European Union: Guernsey - A Guide To Guernsey Investment Funds

Last Updated: 3 August 2018
Article by Matt Sanders and Sam Shires

Introduction

Guernsey has long been one of the world's premier jurisdictions for domiciling investment funds, with approximately £263 billion of assets under management and administration on the Island (as at 31 March 2018). Of those assets there is a wide range, including hedge funds, private equity, debt and real estate funds.

Advantages of Guernsey as a Jurisdiction for Funds

The advantages of Guernsey as a fund jurisdiction include:

  1. internationally recognised and reputable jurisdiction;
  2. experienced professional legal and accounting infrastructure;
  3. experienced and wide-ranging fund administration across a range of asset classes;
  4. thorough and pragmatic regulation by the Guernsey Financial Services Commission ("GFSC");
  5. straightforward regulatory application and authorisation process;
  6. tax-neutral environment for funds;
  7. The International Stock Exchange ("TISE") (formerly the Channel Islands Securities Exchange) based in Guernsey;
  8. close geographical proximity to London and continental Europe;
  9. outside the European Union but with the option to privately place funds into Europe or to opt into an AIFMD equivalent regime;
  10. London time-zone; and
  11. availability of innovative corporate vehicles, namely protected cell companies ("PCCs") and incorporated cell companies ("ICCs").

Structures Used to Establish Guernsey Funds

Companies

Guernsey companies are a classic structure used to establish a Guernsey fund, whereby investors purchase shares in the company. Investments in the company are governed by the terms of the memorandum and articles of incorporation of the company and the scheme particulars (offering document) that are prepared for the company. Guernsey companies can issue different share classes, which can be used to give particular investors special rights in the fund, or to create sub-funds of investors within the same company.

PCCs and ICCs

Guernsey pioneered the concept of the cellular company and has been instrumental in establishing these innovative vehicles as internationally recognised corporate entities. Both PCCs and ICCs have proved very popular with promoters of investment funds established in Guernsey for a number of reasons. In particular, the PCC structure allows a fund manager to establish a PCC to which additional sub-funds can be added easily over time. The sub-funds are added as cells within the PCC through a simplified approval procedure, as and when the fund manager decides to add, for example, different asset classes. This feature has made the PCC structure particularly popular. ICCs are of considerable benefit if there is a desire to treat cells as separate legal entities at any stage of the life of the fund.

PCCs

A PCC is a single legal entity, but the company is made up of a core and a number of ring-fenced protected cells. It is a way of creating different portfolios of assets within one company.

Traditional "umbrella funds" have been popular in Guernsey and elsewhere for many years, but practitioners had always recognised the potential risk of "contagion" between sub-funds. This potential risk is removed by the PCC structure because, in the absence of a recourse agreement, in the event of insolvency of a cell the assets of one cell will not be available to creditors of other cells due to the statutory ring-fencing protections.

PCCs have both core capital (in the case of an investment fund, usually the shares held by the management company) and cellular capital, which is the capital invested in individual cells (via the issue of shares to investors).

Investment funds established as PCCs have a number of benefits:

  1. avoidance of contagion risk (see above);
  2. lower cost of establishing new sub-funds as cells (as opposed to setting up a new fund as a separate corporate vehicle);
  3. faster regulatory consent for new cells (usually five working days);
  4. cost savings in the areas of corporate governance and company administration (for example, common board of directors and company secretary and only one set of articles);
  5. taxable in Guernsey as a single legal entity; and
  6. each cell can have different investment advisers or managers.

PCCs can be approved by the GFSC for use as authorised or registered investment funds (see below).

It should be noted that if a PCC is authorised as a particular class of a fund (for example as an authorised Class B open-ended fund - see below) then all cells of that PCC have to be of the same class of authorisation.

Recently amendments have been made to the PCC legislation in Guernsey in order to enable a cell of a PCC to be converted into a stand-alone company. This gives a PCC additional flexibility for structuring and growing funds.

ICCs

An ICC has cells like a PCC, but in the case of an ICC each cell is a separately incorporated, distinct legal entity. The ICC and its cells all have the same directors and same registered office but the legislation specifically states that incorporated cells are not subsidiaries of the ICC. Unlike a PCC, a cell of an ICC may have a different memorandum and articles of incorporation to another cell in the same ICC.

This structure allows incorporated cells to exploit their status as independent legal entities, with the ability to contract amongst themselves and directly with third parties.

