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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 summarized the key features of the regimes below. To download a PDF of the comparison click here.
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 funds under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 (as amended) (POI Law). PIFs are targeted atmanagers with a relatively small investor base who are looking for amoreflexible regime. If the fund meets the requirements of the PIF Rules itcanberegisteredwithoutanyManagerorthefundneedingto go through the usual approval process under the POI Law, . 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 popularJersey products: Very Private Funds, Private Placement Funds andCOBO Only Funds. They have proved massively popular due to their flexibility and proportional 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.
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FEATURE
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GUERNSEY PRIVATE INVESTMENT FUNDS (PIFs)
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JERSEY PRIVATE FUNDS (JPFs)
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Number of investors
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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
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Limit of 50 offers and the JPF can admit up to 50 investors
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Open-ended / closed-ended
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Can be open or closed ended
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Can be open or closed ended
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AIFMD / UK Private Placement
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Compatible with the AIFMD and UK private placement regimes with minimal additional regulatory applications or notifications in Guernsey
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Compatible with the AIFMD and UK private placement regimes with minimal additional regulatory applications or notifications in Jersey
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Promoter approval
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No requirement for GFSC approval
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No requirement for JFSC approval
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Resident directors
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No strict requirement (but the GFSC would generally expect a Guernsey resident director to be appointed)
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No strict requirement (but the JFSC would generally expect one or more Jersey resident directors to be appointed)
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Offering document
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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
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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
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Risk warnings
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No requirement, but standard warnings are generally included in fund documents as a matter of commercial prudence
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Requirement for investment warning and disclosure statement, which can be included in the subscription agreement.
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Type of entity
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Can be a company, limited partnership or unit trust
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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
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Audited accounts
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Required
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Not required (unless JPF is a public company – typically with> 30 members or where it has issued a prospectus)
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Local service provider appointments
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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.
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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 fulfill 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
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Minimum investment / investor criteria
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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.
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£ 250,000 minimum commitment (unless the investor meets the definition of “professional investor”, as set out in the JPF Guide)
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Listing
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Cannot be listed
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Cannot be listed
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Notification requirements
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Limited notification requirements – generally imposed on the administrator
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Limited notification requirements – DSP must notify the JFSC of material changes and make an annual filing
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Carve outs
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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.
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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
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Fees
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Application: 5,757
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Application: 1,370
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Application Timescales
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The GFSC generally aim to approve PIF applications (and any accompanying Guernsey license application for a Manager) within 24 hours from when the application has been received.
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The JFSC generally aim to approve JPF applications within 48 hours from when the application has been received.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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