The Eco Resources Fund PCC plc (Qualifying Fund)
On 16 March 2017 His Honour the Deemster Doyle sitting in the High Court of Justice of the Isle of Man heard an application from the Isle of Man Financial Services Authority (“the Authority”) seeking an order to wind up the Eco Resources Fund PCC plc (“Eco”) under sections 162(6) and 164(1)(d) of the Companies Act 1931.
• 162 Circumstances in which company may be wound up by court
A company may be wound up by the court if —
(6) the court is of opinion that it is just and equitable that the company should be wound up.
• 164 Provisions as to applications for winding up
(1) An application to the court for the winding up of a company shall be by petition, presented subject to the provisions of this section either by the company, or by the Treasury, or by any creditor or creditors (including any contingent or prospective creditor or creditors), contributory or contributories, or by 10 or more policyholders in the case of an insurance company, or by all or any of those parties, together or separately: Provided that —
(d) If it appears to the Financial Services Authority, from any information or document in its possession, that it is expedient in the public interest that a company should be wound up, it may, unless the body is already being wound up by the court, present a petition for it to be so wound up if the court thinks it proper for it to be so wound up.
His Honour the Deemster Doyle granted the applications by Orders, and appointed Mr Gordon Wilson of CW Consulting Limited as deemed Official Receiver and Provisional Liquidator of the Eco Resources Fund PCC plc. Contact details for Mr Wilson are set out at the end of this statement..
The judgement in this matter is now available to view on the High Court website.
Eco is an Isle of Man Qualifying Fund that launched in July 2012. It was incorporated under the Companies Act 1931 with a reference: 127199C. Eco invested indirectly, via a special purpose vehicle, ERF Limited, into bamboo plantations in Nicaragua and South Africa. ERF Limited invested in loan notes and equity stakes on behalf of the Fund.
Eco has had liquidity issues over a protracted period (since 2014) and has been trying to raise long and short term financing. As at 20 December 2016 Eco had cash resources of GBP 12,545.73 and had accrued debts of over USD2 million. .
In making the application to court the Authority took the following into account:
- On 16 December 2016 the High Court in the Isle of Man appointed an inspector to Eco.
- On 20 December 2016, following a shareholder vote against the liquidation of Eco all three directors of Eco resigned as they felt the result was a vote of no confidence. The proposed new directors have since refused to act, leaving the fund without a governing body.
- On 22 December 2016 the Authority appointed Mr Gordon Wilson to assume control of the affairs of the Fund.
- The Premier Group (Isle of Man) Limited is itself in liquidation and resigned as manager of Eco on 7 February 2017. This led to the tripartite agreement being terminated and as such Moore Fund Administration (IOM) Limited are no longer appointed as administrator to the Fund.
- The Fund’s Custodian (Kleinwort Benson CI) has given notice to terminate its services.
- The Company Secretary resigned with effect from 9 March 2017, leaving the fund with no functionaries.
- The Fund is unable to pay its debts as they fall due:
- The Fund’s former administrator has not been paid since the beginning of 2016.
- The Manager has issued a statutory demand for outstanding fees. The Fund has confirmed in writing that it is unable to pay this debt.
Regulatory Action Taken to Date
Eco has had two Directions imposed by the Authority since September 2015. The first, under 12(1)(d) of the Collective Investment Schemes Act 2008, concerned disclosure to potential investors and the second, under 12(1)(c ) & (d) of the Collective Investment Schemes Act 2008, concerned bringing resolution to the solvency issues Eco was facing.
On 30/06/2016 the Authority appointed Mr. Gordon Wilson as Advisor to the fund under Regulation 13(1)(a) of the Collective Investment Schemes Act.
Following his initial assessment his appointment was extended to take control of the affairs of Eco on 15 July 2016. Mr. Wilson relinquished this role on 5/8/2016, but remained an Advisor to the fund until 22/12/2016 when his role was again extended to take control, following the resignation of all directors to the fund.
On 16 December 2016 His Honour, Deemster Doyle sitting in the High Court of Justice of the Isle of Man heard an application from the Authority seeking an order that an inspector be appointed to the fund. Deemster Doyle granted the application and appointed Paul Shimmin, of Shimmin Wilson & Co., as Inspector of Eco.
The Authority has received a number of reports from Mr. Wilson and is awaiting the results of Mr. Shimmins inspection.
Redemptions – April 2015. Subscriptions – Dec 2015 (All but institutional investors).
Date of Last Audited Accounts
The last audited accounts were to 31 December 2014.
The Authority’s remit for unregulated collective investment schemes
The Authority’s remit for unregulated schemes is to register them, receive notifications of changes and supervise their appointed Isle of Man functionaries. As such schemes are unregulated, they cannot be sold to the general public. The Authority is notified post-facto of the funds creation so has no ability to opine on structure or feasibility of the fund. Unregulated collective investments schemes are typically higher risk in terms of their investment profile and gearing. The Isle of Man Qualifying Fund regulations require that all relevant risks are made known to, and are accepted by, potential investors and that those involved in the promotion, management or administration of a fund are properly licensed and experienced.
Access to such funds is only available to investors who confirm that they meet the fund type’s minimum entry criteria. This includes a statutory certification that they have read the scheme’s offering document and understand and accept the specific risks associated with that type of fund, such as risks surrounding the underlying investments associated with these types of funds and the risk that investment could result in a loss of a significant proportion or all of the sum invested. The Offering Document of such funds also make it clear that the fund is not subject to any approval by the Authority.
The Authority is responsible for a range of scheme types ranging from regulated funds designed for retail clients to unregulated funds designed for experienced/ qualifying investors. The level of regulation is commensurate with the experience level and knowledge of the investor. This is the reason for the statutory declarations that investors must sign in order to access such higher risk specialist and qualifying funds.
The Eco Resources Fund PCC plc is a Qualifying Fund and should not be distributed to retail investors; it was distributed by financial advisers under the pertaining regulatory regime to clients that confirmed they met the minimum entry criteria and understood and accepted the higher risks associated with schemes of this type. Under both Isle of Man and UK legislation, financial advisers who advise clients are required to satisfy themselves that the product is suitable for the particular client.
If an investor is invested directly or indirectly into Eco, the Authority suggests they contact Mr Wilson in the first instance with any queries.
The Authority also suggests that in the meantime investors may also wish to contact their financial advisor or intermediary.
The Authority has prepared some Frequently Asked Questions.
E-mail enquiries can be made to the Authority at:
16 March 2017