On 15th December 2008, changes were made to the regulation of
investment funds in Guernsey. Those changes created two regulatory
regimes for collective investment schemes in Guernsey:
registered investment schemes; and
authorised investment schemes.
Further changes to the registered investment scheme regime were
made with effect from 1 April 2015. This briefing note analyses the
differences between the two regimes.
Repeal of COBO
Prior to 2008, Guernsey closed-ended
funds were regulated by the Control of Borrowing (Bailiwick of
Guernsey) Ordinance, 1959, ("COBO") and
open-ended schemes by the Protection of Investors (Bailiwick
of Guernsey) Law, 1987 ("POI"). Now, all open and
closed-ended funds are governed by POI and may elect to
be regulated as authorised or registered schemes.
In conjunction with the 2008 changes, the Guernsey Financial
Services Commission ("GFSC") has issued three sets
of rules under POI:
the Registered Collective Investment Scheme Rules 2015 (RCIS
Rules), applicable to open and closed-ended registered
the Prospectus Rules 2008 applicable to open and closed-ended
registered funds; and
the Authorised Closed-ended Investment Schemes Rules (ACIS
Rules) 2008 applicable to authorised closed-ended funds.
Authorised open-ended schemes continue to be governed by the
Class A, Class B and Class Q Rules.
The registered fund regime offers a fast-track (3-day)
approval process that involves an expedited review by the GFSC
at the inception of the fund and relies upon increased due
diligence expectations on the part of the fund's
administrator (referred to in the ACIS Rules as the designated
manager and in the RCIS Rules as the designated
Funds that wish to be authorised under the ACIS Rules but
which do not meet the qualifying investor fund (QIF) criteria
will be subject to GFSC scrutiny at the outset and,
consequently, the authorisation process will take significantly
longer than the registration process.
Authorised funds which meet the QIF criteria can access the same
fast-track (three-day) approval process as registered funds.
Therefore, for funds which meet the QIF criteria, timing
considerations alone will not dictate which regime is the more
suitable. To assist promoters and their advisers in choosing
between the two regimes, we set out below a comparison of the
registered and authorised regimes.
Registered and authorised funds may be established as
companies, unit trusts or limited partnerships or such other
vehicle or entity as may be approved by the GFSC. Each scheme
must be established with the objective of spreading risk
and the criteria must be specified in the information
Closed-ended funds (authorised or registered) are not required to
appoint a custodian and may appoint a custodian or trustee
that is domiciled outside Guernsey.
Application and annual fees for both regimes are identical and
contain identical conflicts of interest requirements.
The GFSC adopts the same (existing) policy of selectivity in
respect of both regimes.
The designated manager/administrator of an authorised or registered
fund must submit to the GFSC within six months of the end of
each financial year the audited annual report and accounts
together with any principal documents or other agreements
which have been amended (or, in the case of authorised
schemes, materially amended). The requirement to file
quarterly statistical information is identical under both
The designated manager/administrator of every authorised or
registered fund must notify the GFSC in writing annually of
any changes in the information contained in the application
form submitted for authorisation or registration of the fund.
The first such notification has to be submitted to the GFSC within
12 months of the date on which a declaration of authorisation
or registration was issued and thereafter at intervals of not
more than 12 months. Nil returns are required.
The designated manager of an authorised fund must give written
notice forthwith to the GFSC of:
a proposed material change in the constitutive documents or the
information particulars of the fund;
a proposed change of the (i) manager or general partner, (ii)
designated manager/administrator, (iii) secretary, (iv)
registrar, (v) custodian or trustee, (vi) investment adviser
or investment manager, (vii) directors, or (viii)
a proposed material delegation of the duties of any of the
parties listed in (2)(i) to (vi) above;
any change in the name or of the ultimate or intermediate
beneficial ownership of any of the parties listed in 2(i) to
any proposed material alteration to any agreement under which a
licensed entity provides management, administration or custody
services to the fund;
any proposed material alteration to the fund itself including
its name and its investment, borrowing and hedging
any proposal to reconstruct, amalgamate, terminate prematurely
or extend the life of the fund;
any proposal to list or de-list the fund on any stock exchange;
the bringing of or the intention to bring any proceedings
against or by the fund.
The immediate notification requirements under the RCIS Rules
are much briefer. The designated administrator of a registered
fund is only required to give written notice forthwith to the
GFSC of any proposal to reconstruct, amalgamate, terminate
prematurely, wind up or extend the life of the scheme.
Notably, both the RCIS and ACIS Rules only require notification of
these matters to the GFSC. They do not explicitly require GFSC
consent to the proposed changes.
However, any proposed change to the designated
manager/administrator or custodian (where relevant) requires
GFSC consent under both the RCIS and ACIS Rules.
The ACIS Rules set out the disclosures which must be included
in the information particulars issued to investors in an
authorised closed-ended collective investment scheme. The
Prospectus Rules 2008 set out the disclosures that must be
made to investors in a registered collective investment
scheme. These disclosure requirements differ in some respects,
A registered fund constituted as a limited partnership must
disclose details of significant beneficial ownership of its
general partner. There is no equivalent disclosure for
authorised funds under the ACIS Rules;
The information particulars of a registered fund must contain a
responsibility statement stating that the directors, general
partner, manager or trustee (as appropriate) have taken all
reasonable care to ensure the accuracy of the information
particulars. Although the ACIS Rules ascribe responsibility
for the accuracy of the information particulars to the
directors, general partner, manager or trustee (as relevant)
of the fund, the ACIS Rules do not require an explicit
statement to that effect to be included in the information
Although authorised funds are subject to more immediate
notification obligations, as set out above, the disclosure
requirements in respect of registered funds are slightly more
onerous than those for authorised funds. Accordingly, our analysis
of both rules does not readily identify one regime as being
more heavily regulated than the other.
However, because authorised funds which are not qualifying
investor funds are subject to GFSC scrutiny at the outset and
because of the more stringent regulatory requirements imposed
on authorised open-ended funds, there is a perception that
authorised funds generally are subject to a higher level of
regulation than registered funds. For that reason and because
of the slightly more onerous disclosure requirements
applicable to registered funds, a number of Guernsey fund
promoters have opted for the authorised QIF regime instead of the
registered regime. However, as the above analysis reveals,
technically there is very little to choose between the two
i. there are slightly more immediate notification requirements
for closed-ended authorised collective investment schemes;
ii. the disclosures required of registered funds are slightly
more onerous than those required of closed-ended authorised funds;
iii. authorised funds are perceived to be subject to a higher
level of regulation than registered funds.
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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