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Private Fund Regimes in Guernsey and Jersey - A Comparison

 

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 are targeted at managers with a relatively small investor base who are looking for a more flexible regime.  If the fund meets the requirements of the PIF Rules it can be registered without any Manager or the fund needing to go through the usual approval process under the POI Law, and with significantly reduced ongoing obligations for both any Manager and the fund. The PIF Rules were updated for further flexibility In 2021 and can be accessed here.

JERSEY PRIVATE FUNDS (JPFs)

JPFs were introduced in 2017 and effectively replaced three popular Jersey products: Very Private Funds, Private Placement Funds and COBO Only Funds. They have proved massively popular due to their flexibility and proportionate approach to regulation.

To acquire JPF status, a consent is required from the Jersey Financial Services Commission (JFSC) issued under the Control of Borrowing (Jersey) Order 1958 (COBO). The JPF Guide is here.

FEATURE

GUERNSEY PRIVATE INVESTMENT FUNDS (PIFs)

JERSEY PRIVATE FUNDS (JPFs)

Number of investors

Unlimited number of offers can be made but no more than 50 investors (or persons holding an ultimate economic interest) are permitted

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

Limit of 50 offers and the JPF can admit up to 50 investors

Open-ended / closed-ended

Can be open or closed ended

Can be open or closed ended

AIFMD / UK Private Placement

Compatible with the AIFMD and UK private placement regimes with minimal additional regulatory applications or notifications in Guernsey

Compatible with the AIFMD and UK private placement regimes with minimal additional regulatory applications or notifications in Jersey

Promoter approval

No requirement for GFSC approval

No requirement for JFSC approval

Resident directors

No strict requirement (but the GFSC would generally expect a Guernsey resident director to be appointed)

No strict requirement (but the JFSC would generally expect one or more Jersey resident directors to be appointed)

Offering document

No requirement to have an offer document/PPM (subject to any applicable AIFMD or non-Guernsey requirements) but if it does, limited content requirements apply

No requirement to have an offer document/PPM (subject to any applicable AIFMD or non-Jersey requirements) but if it does, limited content requirements apply

Risk warnings

No requirement, but standard warnings are generally included in fund documents as a matter of commercial prudence

Requirement for investment warning and disclosure statement, which can be included in the subscription agreement.

Type of entity

Can be a company, limited partnership or unit trust

Can be a company (including PCC or ICC or cell thereof), a unit trust or a partnership (an LP, LLP, SLP or ILP). Non-Jersey entities can also apply for registration as a JPF if they otherwise require to apply for a COBO consent

Audited accounts

Required

Not required (unless JPF is a public company - typically with >30 members or where It has issued a prospectus)

Local service provider appointments

Must appoint a Guernsey licensed administrator. A PIF does not need a Guernsey Manager but if desirable, an application can be made for this entity at the same time as the PIF

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

Must appoint a designated service provider (DSP), which is registered pursuant to the Financial Services (Jersey) Law 1998 – in practice the JPF’s administrator will generally fulfil this role

The DSP need only be regulated for trust company business rather than fund services business if there are 15 or less offers/investors

Minimum investment / Investor criteria

No minimum, but the board of the PIF or the Manager needs to be able to confirm that investors can bear the loss of their investment

£250,000 minimum commitment (unless the investor meets the definition of “professional investor”, as set out in the JPF Guide)

Listing

Cannot be listed

Cannot be listed

Notification requirements

Limited notification requirements – generally imposed on the administrator

Limited notification requirements – DSP must notify the JFSC of material changes and make an annual filing

Carve outs

Express dis-application in the POI Law for holding companies, joint ventures, special purpose/securitisation vehicles and arrangements between those with family or employment connections respectively. Single asset or single investor vehicles and carried interest vehicles would also not meet the definition of collective Investment scheme and so be excluded.

Express dis-application in the JPF Guide for holding companies, joint ventures, special purpose/securitisation vehicles and arrangements between those with family or employment connections respectively. Single asset or single investor vehicles and carried interest vehicles would also tend not to have to be a JPF

Fees

Application: £5,757
Annual: £5,096
(includes application and annual fees for a Manager)

Application: £1,370
Annual: £1,090

Application Timescales

The GFSC generally aim to approve PIF applications (and any accompanying Guernsey licence application for a Manager) within 24 hours from when the application has been received.

The JFSC generally aim to approve JPF applications within 48 hours from when the application has been received.