A mutual fund is classified as a registered unit trust, a company, a partnership or a society which has been granted a licence by the Financial Services Commission of Barbados to carry on mutual fund business in or from Barbados. Entities primarily engaged in any industrial, commercial or charitable enterprise cannot be considered mutual funds. Mutual funds are required to pay an annual licence fee.

Advantages of locating a mutual fund in Barbados

The benefits of operating a mutual fund in Barbados include:

– Licensing and sensitive information is kept confidential

– Exemption from property tax with respect to transactions concerning the acquisition or transfer of shares in mutual funds

– Exemption from Stamp duty with respect to transactions concerning the acquisition or transfer of shares in mutual funds

Mutual funds in Barbados are governed by the Mutual Funds Act Cap 320B.

Mutual funds are entitled to:

1. Hold equity interest in the form of shares and the pooling of investor funds  with the aim of spreading investment risks and enabling investors in the mutual fund to receive profits or gains from the acquisition, holding, management or disposal of investment

2. Invest pooled resources in securities, in accordance with the mutual fund investment policies and objectives; and

3. Issue or offer for issue shares or units for sale that entitles the purchaser or holder of the shares or units:

to receive, on demand or within a specified period after demand, an amount  representing the holders’ proportionate interests in the net assets of the mutual fund;

to withdraw at any time part or all of the investment in the funds; and

to withdraw, at any time, investment by submitting shares or units in the case of an open-ended fund.

Total number of Mutual Funds

As of December 31, 2019 the total number of licensed mutual funds including sub-funds was 22 (Source: Financial Services Commission).

Establishing a Mutual Fund

An application for a licence to administer a mutual fund must be made to the Financial Services Commission. The applicant must have stated equity capital of at least US$500,000 or the equivalent in a currency approved by the Financial Services Commission. The application fee for the Mutual Fund Licence is US$5,000. The application fees for a general administration licence and restricted administration licence are US$5,000 and US$2,500 respectively.