The advantages of an ICC are:

  1. cells may enter into legal contractual obligations with one another (such as providing guarantees or loans or acting as feeder funds based in different currencies);
  2. cells have a separate legal identity and can therefore contract with third parties in their own right;
  3. new sub-funds established as additional cells also benefit from the cost and regulatory approval time benefits described above for PCCs; and
  4. ICCs can act as "nurseries" for new funds which might start out as cells of an ICC and, when certain economies of scale have been realised, be converted into separate non-cellular funds in their own right using the statutory severance procedure set out in the legislation.

Limited Partnerships

Limited partnerships tend to be used by private equity fund managers given their familiarity in the PE market and because they are usually treated as being tax transparent vehicles outside of Guernsey. Investors hold interests in the limited partnership as limited partners so they have limited liability. They are then usually taxed on their share of the partnership assets or profits as if they were holding those assets or profits directly in their home domicile.

The legislation governing limited partnerships is the Limited Partnerships (Guernsey) Law, 1995 (as amended) (the "LP Law"). A limited partnership is not a legal entity in its own right but can elect to have legal personality under the LP Law. The Administrator of Income Tax has confirmed that this election will not affect its tax transparent status in Guernsey. The rules of the fund are contained in the limited partnership agreement, and also the offering memorandum sent to investors and normally a subscription agreement signed by investors.

Every limited partnership must have one or more general partners who are responsible for the management of the business of the limited partnership and its liabilities. The LP Law provides that the conduct or management of the business of the limited partnership must not be carried out by the limited partners (subject to certain safe-harbours) otherwise they will lose their limited liability. Therefore, it is usual for the management of the fund to be carried out by a limited liability company acting as general partner (although often in consultation with an investment committee made up of representatives from key investors). In order to carry out these activities this company will need to be licensed by the GFSC under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 (the "POI Law") to act as a general partner. Management of the fund is via the board of directors of the corporate general partner. As this is a licensed company it must have at least one Guernsey resident director and be locally audited.

Day-to-day administration of the fund and the general partner is delegated to a locally licensed administrator as required by the GFSC. A custodian is not normally required (because the fund is normally closed-ended).

Unit Trusts

Unit trusts are a type of trust that can be declared in Guernsey. A trust is an arrangement whereby a person, called the trustee, holds property as its legal owner on behalf of one or more beneficiaries. In Guernsey, unit trusts are governed by the Trusts (Guernsey) Law, 2007 (as amended) (the "Trusts Law").

Unlike other types of trusts, a unit trust must be established by an instrument in writing (ie a trust instrument). The trust instrument will normally be executed by the custodian, as trustee, and the investment manager of the fund. The investment manager is normally a limited liability company which will need to be licensed by the GFSC under the POI Law to act as investment manager.

In a unit trust, the investment manager receives money from investors to form a single fund, which is divided up into units that are owned by the investors (similar to shares in a company). The fund assets are held by the trustee and the investment manager directs the trustee as to investment decisions for the fund. The interests of the investors, the terms governing the types of investments that can be made by the trust and the obligations of the investment manager and the trustee are laid out in the trust instrument.

Listings

Many Guernsey funds are listed on the Official List or the Alternative Investment Market of the London Stock Exchange. Local practitioners and service providers are experienced in these types of listed funds and their operation.

For fund managers looking to list their fund on a "recognised exchange" in order to attract SIPP and SASS investors, or to qualify for REIT status but in a cost-effective and efficient manner, the TISE provides the ideal forum. Walkers Capital Markets Limited is a listing sponsor for the TISE, and we would therefore be very happy to assist with any TISE listing enquiries.

Obtaining Regulatory Approval of Investment Funds in Guernsey

In order to launch a fund in Guernsey, the promoter will need approval from the GFSC and, in the case of listed funds, the appropriate market authority. Different approvals are required depending on whether the fund is to be an "authorised" fund or a "registered" fund, whether the fund is open-ended or closed-ended, the type(s) of investor which the fund is aimed at, and whether the fund is a private investment fund or not. A separate licence may also be required for any manager or general partner entity to be established in connection with the fund. All regulatory approvals are issued and administered by the GFSC through its authority under the POI Law.

Authorised versus registered funds

Both open-ended and closed-ended funds can be approved in Guernsey, as either authorised or registered funds under the POI Law. The main differences between authorised and registered funds are:

  1. the party responsible for the bulk of the due diligence work:

    In the case of an authorised fund, the GFSC undertakes the necessary due diligence on the fund promoter, unless the fund is a "qualifying investor fund" ("QIF"). For registered funds and QIFs, the Guernsey administrator carries out the due diligence required and provides warranties as to the suitability of the promoter to the GFSC.

