4.1 INTRODUCTION

Once upon a time in hedge fund wonderland there was a hedge fund manager who wanted to get international clients. In order to adhere to the prevailing rules of the land he knew that he had to get offering documentation and a memorandum and articles of association. Therefore, he plucked the appropriate documents from the healthiest looking tree in the land and carried them home; soon afterwards he distributed them at the right time and the right place to the right clientele; and he consistently produced the right performance numbers thereby making himself and his clients rich and content; and all of them lived happily ever after

Wouldn t it be nice if reality could match the fairy tale? Unfortunately, all too often the setup of an offshore fund is accompanied by stories of endless delays, out-of-bound costs, angry clients, confused sponsors, conflicts of interest, and never matching time schedules of the involved parties. Evidently this is not ideal. Consequently, it will be the focus of this chapter to establish a procedure for the sponsor of an offshore fund which if adhered to should allow for the avoidance of common problems.

The secret to keeping away from cost explosion and seemingly never ending delays in time is proper preparation. It can save significant amounts of time and money if the sponsor is completely aware of the issues which need to be mastered and what type of service providers need to be selected aforehand.

This chapter will...