Corporate Directors are not an Investment Entity


Corporate Directors are not an investment entity


1. FATCA analysis
In FATCA the only mention of Corporate Directors is when classifying them as entities, but not Financial Institutions.
2. BVI IGA with UK
The BVI guidelines opine that Coroporate Directors do not do activities of an investment entity.
3. CRS analysis
Corporate directors are not manager investment entities. They do not administer financial assets. It is the company that does that, acting on instructions by corporate director. Nor do they administer on behalf of others…
4. Brief PDF document Brief on why a Corporate Director is not a manager type investment entity.
5. Authority to manage assets From the OECD FAQ on CRS Investment Entity:
In what circumstances will an Entity be managed by another Entity that is a Depository Institution, Custodial Institution, a Specified Insurance Company, or an Investment Entity described in Section III, subparagraph A(6)(a)?

The Commentary provides, for purposes of determining whether an Entity is an Investment Entity described in Section VIII, paragraph (A)(6)(b), that
  1. an Entity is managed by another Entity if the managing Entity performs, either directly or through a service provider, any of the activities or operations described in paragraph (A)(6)(a) on behalf of the managed Entity. These activities and operations include trading in money market instruments; foreign exchange; exchange, interest rate and index instruments; transferable securities; or commodity futures trading; individual and collective portfolio management, or otherwise investing, administering, or managing Financial Assets or money on behalf of other persons.
  2. Further, the managing Entity must have discretionary authority to manage the Entity’s assets (in whole or in part). See Commentary on Section VIII, paragraph 17.
Some CRS advisors incorrectly opine that if a Corporate Director (CD) merely has the authority to discretionary manage assets, without actually managing the assets, then the CD is an Investment Entity. As such, the CD helps the entity it manages pass the management test for being an Investment Entity. The other test to be an Investment Entity is the income test.

It can clearly be seen from the FAQ that the CD must:
  • Actually perform the activities of managing the assets, and
  • Have discretionary authority to manage the assets.
Therefore only having the discretionary authority to manage assets but not actually doing any management of assets, the CD does not qualify to be an Investment Entity.


What if the Corporate Director manages the assets of another entity, but not manage the assets of the entity under question?

The Corporate Director would be an Investment Entity for the other entity and hence it is likley that the Corporate Director is an Investment Entity for all entities that it manages. But this would require clarification by OECD.