Private Equity Fund Administrator: His role and duties
The notion of effective fund administration over the life of a Private Equity Fund (‘PE Fund’) is critical. Over and above the role of Fund Managers (inclusive and its relative sub-committees), the expertise and robustness of the Fund Administrator definitely helps in achieving value creation.
By appointing a good Fund Administrator, Fund Managers can primarily focus on the core management of the portfolio companies. On the over hand, the Private Equity Fund Administrator is also independent and provides third party protection in the best interests of the investors.
Moreover, it is fair to say that Fund Managers rely highly on their respective Fund Administrators to deliver superior Internal Rate of Return (IRR), as well as non-financial quality end-results.
The list that follows describes the detailed role of the typical Fund Administrator.
1. Fund registration and licensing
For instance, the incorporation and application for licensing for the PE Fund will require carrying out client acceptance procedures, as required by law and by the company’s own compliance requirements. This involves the application of Due Diligence (DD) and ‘Know Your Client’ (KYC) procedures, and holding preliminary discussions concerning the business of the Client, tax and other regulatory information.
2. Compliance, AML and DD
The Private Equity Fund Administrator, through its appointed Compliance Officer and Money Laundering Reporting Officer (MLRO), also ensures that the Fund complies with its licensing conditions and applicable laws. The Fund Administrator also adopts, enforces and re-assesses its AML/CFT framework on an annual basis.
The Fund Administrator will also carry out all necessary DD on the investors of the PE Fund as required by the regulations in Mauritius.
3. Provision of resident directors and bank signatories if required
The Fund Administrator will designate the resident directors and bank signatories the PE Fund should appoint. They will also provide independence in terms of fulfilling their responsibilities.
4. Company secretarial services by the fund administrator
The Fund Administrator acts as secretary to the PE Fund. It also ensures that the Fund complies with the laws, including without prejudice to the generality of the following:
- the convening of board meetings and shareholders’ meeting, and the taking of minutes thereof;
- the keeping and safe-keeping of the statutory books and records of the PE Fund, including, without limitation:
- the minutes of the meetings of the directors and the shareholders,
- financial statements,
- official letters,
- and statutory filings with the Mauritius Registrar of Companies;
- performing all the duties of a secretary to a PE Fund under the laws and under the Constitution;
- drafting all Directors’ Resolutions and Shareholders’ Resolutions as required for the PE Fund; and
- applying for all such authorisation or notifying the relevant bodies as required under the laws, amongst others.
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5. MLRO and Compliance Officer
A Private Equity Fund Administrator also caters for the provision of a MLRO, a Deputy/Alternate MLRO and a Compliance Officer according to the law.
A MLRO is the person responsible for reporting suspicious transactions (money laundering or terrorist financing) to the local authorities. The key responsibilities of a MLRO include:
- examining reports received from employees concerning activities and transactions raising suspicions;
- reporting to and acting as liaison with the Financial Services Commission (FSC), the Financial Intelligence Unit (FIU) and other law enforcement agencies;
- maintaining proper and formal records of all Suspicious Transaction Reports, correspondence sent or received, reports made to the relevant law enforcement agencies.
A Compliance Officer forms part of a company as employee. He/she helps the company maintain policies and procedures to remain compliant with the regulatory framework of the industry within which they operate. The duties of a Compliance Officer include:
- working with all employees to identify and manage regulatory risk;
- inspecting facilities to make sure they are accessible and safe;
- drafting or updating internal policies and disciplinary measures to mitigate risks;
- setting standards for outside communications (e.g. disclaimers in emails); and
- Leading internal audits of policies and procedures.
6. Fund Administration services
The Fund Administration services provided by the Fund Administrator include:
- liaising with the investment manager, investors and banks regarding general administration of the PE Fund;
- receiving and managing applications, notices and correspondence on behalf of the PE Fund, opening bank accounts, and renewal of licences;
- providing fund accounting services;
- handling and processing subscriptions to shares in the PE Fund and, subject to the law, dealing with requests for repurchases and re-sales of repurchased shares and taking such actions as shall be necessary in order to effect such sales and repurchases;
- attending to all administrative work concerning capital calls;
- payment of Fund’s expenses relating to the operation of the PE Fund and its constitutive documents;
- processing of instructions and maintenance of a creditors’ ledger system for the PE Fund;
- maintenance of internal control procedures for verification and payment of invoices in line with budget of the PE Fund;
- acting as signatory to the PE Fund’s bank account if required;
- carrying out KYC and DD work on investors and parties having a business relationship with the PE Fund;
- reporting with regulators and Investors; and
- handling the processing of subscriptions to shares in the PE Fund and, subject to the Laws, dealing with requests for repurchases and re-sales of repurchased shares and taking such actions as shall be necessary in order to effect such sales, repurchases and preparing distribution calculations and follow up with investors.
7. NAV computation by the fund administrator
The Private Equity Fund Administrator is responsible for the Net asset value (NAV) computation. The NAV is the value of a fund’s assets minus the value of its liabilities. The formula is , where:
- Fund assets represents the value of all the securities in the portfolio; and
- Fund liabilities represents the value of all liabilities and fund expenses (e.g. salaries, management and operational expenses, audit fees, etc.)
8. Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS)
As part of its role, a Private Equity Fund Administrator assists its clients for FATCA assessment and CRS reporting.
FATCA is a US tax initiative. An initiative of the Internal Revenue Services (IRS), its objective is to prevent tax evasion by promoting cross-border tax compliance through the implementation of international standards for the automatic exchange of information relating to US citizens.
Wide reaching CRS is a global reporting standard for the automatic exchange of information introduced by the OECD. Its objective is to allow tax authorities of a country to have a better view of financial assets held abroad by their residents.
Why choose Sunibel Corporate Services as your preferred Fund Administrator
Our clients are our only focus. Our professional team of fund administrators provides bespoke fund services, fund accounting and fund administration services.
Our competitive advantage resides in:
- Provision of high-end tailor-made solutions;
- Robust team of fully-fledged fund administrators;
- Outsourcing of your fund accounting;
- Highly responsive team;
- International expertise, arising from our Swiss origins;
- Pro-active and strong Investor Relations;
- Advanced technology;
- Continued and valuable relationships; and
- Robust Internal Controls Systems.
Collaborating with the right Fund Administrator is of essence in this ever evolving and dynamic world. We need to keep pace through expertise and continuous learning.
“Risk comes from not knowing what you’re doing.” – Warren Buffet.
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Disclaimer and important notices
This document has been prepared using sources believed to be reliable. However, their accuracy and completeness cannot be fully guaranteed. The statements and opinions it incorporates were formed after careful consideration and maybe subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to sell any services. The use of any information contained in this document shall be at the sole discretion and risk of the user. Sunibel Corporate Services Ltd does not provide legal or tax advice and this document should not be construed as such. Sunibel Corporate Services Ltd expressly disclaims any and all liability for inaccuracies contained in the document and shall not be held liable for any damage that may result from any use of the information presented herein.
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