Guernsey: New Fund Rules In Guernsey

Last Updated: 24 March 2009
Article by Darren Bacon and Marcel Cariou

This briefing provides a concise outline of recent developments in the regulation of Guernsey investment funds.

2008 has seen various changes to legislation at the core of Guernsey's finance industry, including the introduction of the zero-10 tax regime and the Companies (Guernsey) Law, 2008. The Guernsey Financial Services Commission's (the "Commission") system for approval of investment funds has also been overhauled. Here we explain the main points of the new rules and give an overview of the various regimes as they currently stand.

1. Control Of Borrowing

All but limited sections of the Control of Borrowing (Bailiwick of Guernsey) Ordinances, 1959 to 2003 ("COBO") have now been repealed.

  • Consent under COBO for borrowing and guarantees - still required
  • Consent under COBO for establishment of closed-ended funds (and further issues) - transferred to POI Law and the new rules (see post)
  • COBO for incorporation of (non-fund) companies - abolished
  • COBO for establishment of (non-fund) unit trusts - abolished
  • COBO for establishment of (non-fund) limited partnerships - abolished
  • COBO for further issues of shares in companies, units in unit trusts or limited partnership interests (non-fund) - abolished
  • COBO for distribution in Guernsey of a prospectus by a Guernsey / non-Guernsey entity - transferred to new Prospectus Rules (see post)

2. Protection Of Investors

New rules have been introduced under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 as amended ("POI Law"). Closed-ended investment schemes are now included in the definition of "collective investment schemes" in the POI Law and application for regulation of either open- or closed-ended schemes may now be made under the "Authorised" regime or the lighter touch "Registered" or "QIF" regimes.

2.1 Authorised Funds

Authorised open-ended schemes continue to be governed by either the Class A, Class B or Class Q Rules, but the Class A Rules have been updated with a 2008 version (in force 24 November 2008) which reflect a movement to liberalise UCITs in Europe.

Closed-ended schemes may now be approved under the Authorised regime with the introduction of the Authorised Closed-Ended Investment Schemes Rules 2008 (the "Closed-Ended Rules") which provide for the administration and custody of a closed-ended scheme, certain ongoing compliance matters, the information required to be included in any prospectus (which mirrors the requirements of the Commission's old Form APC) and the obligations to notify the Commission or investors in the fund.

Existing Authorised closed-ended schemes may elect (until mid-April 2009) to be treated as a Registered closed-ended scheme and thereafter will be deemed to have been granted a registration in accordance with the new Registered Rules (as defined below).

Existing closed-ended schemes which do not elect for registration under the Registered Rules must revise their principal documents (articles of incorporation, limited partnership agreement or unit trust instrument and related management agreements) to comply with the Closed-Ended Rules either at the next occasion when an amendment of their principal documents is put to investors or by not later than December 2010. Most existing closed-ended funds will already comply with the Rules. Prospectuses of existing funds, if revised following commencement of the Closed-Ended Rules must be revised to comply with them.

2.2 Registered Funds

Open-ended funds can now take advantage of the fast-track application process of the Registered fund regime, which previously only dealt with closed-ended schemes. Open- and closed-ended schemes are now both included in the Registered Collective Investment Scheme Rules 2008 (the "Registered Rules"). The Registered Rules provide for the administration and custody of a Registered scheme, certain ongoing compliance matters, the obligations to notify the Commission and investors in the scheme and the preparation of a prospectus but do not deal with the content of the prospectus. The Prospectus Rules 2008 (the "Prospectus Rules") have been introduced to regulate the contents of prospectuses issued by Registered open- or closed-ended schemes, including information required to be disclosed and statements to be included.

Existing Authorised open-ended schemes may elect (until mid-April 2009) to be treated as a Registered open-ended scheme and will be deemed to have been granted a registration in accordance with the Registered Rules.

Existing Registered schemes must revise their principal documents to comply with the Registered Rules either at the next occasion when an amendment of their principal documents is put to investors or by not later than December 2010. Most existing closed-ended funds will already comply. Prospectuses of existing funds, if revised following commencement of the Registered Rules must be revised to comply with them.

There are no changes to the Qualifying Investor Fund, or "QIF", regime.

2.3 Prospectuses

The Prospectus Rules regulate the contents of Registered fund prospectuses and also apply to offers of any controlled investment ("General Securities and Derivatives") either made by a Guernsey entity (company, limited partnership or unit trust) or made to the public in the Bailiwick wherever the offeror is domiciled. The "public" is defined as an identifiable category of persons exceeding 50 in number. The Prospectus Rules do not apply to offers of investments which are listed on an exchange supervised by a member of the International Organization of Securities Commissions (IOSCO), such as the London Stock Exchange or AIM.

Any prospectus circulated in the Bailiwick of Guernsey or outside the Bailiwick by a Guernsey entity must meet the requirements of the Prospectus Rules and be delivered to the Commission for registration on payment of an application fee. Any changes to the contents of the prospectus must be notified to investors.

2.4 POI Licensees

In October 2008 the Commission introduced a fast track process for consideration of a POI Law licence application for any company domiciled in Guernsey which acts as fund manager to a Registered fund or QIF. Where the fund structure includes a Guernsey fund manager or the fund is structured as a limited partnership and has a Guernsey general partner, the Commission will process the application for the licence of such entity (with reliance on the certification of the administrator) under the fast track licensee application process and put it before the Commission's Licensing Committee within ten business days of receipt.

The Commission has confirmed that administrators and other service providers which are licensed to provide restricted activities to only category 2 controlled investments ("General Securities and Derivatives") which category previously included closed-ended funds, will, with the re-classification of closed-ended funds as "collective investment schemes", automatically be deemed to hold a licence for providing the same services to category 1 controlled investments ("Collective Investment Schemes").

Expert Advice Is On Hand

Mourant du Feu & Jeune's funds team provides advice in relation to a broad range of investment funds in Guernsey, Jersey and the Cayman Islands, including hedge funds, property funds, private equity funds and money market funds. It advises on the establishment of investment funds, fund related deals and provides ongoing advice in relation to fund structures.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
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