Hedge Funds

A hedge fund is a form of collective investment scheme that pools capital from investors and allocates it across various financial instruments, including:

• equities, bonds, options, and commodities
• money market instruments
• other investment securities

Profits and capital appreciation achieved by the fund are distributed among investors proportionally to their shares. The main advantage lies in risk diversification and flexible investment strategies.

Legal Framework and Regulation

The hedge fund industry in Seychelles is regulated under the Mutual Fund and Hedge Fund Act, 2008 (as amended).
The Financial Services Authority (FSA) is the competent authority responsible for licensing, supervision, and regulatory compliance.

Every Seychelles hedge fund must comply with:

• Registration and licensing by the FSA
• AML/CFT obligations under the AML Act 2020
• Beneficial ownership disclosure (Beneficial Ownership Act)

Hedge Fund Structures

Hedge funds in Seychelles can be structured as:

• International Business Company (IBC) under the IBC Act 1994
• Company (Special Licence) under the Companies Act 2003
• Partnership Limited by Shares

The IBC structure is the most common due to its flexibility, simplicity, and favorable tax treatment.

Types of Hedge Funds in Seychelles

The legislation recognizes four primary categories:

1. Private Fund

• Maximum of 50 investors
• No public offering or marketing allowed
• No minimum investment requirement

2. Professional Fund

• Designed for qualified investors
• Minimum subscription: USD 100,000 per investor

3. Public Fund

• Targeted at retail investors
• Requires an FSA-approved prospectus

4. Exempt Foreign Fund

• Already licensed in a recognized jurisdiction
• Must be managed by a Seychelles-licensed fund administrator

Key Advantages of Setting Up a Hedge Fund in Seychelles

• Attractive tax regime: Offshore income may qualify for 0% corporate tax, provided economic substance requirements are met
• Possibility of umbrella funds – multiple sub-funds under a single structure
• Flexible regulatory environment and investor protection
• Free repatriation of capital and profits
• OECD white-listed jurisdiction with strong legal framework

Tax Benefits and Substance Rules

• 0% corporate income tax applies only to offshore income, subject to economic substance compliance.
• Local Seychelles-sourced income is taxable at standard corporate tax rates (15–25%).
• Substance obligations include:
  • Licensed local fund administrator
  • Board and management presence
  • Operational and record-keeping functions in Seychelles

Regulatory Requirements and Compliance

To obtain an FSA license, a fund must provide:

• Licensed Seychelles-based fund administrator
• Offering memorandum / prospectus
• AML/KYC documentation, compliance manual, and risk management policies
• Annual audit by an FSA-approved auditor
• Annual returns and license renewal with FSA

Why Choose Seychelles for Hedge Funds?

• Tax neutrality for offshore income (0% with substance compliance)
• Flexible fund structures for private and professional investors
• Robust legal framework with international credibility
• Confidentiality and investor protection

Looking to Launch a Hedge Fund in Seychelles?

We provide:

• Complete fund incorporation and licensing with FSA
• Drafting of offering memorandum and legal documentation
• Appointment of licensed fund administrator and compliance officer
• Ongoing fund management and regulatory compliance support

Contact us today to structure your Seychelles hedge fund with full compliance and maximum efficiency.