Jersey has always been a very attractive jurisdiction for the establishment of collective investment funds for a variety of reasons. The Expert Funds regulatory regime was established to make Jersey more attractive to promoters wishing to establish funds aimed at sophisticated, institutional and high net-worth investors.

The Expert Fund classification benefits from significantly less regulation, and enables Expert Funds to be established in a matter of days. The Expert Fund regime establishes a streamlined authorisation process, and permits the certification by a regulated Jersey financial services provider – typically the administrator - of the fund's compliance with the Commission's guidelines. This contrasts extremely favourably with the often lengthy and involved four-stage in-principle consent, document review and final approval process for collective investment schemes otherwise carried out by the Commission.


Generally, a collective investment fund will qualify as an Expert Fund if each investor signs an acknowledgement of receipt of a prescribed form of investment warning and falls within one of the following categories:

  1. they invest a minimum of US$100,000.00 (or equivalent); or
  2. their ordinary business or professional activity includes the buying or selling of investments or the provision of investment advice; or
  3. they have a net worth, or joint net worth with their spouse, exceeding US$1,000,000.00 (excluding that person's principal place of residence); or
  4. it is a company, partnership, trust or other association which has assets available for investment of not less than US$1,000,000.00 or every member or partner of which falls within the definition of expert investor; or
  5. it is a functionary or an associate of a functionary to the Expert Fund or an employer, director, partner or consultant of such a person; or
  6. it is a government, local authority, public authority or supra-national body in Jersey or elsewhere.

An Expert Fund must be a collective investment fund for the purposes of Jersey collective investment funds law. It can be structured as a company, a limited partnership or a unit trust. It may be either open or closed-ended.

Where the fund is established as a limited partnership, at least two Jersey resident directors with appropriate experience must be appointed to the board of directors of the general partner.

An Expert Fund must have an auditor appointed, and annual audited accounts must be prepared.

Full details of the investment strategy must be set out in the offering documentation.

There are no requirements as to investment or borrowing restrictions applicable to Expert Funds, provided that the approach to borrowing or gearing is clearly disclosed in the offering documentation. However, if the Expert Fund is permitted to borrow money in excess of 200% of the net asset value of the fund, full details of the manner in which the risk posed by such borrowing will be managed must be disclosed to the Commission and in the offering documentation.

There are no limitations on marketing or, in particular, on the number of persons to whom an Expert Fund can be marketed.


Investor protection

Investor protection is maintained through the requirements that:

  1. full disclosure be set out in any offering document issued by the Expert Fund;
  2. any Jersey entity that provides services to the Expert Fund must be licensed to do so by the Commission; and
  3. prospective investors sign an agreed form of investment warning before their investment is accepted.

Investor requirements

All investors must qualify as expert investors and must sign an investment warning prior to investing in the fund. There is no limit on the number of investors.

In addition, the Commission believes that those involved in establishing and providing services to an Expert Fund should be able to invest in the fund, and will adopt a flexible approach in relation to "carried interest" investments to be made by or on behalf of those connected with the Expert Fund.


Expert Funds can take any form recognised under the laws of Jersey. A key feature of such funds is that the fund board, general partner, manager or trustee (which will have at least two Jersey directors) is ultimately responsible for the management and control of the Expert Fund in accordance with and subject to the applicable law.


  1. The Companies (Jersey) Law 1991 is a modern statute, based upon internationally familiar English company law principles.
  2. There is no minimum authorised or issued share capital requirement imposed.
  3. A number of different types of company are available (see our briefings entitled "Companies in Jersey" and "Cell Companies in Jersey").

Unit trusts

  1. In contrast to an investment company, a unit trust is not a separate legal entity as such, but a trust arrangement whereby legal ownership of the fund's assets is vested in a trustee who holds the assets of the fund on trust for the benefit of the unit-holders.
  2. The unit trust will generally be constituted by means of a trust instrument made between a trustee company and an independent manager. Typically the manager will promote, manage and administer the scheme. Subscription proceeds will be paid to the trustee which will act as custodian of the investment assets of the fund. In addition, the trustee will generally supervise compliance by the manager with its obligations under the trust instrument.
  3. The trust instrument will generally contain provisions regulating the issue, redemption and valuation of units, the appointment and removal of the trustee and the manager, their duties and remuneration, borrowing powers, investment restrictions and for the winding-up of the trust.
  4. Jersey has a modern statute-based trusts law.
  5. For most practical purposes a unit trust scheme will operate and be regulated in the same manner as a corporate investment fund.

