Jersey and Guernsey Introduce New Fund Regimes

To respond to market demands Jersey and Guernsey have introduced new fund regimes which will enhance the competitiveness of the jurisdictions in which to establish funds.

On 16 November 2016 the Guernsey Financial Services Commission (Commission) launched the new Private Investment Fund (PIF) regime after consultation with industry and in response to market demand.

The new Jersey Private Fund (JPF) was announced by the Jersey regulator and government on 15 March 2017 and came into effect on 18 April 2017.

Alex Di Santo, Director Fund Services based in Jersey, and Kees Jager, Director Funds Services based in Guernsey, discuss the key highlights of these regulations and benefits for fund managers and investors.

The New "Jersey Private Fund"

The JPF replaces the existing three private fund products (COBO Only, Private Placement and Very Private Funds) resulting in one private fund product in Jersey which can be marketed to up to 50 investors. The simplification of the regime and the benefits of the JPF, as set out below, should ensure Jersey continues to compete as a leading offshore centre for Funds.

Key benefits of the JPF:

  1. Flexibility - over legal form and residency of directors
  2. Speed - 48 hour regulatory authorisation process and no prior approval of promoter required from regulator
  3. Simplicity - e.g. no requirement for auditor or private placement memorandum
  4. Regulatory Oversight - reliance placed on Jersey regulated administrator

As noted above a JPF must appoint a Jersey-regulated administrator (“Designated Service Provider”) to ensure that, inter alia, the JPF meets all of the eligibility criteria of the JPF Guide, all necessary due diligence on the JPF and its promoter is carried out and that AML/CFT requirements are complied with. The regulation is focused on the service provider rather than fund which affords the fund a lighter-touch treatment. 

The New "Guernsey Private Investment Fund"

The PIF will benefit products where there is a close relationship between investors and management, greatly reducing the costs and time in launching a fund in Guernsey. The PIF can be either closed-ended or open-ended and is limited to 50 legal or natural persons holding an economic interest.

The key features of the PIF:

  1. No requirement to produce an information memorandum or prospectus
  2. Applications for a PIF are processed within one business day by the Commission
  3. There is no limit to the amount of investors the fund can be marketed to
  4. Requirement for a licensed manager in the structure, who will be responsible for making certain representations and warranties to the Commission on the ability of investors to suffer losses and the fitness of the fund promoter
  5. No conduct of business rules will be applied to the licensed manager
  6. Submission of annual returns
  7. Submitting annual audited accounts (within six months of the year end)
  8. Managing conflicts of interest 

Introductions of these regimes will enhance the funds environment on both islands and make the funds offering clearer and simpler whilst giving the fund managers and investor a greater choice. We anticipate that these regimes will appeal to our client base from private equity, infrastructure to real estate and debt fund asset classes.

 

For further information
Alex Di Santo
Director
Intertrust Jersey
+44 1534 753814
+44 779 773 0253
Kees Jager
Director, Intertrust Guernsey
+44 1481 754294

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