  2. the length of time to obtain approval:

    Approval of an authorised fund can take as little as several weeks, or up to several months if the fund is not a QIF, but usually towards the lower end of that range. Registered funds and QIFs are approved within three working days of completed documents being submitted to the GFSC and resolution of any issues arising.

  3. the applicable fund rules:

    In general terms, the rules set out stricter requirements for open-ended funds than for closed-ended funds. Likewise, in general terms the rules for authorised funds are slightly stricter than those for registered funds.

Authorised open-ended funds

Authorised open-ended funds are governed by the rules of the class under which they are authorised (known as Class A, Class B and Class Q).

Class A funds are generally retail funds intended for marketing to the UK public (or one of the other territories which recognise Class A funds as equivalent to their own retail funds, thereby allowing the fund to be passported without additional registration or authorisation requirements).

The rules relating to Class B funds have been developed with more flexibility in mind. Class B funds range from retail funds through to institutional and private funds.

Class Q funds are only to be sold investors", with rules which are correspondingly non-prescriptive.

Class A, B and Q funds can all be authorised using the QIF regime if they are limited to "Qualifying Investors". This reduces the authorisation time. However, the "Qualifying Investor" restriction means that in practice usually only Class B funds or Class Q funds are authorised in this way.

"Qualifying Investors" are those who are "professional", "experienced" and/or "knowledgeable", as defined by the GFSC guidelines on QIFs.

Authorised open-ended funds generally require the appointment of a Guernsey licensed custodian, although there is a flexible regime for hedge funds constituted as Class B or Q funds allowing for typical prime-broker arrangements with a non-Guernsey entity to be put in place.

Authorised closed-ended funds

Authorised closed-ended funds are governed by the Authorised Closed-Ended Investment Schemes Rules 2008. Such funds are subject to a lighter degree of regulation than applies to an authorised open-ended fund, but they are required to make more immediate notifications to the GFSC than a registered closed-ended fund.

It is worth noting that there is no requirement for an authorised closed-ended fund to have an appointed Guernsey custodian, and either the Guernsey administrator or a non-Guernsey based custodian may provide safekeeping services, provided that the arrangements are approved by the GFSC.

Authorised closed-ended funds can also be authorised under the "fast track" QIF regime if they are restricted to "Qualifying Investors".

Registered funds

Registered funds (whether open or closed-ended) are governed by the Registered Collective Investment Scheme Rules 2015 and the Prospectus Rules 2008.

The main advantage of a registered fund lies in the three working days, "fast track" approval time, without the "Qualifying Investors" restrictions. It should be remembered that the three working days only begins once all due diligence and information particulars have been completed - see further below.

The Rules require that a registered open-ended scheme must appoint a designated manager and a designated custodian, who are licensed under the POI Law. For a registered closed-ended scheme, only a designated manager is required.

The Rules require each registered fund to prepare information particulars which contain (at a minimum) the matters set out in the Prospectus Rules 2008. The ongoing notification requirements under the Rules are not as extensive as those for an authorised scheme.

Private investment funds ("PIFs")

The Private Investment Fund Rules 2016 (the "PIF Rules") create a new class of private fund which may be registered with the GFSC under the POI Law. PIFs may be either open or closed-ended and are aimed at the situation where a manager has a close working relationship with a small group of investors. In this situation a more informal and flexible regulatory regime may be appropriate for the fund and its investors. The key features of the PIF Rules are:

  1. there should be no more than 50 investors (or persons holding an ultimate economic interest) in a PIF. For PIFs that are constituted as a PCC or ICC, this limit applies per cell (such that, overall, a PCC or ICC may have significantly more than 50 investors if it has more than one cell);
  2. 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;
  3. there is no requirement to produce information particulars (ie an offering document or prospectus) for a PIF;
  4. a licensee domiciled in Guernsey (other than the locally licensed administrator) must take responsibility for the management of the PIF and also make a declaration to the GFSC that it has assessed that the investors are able to sustain any loss of investment in the PIF;
  5. a locally licensed administrator must also be appointed by the PIF;
  6. PIFs may be established as companies, limited partnerships or unit trusts; and
  7. a PIF is not required to appoint a custodian.

