How To Start A Hedge Fund - Creatrust

To incorporate a hedge fund in Luxembourg, the promoter needs to set up the alternative investment fund entity. This can be either a mutual fund (FCP) or a company with variable capital (SICAV).

The choice of the jurisdiction might be the first step in the process: whether in Luxembourg or in other well-known destinations within the industry, such as the Cayman Islands or British Virgin Islands.

There are a number of parameters which should be taken into account, such as whether the destination is a business-friendly environment; with a stable government, well-developed financial services laws, and well-organised civil/common law system. The tax system should provide exemption of corporate gains, income or withholding taxes of any nature when distributions are made to investors. For all these reasons, many funds have selected Luxembourg, Cayman or BVI as their home.

Luxembourg Specialised Investment Funds , RAIF and SCSp are particularly suitable for hedge fund strategies.

The hedge fund – how to incorporate the investment company

• The first step for the promoter is to prepare the draft memorandum and articles of association, which will be used to set up the company, and will conform with the offering documentation.

• The second step is to draft the offering document which sets out the terms of the offering of the fund's shares (offering memorandum).

• The third step is to incorporate the form of company and register the fund.

The Hedge Fund and their Investment Management Company The hedge fund shall be managed by a management company. Should the promoter not have a management company, then the first step is to set up such a company (eithe rin Luxemborug or abroad). Promoters may appoint an investment management company formed in another jurisdiction. Management Companies are either regulated or simply registered ; called sub threshold AIFM (below 100 Mio AUM)

Creatrust helps promoters, institutional clients and managers to establish their own hedge fund, and supplies corporate services and fund administration services to ensure efficient running of the vehicle.

Read also:

• Specialised Investment Funds

• Securitisation Fund

• Alternative Investment Funds