Over recent years both Guernsey and Jersey have updated their respective private fund regimes, both of which have generated significant interest from fund promoters who are looking to launch new funds in the Channel Islands. We have summarised the key features of the regimes below.
GUERNSEY PRIVATE INVESTMENT FUNDS (PIFs)
The Guernsey Financial Services Commission (GFSC) introduced the Private Investment Fund Rules 2016 (PIF Rules) which created a new class of private fund under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 (as amended) (POI Law).
PIFs may be open-ended or closed-ended, and are targeted at managers with a relatively small investor base who are looking for a more flexible regime.
The key features of the PIF Rules are:
- there should be no more than 50 investors (or persons holding an ultimate economic interest) in a PIF;
- for open-ended PIFs the manager must apply a continuous rolling test whereby in the previous twelve months no more than 30 new ultimate investors may be added to the PIF;
- there is no requirement to produce an offering document or prospectus for a PIF;
- a licensee domiciled in Guernsey (other than the locally licensed administrator) must take responsibility for the management of the PIF (Manager) and confirm that it has assessed that the investors are able to sustain any loss of investment in the PIF;
- a Guernsey licensed administrator must be appointed by the PIF;
- PIFs may be established as companies, limited partnerships or unit trusts; and
- a PIF is not required to appoint a custodian, although if open- ended, custodial arrangements will need to be approved as part of the application process.
JERSEY PRIVATE FUNDS (JPFs)
JPFs were introduced in 2017 and effectively replaced three existing Jersey products: Very Private Funds, Private Placement Funds and COBO Only Funds. JPFs are required to obtain a consent from the Jersey Financial Services Commission (JFSC) issued under the Control of Borrowing (Jersey) Order 1958, which sets out certain conditions with which a JPF must comply.
The key features of a JPF are:
- can only be marketed to 50 or fewer “professional investors” or eligible investors (i.e. investors with a minimum investment value of £250,000);
- can be open-ended or closed-ended;
- has no requirements for promoter policy/approval;
- has no requirement for Jersey-resident directors (but the JFSC have stated that they would generally expect a JPF to have Jersey-resident directors);
- is not required to issue an offering document;
- must appoint a designated service provider (DSP), which is registered pursuant to the Financial Services (Jersey) Law 1998 – in practice the fund’s administrator will generally fulfill this role;
- must communicate an investment warning and disclosure statement to its potential investors ahead of them making an investment into the JPF;
- is not required to appoint an auditor, but any qualified audit must be reported; and
- must make a JPF return which is signed by the DSP.
Annual: £5,096
(includes application and annual fees for the Manager)
Annual: £500
GUERNSEY PRIVATE INVESTMENT FUNDS (PIFs) |
JERSEY PRIVATE FUNDS (JPFs) |
The Guernsey Financial Services Commission (GFSC) introduced the Private Investment Fund Rules 2016 (PIF Rules) which created a new class of private fund under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 (as amended) (POI Law). PIFs may be open-ended or closed-ended, and are targeted at managers with a relatively small investor base who are looking for a more flexible regime. |
JPFs were introduced in 2017 and effectively replaced three existing Jersey products: Very Private Funds, Private Placement Funds and COBO Only Funds. JPFs are required to obtain a consent from the Jersey Financial Services Commission (JFSC) issued under the Control of Borrowing (Jersey) Order 1958, which sets out certain conditions with which a JPF must comply. |
The key features of the PIF Rules are: • there should be no more than 50 investors (or persons holding an ultimate economic interest) in a PIF; • for open-ended PIFs the manager must apply a continuous rolling test whereby in the previous twelve months no more than 30 new ultimate investors may be added to the PIF; • there is no requirement to produce an offering document or prospectus for a PIF; • a licensee domiciled in Guernsey (other than the locally licensed administrator) must take responsibility for the management of the PIF (Manager) and confirm that it has assessed that the investors are able to sustain any loss of investment in the PIF; • a Guernsey licensed administrator must be appointed by the PIF; • PIFs may be established as companies, limited partnerships or unit trusts; and • a PIF is not required to appoint a custodian, although if open- ended, custodial arrangements will need to be approved as part of the application process. |
The key features of a JPF are: • can only be marketed to 50 or fewer “professional investors” or eligible investors (i.e. investors with a minimum investment value of £250,000); • can be open-ended or closed-ended; • has no requirements for promoter policy/approval; • has no requirement for Jersey-resident directors (but the JFSC have stated that they would generally expect a JPF to have Jersey-resident directors); • is not required to issue an offering document; • must appoint a designated service provider (DSP), which is registered pursuant to the Financial Services (Jersey) Law 1998 – in practice the fund’s administrator will generally fulfill this role; • must communicate an investment warning and disclosure statement to its potential investors ahead of them making an investment into the JPF; • is not required to appoint an auditor, but any qualified audit must be reported; and • must make a JPF return which is signed by the DSP. |