The GFSC Approval Process

Normal authorisation procedure

If the promoter of an authorised fund is new to Guernsey, it will need to complete a "new promoter checklist" and be pre-vetted by the GFSC. The new promoter checklist must set out the track record of the principals of the promoter in the establishment and/or management of investment funds in order to satisfy the GFSC that it is fit and proper, will carry on business with integrity and skill and in a prudent manner. The promoter will also need to be able to show that it has adequate financial resources and that its business will be carried out by at least two experienced individuals.

If the promoter is already known to the GFSC, this step is not necessary.

Funds which proceed along the normal authorisation route then follow three levels of GFSC approval: outline, interim and formal approval. The draft offering document for the fund must be submitted and reviewed by the GFSC at the interim stage once outline consent has been obtained for the fund. Certified copies of all final documentation must be filed with the GFSC when an application is made for final consent, although the documentation is not reviewed by the GFSC at this stage and consent is usually given within 48 hours. A fund must not be launched until final authorisation is granted.

QIF / Registered fund procedure

Once the local administrator has provided the necessary warranties to the GFSC, approval will be forthcoming within three working days of receipt of all the necessary documentation and the resolution of any issues raised by the GFSC.

Funds which are approved as QIFs must have in place measures to ensure that they are only available to investors who fall within the above definitions. Offering documents for QIFs need to contain various disclaimers and the administrator needs to provide the GFSC with a warranty certifying that the promoter is fit and proper.

Similar to QIFs, Registered Funds have to submit an application form to the GFSC which includes certain warranties that the local administrator has performed sufficient due diligence on the principal parties to the fund.

Guernsey Management Companies

Typically, a Guernsey fund will appoint a management company to act as manager of the fund (or general partner in the case of a limited partnership), whether incorporated in Guernsey or elsewhere (the "Manager"). If the Manager is incorporated in Guernsey, it will need to be separately licensed by the GFSC under the POI Law.

Similar to the requirements to approve a new promoter, an application for a licence under the POI Law must set out a demonstrable track record of the principals of the Manager in the establishment and/or management of investment funds and satisfy the GFSC that it is fit and proper, and it will carry on business with integrity and skill and in a prudent manner. The business of the Manager must be carried out by at least two experienced individuals and the Manager must be able to show that it has sufficient financial resources.

In the case of new Managers of funds that are following the normal procedure for authorisation, formal application for a Manager licence is normally made in tandem with the fund authorisation application itself. The licence will normally be granted on the same day that the fund achieves authorisation/consent.

For new Managers of QIFs or registered closed-ended investment funds, there is a "fast track" procedure whereby a licence can be granted by the GFSC within ten working days of submitting the licence application and resolution of any issues arising. Under this procedure, a local administrator is required to give warranties to the GFSC and to conduct due diligence to support the application, including on the beneficial owners and controllers of the Manager and certain other relevant individuals.

The Manager will usually delegate the day-to-day administration of the fund to a locally licensed administrator. All funds established in Guernsey must appoint a locally licensed administrator to carry out certain core duties.

It is possible for a Guernsey Manager to perform management, administration and/or custody services to a fund that is not domiciled in Guernsey. However, prior notification to and the approval of the GFSC is required if the non-Guernsey fund is an open-ended fund - see further below under the heading "Non-Guernsey Funds".

Non-Guernsey Funds

The non-Guernsey funds regime offers fund promoters the opportunity to establish funds in jurisdictions that they may be familiar with, or that may have regulatory or tax benefits, whilst using the expertise of Guernsey based administrators, managers or custodians. It also offers Guernsey administrators, managers, custodians and other investment business service providers the opportunity of accessing funds markets in other jurisdictions for the provision of their services.

The non-Guernsey funds regime can be separated into three areas, namely: (i) exempt funds; (ii) non-Guernsey open-ended funds; and (iii) non-Guernsey closed-ended funds.

Exempt funds

The following funds may use Guernsey licensed administrators, managers and custodians without needing approval from the GFSC ("Exempt Funds"):

  1. unit trust schemes domiciled in the UK (including Northern Ireland);
  2. UCITS schemes domiciled in the Republic of Ireland;
  3. collective investment schemes authorised in Jersey and which have a regulated functionary; and
  4. schemes authorised in the Isle of Man within the meaning of the Financial Supervision Act 1988 (although the Financial Supervision Act 1988 has been repealed and replaced by the Collective Investment Schemes Act 2008, the Guernsey Financial Services Commission should normally accept schemes authorised in the Isle of Man as Exempt Funds if they are the equivalent to a Guernsey Class A scheme).

