The principal law governing investment funds and licensees in
Guernsey is The Protection of Investors (Bailiwick of Guernsey)
Law, 1987 (the "POI Law"). This law was
overhauled in 2008 primarily to bring the regimes for open and
closed ended investment schemes under one law. New rules were
published and came into force at the end of last year; the
Authorised Closed Ended Investment Schemes Rules 2008; the
Registered Collective Investment Scheme Rules 2008; and the
Prospectus Rules 2008. The Authorised Rules cover not dissimilar
ground to the existing rules for open ended investment schemes,
e.g. the Class B Rules. A fund which is authorised is regarded as
supervised at the highest level in Guernsey and must comply with
the Authorised Rules if closed ended and the Class B Rules if open
ended. (In respect of open ended investment schemes there are also
the Class A Rules and the Class Q Rules which might be chosen in
place of the Class B Rules). A fund which is registered under the
Registered Rules is regarded as only lightly regulated in Guernsey.
These rules cover both open and closed ended investment
The Prospectus Rules provide for the contents of, amongst other
things, the prospectus for a registered investment scheme. They do
not apply to schemes governed by the Authorised Rules, but rules
relating to the contents of any prospectus for an authorised closed
ended investment scheme will be found in the Authorised Rules and
for an authorised open ended investment scheme in the relevant open
ended rules, e.g. the Class B Rules.
In addition to collective investment schemes, the POI Law also
covers licensees, in particular administrators and custodians of
investment schemes based in Guernsey. To date the licensees have
been supervised pursuant to the Licensees (Financial Resources,
Notification, Conduct of Business and Compliance) Rules and the
Collective Investment Schemes (Designated Persons) Rules. These
rules also deal with the minimum required capital for
However, both those sets of rules are due to be revoked and
replaced with the Licensees (Conduct of Business) Rules and the
Capital Adequacy Rules. The first of those has been issued in draft
form for the purpose of consultation and is available on the
Guernsey Financial Services Commission website. Comments are sought
by the close of business on 28 May, 2009.
The idea is to have a single set of rules covering
responsibility of the board of a licensee for compliance and to
provide for more appropriate client money rules. The rules also
cover the conduct of business, record keeping, complaints, safe
keeping of assets, conflicts of interest and notifications. There
are also provisions concerning the categorisation of clients.
The draft rules do not however deal with capital requirements.
It is anticipated that there will be further draft rules released
for consultation later this year, i.e. the Capital Adequacy
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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