This article covers the documentation requirements to set up a Limited Company that will manage the Private Investment fund. Links to guides are provided on on how to structure a Business Plan for the Limited company and what are the recommended sections to include when drafting the Prospectus.
Table of Content
Registering with a Management Company
The management company will set up a new company for you, and this new company will manage the Digital Assets Fund.
A business plan is the crucial because it serves as a roadmap for how the company will manage its affairs. A well structured business plan gives confidence to service providers and to attract investors.
A sample business plan for company who's primary objective is to manage a Private Investment Fund is provided HERE
A number of other documenst will be requested by the managemen company helping with the set-up of the company and the drafting of the Prospectus for the Private Fund
- Notarized Copy of your Passport
- Certified copy of your utility bill in your name and no older than 2 months
- A professional reference letter from a lawyer, accountant or bank
- A certified copy of your bank statement no older than 2 months with your name and residential address
When selecting a company name for your Crypto fund, the company house in Gibraltar might ask for an additional explanation about the chosen term to verify if it meets any licensing requirement. In general, a financial company in Gibraltar needs to be licensed; therefore, if you choose a name that suggests financial services, then you will need to provide a note explaining how the company will operate.
A company operating a private fund in Gibraltar does not require a special license.
- Management Company - The management company should be your main point of contact when setting up the Limited Company
- Legal Advisory - The legal advisors should be engaged to help with drafting and validating the Prospectus document for the Private Fund
- Accounting Practice - The accounting practice should be engaged to produce and file annuals statutory accounts
Contacts for each of the parties are provided in the References section below
These are the documents that set out legal structure and internal governance of a company
Articles of Association
The Articles of Association (often simply called "Articles") are a legal document that outlines the internal rules and regulations governing the operations of a company. They are one of the two key constitutional documents of a company, with the other being the Memorandum of Association. These documents are required when registering a company and must be submitted to the relevant government authority
The model for the articles of association for a company in Gibraltar are provided below.
The Model Articles of Association cover the following sections
- Interpretation and Limitation of Liability
- Director's Powers and Responsibilities
- Decision-Making by Directors
- Appointment of Directors
- Shares and Distributions
- Dividends and Other Distributions
- Capitalization of Profits
- Organization of General Meetings
- Voting at General Meetings
- Administrative Arrangements
- Director's Indemnity and Insurance
The Management company and the Legal advisors provide support when drafting these
Memorandum of Association
The Memorandum of Association is one of the fundamental documents required when establishing a company under common law systems such as in the United Kingdom and many other countries. It serves as a company's charter or constitution and outlines the company's fundamental objectives, powers, and limitations
Certificate of Incorporation
The Certificate of Incorporation in Gibraltar is a legal document issued by the Companies House in Gibraltar upon the successful registration of a company. This document serves as official proof that the company has been legally incorporated and is recognized as a separate legal entity. The Certificate of Incorporation includes important information about the company, such as its name, registration number, date of incorporation, and the type of company (e.g., private limited company).
Once the registration is complete and the authorities have reviewed and approved the application, the Certificate of Incorporation is issued to the company. This certificate is an essential document for a company, as it is often required to open a bank account and register with the exchanges and other business transactions. It provides evidence of the company's existence and legal status.
The management company will assist with obtaining the Certificate of Good Standing.
Certificate of Good Standing
A Certificate of Good Standing is a document issued by the government or regulatory authority of a jurisdiction, confirming that a particular company is duly registered and authorized to operate in that jurisdiction. The certificate includes information about the company's current status, ownership, and compliance with relevant regulations.
In Gibraltar, a Certificate of Good Standing is issued by the Companies House of Gibraltar, which is the regulatory body responsible for the registration and administration of companies in Gibraltar. The certificate confirms that the company is in good standing, meaning it has fulfilled all its statutory obligations, such as filing annual returns, maintaining a registered office, and paying applicable fees.
This document is required in various business transactions, such as opening a bank account, opening accounts at exchanges, or demonstrating the company's legal status in international dealings. It provides assurance to third parties that the company is validly existing and complying with its legal obligations in Gibraltar.
The management company will assist with obtaining the Certificate of Good Standing.
Opening a Bank Account
The cost to open a bank account can be high and will vary according to your needs. The more service you need the bank to provide the more expensive it will become. You have a a choice between two type of accounts: 1) A full service bank account at a private bank, focusing on wealth management, where they also provides custody of assets amongst other things; 2) A FinTech bank, or a Banking as a Service platform (BaaS) - these typically offer a more basic service and require greater knowledge of banking operations from the user
Full Service Private Bank
A bank account at a Private bank in Gibraltar will cost c. 10k EUR set-up free and maintenance fee of 20k per year. A Private bank will also tend to charge a % of Assets under management. This might be reasonable for a large fund with high volume, or an inexperience fund manager requiring a more comprehensive suite of banking services.
Example of a Private bank in Gibraltar: Turicum Bank - a private bank in Gibraltar offering checking accounts and wealth management;
You will need to prepare a letter addressing the following questions. Sample text is provided for each answer you can amend according to your needs.
Q: What will be the amount and frequency of incoming funds?
A: The target starting capital for the fund is 2.5mn, to be subscribed by 50 individuals with a minimum investment of 50k each. The majority of this will be via bank transfers in USD, EUR and GBP currencies. The fund has a maximum capacity of 50 investors. After the initial subscription, we estimate additional top-ups to be infrequent and far between. Around 0 to 5 per quarter.
Q: What will be the amount and frequency of outgoing funds?
A: Fund withdrawals are processed every quarter. Any withdrawals will be batched and processed at or around the quarter ends. The fund is limited to 50 investors. Therefore, we foresee the number of transactions to be below 50 and the amount of all transactions to be below 10% of the fund's net asset value. The minimum lock-up period is 90 days.
Entities receiving funds
Q: Details of Entities that will receive the funds?
A: Withdrawals will be processed to the same bank account from where the funds were deposited into the fund.
Jurisdictions remitting funds
Q: Jurisdictions that will be remitting the incoming funds?
A: Investors and funds are expected to come primarily from the UK, US, Germany, Netherlands and the rest of the EU.
A bank account at a fintech bank comes with a basic checking account and a debit card. The bank account might have limits on the size of transactions and frequency. And similarly for the issued cards. Set-up cost are c. 1k USD and annual costs of between 1k and 3k USD
Examples of fintech banks that deal with blockchain and crypto projects are:
- Satchel - a banking-as-a-service platform offering checking accounts and payment cards;
- Xace - a bank for the gaming sector offering checking accounts;
- Tap Global - a financial platform, based in Gibraltar offering checking accounts and payment cards.
A prospectus is a formal legal document that provides detailed information about an investment opportunity, such as a securities offering or a mutual fund. It is typically prepared by the issuer or the fund manager and is used to provide potential investors with essential information to make informed investment decisions.
The prospectus is an important document that estbalishes the relation between the Fund and the Investors. A detailed review of the sections that should be included in a Prospectus are covered HERE
Reference Letter Template
THIS IS JUST A SPECIMEN LETTER, THE ORIGINAL MUST BE ISSUED BY A
LAWYER, ACCOUNTANT OR BANK AND MUST BE PRINTED ON THEIR LETTER
To: <<address of management company>>
Re: Mr ………….
We confirm that Mr …………… of address at ……………………………….. has been
personally known to this firm for a period in excess of years and that we consider them
of good financial standing and repute.
In accordance with standard practice, although this reference is given in good faith no
responsibility is to attach to the writer or this firm in respect thereof.