Although local administrators, managers and custodians are not required to give any formal notice to the GFSC that they intend to provide services to an Exempt Fund, they are asked to advise the GFSC by email of that intention together with a copy of the fund's prospectus, latest annual report and evidence that the fund is authorised in the country where it is domiciled to ensure that they are acting in an open and co-operative manner.

The activities performed by the Guernsey administrator, manager or custodian to an Exempt Fund must be in accordance with the requirements subject to which those activities may lawfully be carried on in the country where the fund is domiciled.

No fees are payable to the GFSC in respect of a local administrator, manager or custodian providing services to an Exempt Fund.

Although strictly speaking there is no limit on the number of services that may be provided to an Exempt Fund from Guernsey, if two or more services are provided to the Exempt Fund from Guernsey there may be a risk that the actual domicile of the fund may be challenged (ie arguments may be raised that the fund is in fact domiciled in Guernsey), which may have unintended legal and tax consequences for the fund and its investors and regulatory issues for the Guernsey services provider.

Non-Guernsey open-ended funds

For all other non-Guernsey open-ended funds, which are not Exempt Funds, the administrator, manager or custodian who intends to provide services to the fund must comply with the Licensees (Conduct of Business and Notification) (Non-Guernsey Schemes) Rules 1994 (the "Non-Guernsey Scheme Rules"). This means that the Guernsey administrator, manager or custodian must give formal notice to the GFSC of their intention to provide services to the fund. The Guernsey administrator, manager or custodian cannot provide services to the fund until the GFSC has approved the arrangement.

Only one of the services of administration, management or custody may be provided in Guernsey to a non-Guernsey open-ended fund that is not an Exempt Fund, otherwise the GFSC will require the fund to be fully authorised in Guernsey.

The GFSC approval process for a Non-Guernsey open-ended fund depends on the activities being carried out and (in the case of management and administration only) whether the "traditional" or "fast track" process is selected.

Approval to act as a custodian can only be given via the "traditional" route, save that it is possible to use the QIF regime to obtain approval in three days if the non-Guernsey fund is equivalent to a Guernsey QIF.

For approval to act as manager or administrator, it is now possible to obtain approval on a "fast track" basis, whereby the relevant Guernsey manager/administrator must conduct due diligence on, and provide a number of warranties to, the GFSC in relation to the non-Guernsey fund. Once the due diligence process is complete and the application has been submitted to the GFSC, the GFSC will issue approval under the Non-Guernsey Scheme Rules within two business days of the application being made and all queries of the GFSC being answered. It is also possible to apply for approval using the "traditional" process.

Non-Guernsey closed-ended funds

Non-Guernsey closed-ended funds utilising a Guernsey service provider are not subject to a formal approval process in Guernsey. However, it is generally considered prudent for the service provider in Guernsey to notify the GFSC of their intention to provide services to a non-Guernsey closed-ended fund. Consequently, there are no fees payable to the GFSC in respect of a Guernsey administrator, manager or custodian providing services to a non-Guernsey closed-ended fund.

European Union Regulations and Directives

Markets in Financial Instruments Directive ("MiFID")

Guernsey is not part of the United Kingdom or the European Union. Therefore, Guernsey is not subject to the EU directives on financial services unless it chooses to adopt them (or measures equivalent to them) and as such Guernsey is not subject to MiFID.

AIFM Directive

The Alternative Investment Fund Managers Directive (Directive 2011/61/EU) ("AIFM Directive") came into force across the EU on 22 July 2013 and has implemented new rules in the EU that aim to harmonise the authorisation, monitoring and supervision of managers of alternative investment funds ("AIFMs"), which manage and/or market alternative investment funds ("AIFs") in the various member state countries of the EU.

In order to clarify the requirements under the AIFM Directive the EU has also implemented the Commission Delegated Regulation (EU) No. 231/2013 (the "Level 2 Regulation") to supplement the AIFM Directive. The Level 2 Regulation came into force in each member state of the EU on 22 July 2013.

Importantly, EU AIFMs are now required to fulfil all of the requirements under the AIFM Directive (subject to any exemptions and transitional provisions) whilst non-EU AIFMs wishing to market non-EU AIFs in the EU fall under separate, lighter touch, national private placement regimes.

