This note provides an overview of Jersey Funds
Jersey has established itself as a well regulated international finance centre for investment funds with a wealth of fund administrators, banks and accountants.
At the end of June 2014, Jersey was reported to have £200 billion of assets under management, 1,283 regulated funds and 202 unregulated funds. Jersey and Guernsey had also established the Channel Islands Securities Exchange Limited.
Jersey now offers an attractive range of investment funds (unregulated and regulated) for all types of investors. This wide range reflects the history of the Jersey funds industry dating back to the 1980s.
There are now eight categories for regulatory purposes. These are as follows: -
Category of Fund Regulatory Treatment
There is presently a wide spread of funds under management in Jersey such as property, equities, bonds, money market, commodities and futures and debt funds.
Fund Legistation and Regulation
Jersey funds are regulated under the Collective Investment Funds (Jersey) Law 1988 (the "Funds Law") as amended. The most highly regulated funds, which fall under the Funds Law and require a certificate, include expert funds, listed funds, unclassified and regulated funds ("Certified Funds"). Funds that are regulated to a lesser degree include Very Private and Private Placement Funds requiring a consent under the Control of Borrowing (Jersey) Order 1958 (the "1958 Borrowing Order"). Unregulated funds are subject to the least regulation.
The Jersey legislation has been supplemented by changes brought about by the Alternative Investment Fund Manager Directive (the "AIFMD"), which will need to be complied with when funds are marketed to an EU/EEA member state.
Jersey based "functionaries" (including fund managers, administrators, investment managers or advisers) are regulated under the Collective Investment Funds (Recognised Funds) (Rules) (Jersey) Order 2003 and the Financial Services (Jersey) Law 1998 as amended for other funds as providers of fund services businesses.
The salient points in respect of the revocable, capital trust are as follows:
- Jersey has made a commitment to ensure international tax transparency and in July 2013 received praise from the Secretary General of the OECD concerning Jersey's position on international tax transparency.
- Jersey is on the white list of the G20 offshore jurisdictions.
- Jersey holds designated territory status under the UK Financial Services and Markets Act 2000.
- Jersey is recognised as a "Qualified Intermediary" jurisdiction by the US Internal Revenue Service.
Type of Structure
Jersey funds may be set up as limited partnerships, companies and unit trusts. There are different types of limited partnership (separate limited partnerships, incorporated limited partnerships and limited liability partnerships) and various forms of companies (such as protected cell companies and incorporated cell companies).
For the purpose of Jersey regulation, an open-ended fund refers to an investment vehicle that permits its investors to continuously issue and redeem equity holdings at a price related to the value of the underlying assets. A closed-ended fund means a fund that is not open for redemptions at the option of the investors.
A detailed consideration of types of structure appears towards the end of this paper.
Categories of Funds
In deciding which category of fund to establish, fund promoters should carefully consider their reputation, ownership, track record and financial standing. New promoters with no track record or experience should consider unregulated funds as a starting point if they do not wish to market that fund to an EU/EEA member state.
The JFSC has published policy on promoters of public and private collective investment funds. That policy document does not apply to Unregulated Funds, Listed Funds, Expert Funds or non-domiciled funds.
The JFSC has also published a Code of Practice for certified funds which was updated on 22 July 2013 and includes a Jersey Expert Fund Guide, a Jersey Listed Fund Guide, a Guide to Jersey Open-Ended Unclassified Collective Investment Funds Offered to the General Public and a Jersey Eligible Investor Guide.
Other factors that the JFSC will take into account include: (i) the person responsible for attracting investors; (ii) whether or not the fund is linked to specific persons; and (iii) whether or not one organization has overall responsibility for all aspects of the fund.
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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.