Segregated Fund International Companies
The Segregated Fund International Companies Act 2000 (the "SFIC Act") creates an innovative vehicle for international investment and asset protection by providing a legislative regime for statutory quarantining of assets and liabilities.
The legal structure
The SFIC Act permits the incorporation of a segregated fund international company (SFIC) which is empowered to create investment cells known as "segregated funds". Each fund is registered and bears its own distinct name. The segregated fund is a separate division of the SFIC in which assets and liabilities are quarantined, and the rights and obligations of members and creditors are administered separately as between each fund and the SFIC itself. A SFIC may have any number of segregated funds.
The assets and liabilities of the SFIC are designated as either segregated or non-segregated. Segregated assets and liabilities are those that are attributable to the segregated funds, whilst the non segregated assets and liabilities are those held beneficially by the SFIC.
The capital of a SFIC can be structured in the same form as any other limited liability company. A SFIC may be a company limited by shares and/or guarantee although it cannot issue bearer shares. The SFIC can create and issue shares or other membership interests in each segregated fund. Such shares or interests in each fund constitute a separate class.
Management of a SFIC is effected through both directors and fund managers. Each SFIC must have one resident individual director who must be an officer of a trustee company. Otherwise there are no restrictions on the number or qualifications of directors. Corporations may be directors. Each segregated fund must have a fund manager that is a licensed trustee company.
As a trustee company, Asiaciti Trust Samoa Limited can provide both the resident director and fund manager. Please contact us to find out more.
Asset protection
The segregation of assets and liabilities into separate legally segregated funds provides a strong corporate asset protection feature.
The liability of a SFIC is limited to the assets of the segregated fund to which the transaction is attributable. Creditors of a segregated fund are only entitled to have their claims satisfied from the assets of the fund with which they transacted, and are statutorily prohibited from access to the assets of other funds. Similarly, members are only obligated to, or entitled to exercise their rights in respect of, the segregated fund in which they have an interest. Distributions to members can only be made from the fund in which they hold an interest and there is no recourse to other segregated funds for distributions.
Uses of SFICs
A SFIC is an ideal vehicle for a family office structure. Segregated funds can be used to separate the interests of various family members and to provide for -succession planning, whilst allowing family assets and businesses to administered in one entity, ie. the SFIC. Alternatively segregated funds can be used as asset protection vehicles to hold and operate different family businesses or investments within the SFIC but with each investment or business being protected from creditor claims against the other. The family office SFIC can be structured as an alternative to the common law trust or as part of a family office trust structure. Similarly the segregation of funds within one company may form part of tax deferral based planning structures for residents of countries which adopt Controlled Foreign Corporation (CFC) legislation.
SFICs can also be used as collective investment vehicles (mutual funds), insurance pools, "rent a captive" insurance companies, or by joint venture partners to manage JV projects whilst maintaining separation of their interests.
Effect of the International Companies Act 1987
Unless specifically provided in the SFIC Act, the ICA applies to SFICS, giving them the same flexibility and functionality as Samoa international companies. Specifically the confidentiality provisions of the ICA are incorporated into the SFIC Act to maintain the rigorous non-disclosure provisions for SFICs, segregated funds, members and the principals of such entities.
SFICs and segregated funds are exempt from all local taxes, duties and exchange controls, and are not required to file annual accounts. Please contact us for further details of this unique and innovative product.
Click on one of the links below to read more about Samoa companies:
International Partnerships and Limited Liability Partnerships