Guernsey's PIF regime recognises that for some funds the nature of the target investors warrants a more flexible, cost-effective and timely approach to regulation and fund launch.
It is extremely popular with both new managers looking to launch their first fund and existing promoters looking to provide a simple product to investors very quickly.
A PIF and its associated management entity can be registered and licensed by the Guernsey Financial Services Commission within one business day. The application consists of a single form, which combines the fund registration and the management licence.
This provides a licensed investment manager with a very flexible regulatory environment to allow innovation and expansion.
With the application, the manager and administrator have to make certain declarations to the Commission including as to whether the investors are able to sustain any losses incurred on their investment in the fund and the relative close proximity of these investors to the management. Essentially, this is to ensure that the PIF is aimed at sophisticated investors with sufficient wealth.
Regulation: a PIF must be a collective investment fund under the Protection of Investors (Bailiwick of Guernsey) Law 1987 and be registered with the Commission under the POI Law. PIFs are subject to the Private Investment Fund Rules, which can be found on the Commission's website.
Open or closed ended: a PIF can be either an open-ended or a closed-ended fund.
Flexible form: PIFs may be established as companies, unit trusts, limited partnerships or such other vehicle or entity as may be approved by the Commission.
Manager: the manager must be licenced and domiciled in Guernsey and be responsible for the investment management of the fund as a whole. However, the Licensees (Conduct of Business) Rules, 2016 and the Licensees (Capital Adequacy) Rules 2010 do not apply to the manager.
Investors: a PIF may have a maximum of 50 investors but there is no limit to how many investors a PIF is marketed to. For open ended funds, following the initial year from the date of first subscription, the PIF may take on 30 additional investors per year, up to the cap of 50 investors.
Documents: due to the relationship between manager and investors, there is no regulatory requirement to produce a prospectus. The only document submitted to the Commission is the Form PIF, although the manager may wish to prepare a document outlining the terms and risks of the investments for the investors.
Administration: a Guernsey domiciled and licensed administrator must administer the PIF.
Auditor: a PIF must be audited by a qualified auditor.
Custodian: a custodian is only required for open-ended funds and the Commission will consider the appointment of a custodian or prime broker domiciled out of Guernsey.
Fees: the Commission charges a one-off application fee of £5,757 and annual fees pf £5,096.