Bahamas SMART fund business solution
Since 2003, Healy Consultants has been assisting international investment Firms to register fund management vehicles in the Bahamas and other jurisdictions. The new “SMART” funds (Specific Mandate Alternative Regulatory Test Fund) have proved to be a very attractive solution for investment management, thanks to their flexible compliance and legal obligations.
Advantages of Bahamas SMART funds
- No requirement to prepare an Offering Document. Only a simple Term Sheet is needed;
- Complex fund structures enjoy i) pre-defined incorporation steps and ii) optimized licensing timelines;
- Simple majority of investors can remove fund directors, negating governance risks;
- Diversified management of family assets, that can be separated as investment cells, managed by different asset managers;
- Exemption on annual audit obligations is possible for SMART fund types 1 and 5, if waived by all investors;
- Because The Bahamas Securities Commission allows “open architecture” of business structuring, investors have access to innovative structures otherwise inaccessible in other jurisdictions.
Best uses of Bahamas SMART funds
- The SMART Funds Programme allows for a time-efficient process, suitable for new and unexperienced investors;
- Fund managers keen on creating tailored and innovative vehicles will have a higher chance of license approval under this programme.
Types of SMART funds
There are five core types (models) of smart investment funds in Bahamas, including:
- SMART Fund 001: This structure represents a collective investment scheme limited only to the discretionary managed Clients of regulated financial institutions;
- A SMART Fund 002: Tailored private investment company with a maximum of 10 qualified investors. The majority of qualified investors can freely appoint and remove the fund’s operators (i.e., general partners, directors);
- A SMART Fund 004: represents a private investment company with a maximum of 5 investors with no requirement to appoint a fund administrator;
- A SMART Fund 005 is an investment fund with a maximum of 5 qualified investors and may not require licensing from the Securities Commission as fund administrator;
- SMART Fund 006: Allows the creation of a side fund for non-liquid assets, which can be transferred into another SMART fund;
- SMART Fund 007: This vehicle can be created by a single investor, but allows a maximum of 50 investors to have an equity interest in the fund. There is a minimum investment of US$500,000 and license requirement in all cases.
Best uses of Bahamas SMART fund?
A Bahamas SMART fund is a flexible solution for global investors interested in innovative asset management structures, otherwise involving complex incorporation procedures in other jurisdictions.
Other considerations table
|SMART FUND 1||SMART FUND 2||SMART FUND 4||SMART FUND 5||SMART FUND 6||SMART FUND 7|
|Annual financial statements required?||Yes||Yes||Yes||Yes||Yes||Yes|
|Annual Audit required?||Yes||No||No||No||Yes||No|
|Specific license required?||Yes||Yes||Yes||Yes||Yes||Yes|
|Licensed administrator required?||Yes||Yes||No||No||No||No|
|Custodian appointment required?||Yes, except for fund-of-funds or master-fund structures||Yes, except for fund-of-funds or master-fund structures||Yes, except for fund-of-funds or master-fund structures||Yes, except for fund-of-funds or master-fund structures||Yes, except for fund-of-funds or master-fund structures||Yes, except for fund-of-funds or master-fund structures|
|Term sheet mandatory?||No||Yes||No||No||No||No|
|Performance reports?||Every six months||Every six months||Every six months||Every six months||Every six months||Every six months|
|Qualified investors required?||No||Yes||No||Yes||No||No|
|Invoice||Inquire a proposal||Inquire a proposal||Inquire a proposal||Inquire a proposal||Inquire a proposal||Inquire a proposal|