A large part of the debate in respect of the AIFM Directive regarded the intended new passport regime for non-EU AIFMs (the "Passport Regime"), which will enable non-EU AIFMs to market AIFs across the EU on a single authorisation. On 30 July 2015 the European Securities and Markets Authority ("ESMA") published its first advice that no significant obstacles exist to the extension of the Passport Regime to Guernsey, which was sent to the European Commission, Parliament and Council for their consideration on whether to activate the Passport Regime for Guernsey. On 18 July 2016 ESMA published its second advice that again confirmed that no significant obstacles exist to the extension of the Passport Regime to Guernsey.

In accordance with the AIFM Directive, the European Commission has the power to approve the Passport Regime by way of a delegated act and the AIFM Directive specifies that it should do so within three months of receiving positive advice from ESMA. At the time of writing, this positive advice remains awaited despite the publication of the two sets of advice above, and is now not expected until after the United Kingdom has left the European Union.

Until the Passport Regime has been implemented and the European Commission has determined to withdraw EU member states' national private placement regimes (the "NPP Regimes"), Guernsey AIFMs will be permitted to continue to market Guernsey AIFs in the EU pursuant to the various NPP Regimes, subject to additional regulatory requirements (see below).

Further, there are transitional provisions that apply exempt AIFMs from the AIFM Directive if the AIFs they manage are closed-ended and made no further investments after the transposition date of the AIFM Directive of 22 July 2013.

Guernsey AIFMs who want to use the Passport Regime when it becomes available will need to opt-in to Guernsey's equivalent AIFMD regime under the AIFMD Rules 2013 (the "Guernsey AIFMD Rules"). In essence, the Guernsey AIFMD Rules require Guernsey AIFMs to apply to the GFSC for approval and they must comply with the full requirements of the AIFM Directive and the Level 2 Regulation.

National private placement and the AIFM Directive

Guernsey AIFMs are now required to comply with additional regulatory requirements for each Guernsey AIF that they wish to market in the EU pursuant to each EU member state's NPP Regimes.

In order to meet the requirements imposed by the AIFM Directive in respect Guernsey AIFMs, the GFSC has agreed a Memorandum of Understanding (the "MoU") with ESMA, which represented the regulatory authorities of the 27 EU member states, as well as in Croatia, Iceland, Liechtenstein and Norway.

The MoU lead the way for bi-lateral co-operation agreements to be agreed and entered into between the GFSC and each of the regulators of the EU/EEA member states (excluding Spain, Italy, Slovenia and Croatia).

Pursuant to the requirements of the AIFM Directive, the GFSC has made The AIFMD (Marketing) Rules, 2013 (the "Marketing Rules") in accordance with its powers under the POI Law.

The Marketing Rules came into force on 22 July 2013 in order to coincide with the transposition of the AIFM Directive. In essence, the Marketing Rules set out the requirements that Guernsey AIFMs must comply with in order to market Guernsey AIFs in one or more EU member states in accordance with those countries' NPP Regimes and the requirements of the AIFM Directive.

Under the Marketing Rules, Guernsey AIFMs are required to submit a notification to the GFSC within fourteen days of commencing any marketing of a Guernsey AIF in an EU member state. Importantly, Guernsey AIFMs are required to continue to comply with the conditions of the NPP Regimes in each EU member state in which it markets Guernsey AIFs (and any other provisions of the AIFM Directive that may apply). Further, under the AIFM Directive, EU member states have the power to introduce stricter rules in respect of the marketing of Guernsey AIFs (for example, Germany has introduced an approval process and the requirements to have a depositary).

Therefore, it is important that Guernsey AIFMs keep themselves updated in respect of any changes that may be made to EU member states' NPP Regimes under which they market, or intend to market, Guernsey AIFs, particularly as a result of the implementation of the AIFM Directive and any stricter rules that EU member states may impose on Guernsey AIFMs.

Manager-led product regime

Guernsey has introduced the manager-led product regime (the "MLP"), which can be used by Guernsey AIFMs who are approved by the GFSC under the AIFMD Rules and are seeking to market a fund into an EU/EEA country under their national private placement regime.

The MLP enables managers to register new funds with the GFSC within one day of submitting a notification to the GFSC. The MLP follows the approach of the AIFM Directive by regulating the AIFM and not the fund itself. Therefore, it is not necessary for a fund that is registered with the GFSC under the MLP to also be separately authorised by the GFSC (which was traditionally the case) and no GFSC rules will apply to the fund. Further, none of the related entities to the fund, such as a general partner or subsidiary investment vehicle, will be subject to any GFSC rules (unless they are the AIFM).

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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Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions