The Guernsey Financial Services Commission ("GFSC") yesterday launched a new regime for private investment funds, following a brief consultation with industry.
In summary, a private investment fund will be registered by the GFSC and the regime dispenses with the need for the preparation of information particulars in circumstances where the manager has a closer relationship with investors. The fund must have within its structure a licensee domiciled in Guernsey, which is responsible for the management of the fund and, as part of the application process, that manager will give certain warranties to the GFSC as to the ability of the investors to assume loss. A designated administrator licensed by the GFSC must also be appointed. The fund is not required to appoint a custodian, although if it is open-ended it must have a designated custodian, which can be the designated administrator.
The fund must be a collective investment scheme and should have no more than 50 legal or natural persons holding an ultimate economic interest (save where an investment manager makes an investment as agent for a wider group of stakeholders). Except for the period of one year from the date of first subscription, a rolling test is applied whereby in the previous 12 months the fund can add no more than 30 new ultimate investors. There is no limit on the number of investors to whom the fund can be marketed.
Private investment funds may be open- or closed- ended and may be established as unit trusts, limited partnerships or companies, including protected cell companies or incorporated cell companies (although there cannot be separate investment advisers acting in relation to individual cells). The funds will be subject to the Private Investment Fund Rules 2016, which set out the mandatory requirements for a private investment fund and provisions relating to the management of conflicts of interest, submission of an annual notification and quarterly statistical information.
The application process (which will require an application to be made at the same time for a licence for the manager and for registration of the fund) should take one business day once a complete application has been made to the GFSC.
An existing registered collective investment scheme may elect prior to 16 November 2017 to be treated as a private investment fund.
Bedell Cristin Guernsey Managing Partner, Kate Ovenden, commented
"the development of the new private funds regime represents a timely response to industry and investor feedback and is a firm indication of Guernsey's continued commitment to the development of its market-leading funds sector".
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