition to the basic capital requirement under the license process, each investment manager is required to complete an Internal Capital Adequacy Assessment Process (‘ICAAP’). Submission to the FSC determines what additional capital is required to support the business, taking into account the risks faced by the business and mitigation controls in place. Typically most licensed businesses will need to provide some additional capital above the minimum set out in the regulations.

A Gibraltar investment manager or advisor must have a physical presence and staff located in Gibraltar. Investment managers licensed in Gibraltar may apply to passport the provision of their services across the EU. Similarly EU fund managers relocating to Gibraltar may passport in, which requires a relatively routine notification process. A new investment manager in Gibraltar, or one relocating from outside the EU, will be required to complete the application process set out in the FSC website. The FSC employs a universal application process across all licensed activities. The main elements of the application comprise:

  • Completion of application forms for the business and all its controllers;
  • Provision of a detailed business plan;
  • Provision of a 3 year financial plan with accompanying statutory returns;
  • Submission of an ICAAP assessment;
  • Details of the systems and controls in place;
  • Details of compliance and anti-money laundering procedures; and
  • Business continuity plan.

The application time frame is driven by the quality of the application submitted. If the application includes the appropriate level of foresight and due diligence then an investment manager can expect to be licensed in Gibraltar within a period of three to six months. Once an application is submitted the FSC will work to ensure that the principal individuals behind the business are:

  • fit and proper to run an authorised business;
  • have the resources, systems and controls to effectively manage the business;
  • adhere to the ‘four eyes’ principle; and
  • that mind and management of the investment manager is located in Gibraltar.