Limited partnerships

  1. Limited partnerships may be established and operated in each jurisdiction under comprehensive and modern legislation.
  2. A limited partnership may be an appropriate structure for a number of different purposes. A principal use will be to provide an additional form of investment vehicle for mutual funds, in particular for the venture capital industry. A limited partnership can also be an attractive structure for various tax planning purposes as the partnership is generally treated as being fiscally transparent.
  3. There is no maximum imposed on the number of limited partners of a limited partnership.
  4. The general partner will manage the business of the partnership and have unlimited liability for its debts. The liability of investors taking interests as limited partners (and who do not participate in the management of the business) will be limited generally to the amount of their investment.


The promoter of an Expert Fund will not generally be subject to any regulatory review or approval.

Investment manager

The investment manager must either have been previously approved by the Commission or it must:

  1. have relevant experience in managing assets similar to those of the Expert Fund;
  2. have no criminal convictions or regulatory sanctions imposed on it;
  3. be solvent;
  4. be established and regulated in an OECD member state (or another jurisdiction – as agreed with the Commission – which subjects the manager to appropriate regulator oversight); and
  5. satisfy the Commission's general principles of corporate governance and span of control requirements (meeting the four-eyes principle if it cannot handle client monies, and the six-eyes principle if it can handle such monies).

If an investment manager does not meet these requirements, it may approach the Commission for approval on a case-by-case basis, with the Commission taking a flexible approach, commensurate with offering adequate protection to the Expert Fund's investors and the Island's reputation.

If a distributor is the "prime mover" behind the fund, then that distributor will be required to meet similar tests to those imposed upon the investment manager.

Once the Commission approves the investment manager, provided there are no material changes to its circumstances, the Commission will not require the investment manager to seek its further approval to act as investment manager to additional Expert Funds.

Offering documents

The overriding principle of the Expert Fund regime is that any offering document must set out clearly and fully all material information that a prospective investor would reasonably require to enable them to make an informed judgement about investing in the Expert Fund. This should include the basis upon which the value of the Expert Fund is calculated.

The offering documentation will be required to include the relevant investment warnings contained in the Commission's guidelines explaining that the fund is only suitable for expert investors as well as any investment warnings required by any applicable legislation, and will also be required to contain an acknowledgement that all investors must sign confirming that they fully understand and accept the risks of investing in that Expert Fund.

Investment restrictions

Full details of the investment and borrowing strategy of the fund must be set out in the prospectus. No investment or gearing restrictions will be prescribed by the Commission in relation to Expert Funds, though the approach to borrowing and gearing must be clearly disclosed to investors.

Every Expert Fund must appoint an administrator, manager or (in the case of a unit trust) trustee that is regulated by the Commission and has a physical presence in Jersey. The administrator, manager or trustee is responsible for ensuring that the investment manager complies with the terms of the offering documentation and all applicable law when managing the fund. This responsibility cannot, generally, be delegated.

Safe custody arrangements

An Expert Fund must have adequate safe custody or prime brokerage arrangements in place in respect of the fund assets, although there is no requirement for these to be carried out by an independent Jersey custodian, other than for an open-ended Expert Fund. An open ended Expert Fund will be required to source its custody arrangements from a Jersey custodian or, if it is a hedge fund, it may appoint a prime broker that is part of a group with a credit rating of A1/P1 or better.

Administration and monitoring of the investment manager

There must be a regulated Jersey manager or administrator with staff and a physical presence in the Island appointed to provide services to the Expert Fund.

The responsibility of the administrator, manager or trustee (as applicable) shall include taking reasonable measures to satisfy itself that the actions of the investment manager do not breach the investment and borrowing restrictions applicable to the Expert Fund as set out in the fund prospectus, and to promptly notify the entity that appointed the investment manager of any concerns it has in that regard so that appropriate action may be taken.

The "reasonable measures" that the administrator, manager or trustee takes to fulfil their responsibility may be outsourced in accordance with the Commission's policy, though the responsibility itself cannot be outsourced.

The functionary will be required to maintain in Jersey sufficient records in relation to the Expert Fund in order to fulfil its obligations.

Each Jersey functionary of an Expert Fund must obtain a permit from the Commission and must be managed and operated in accordance with the terms of the codes of practice to be published by the Commission from time to time.


Assuming that the fund complies with all of the criteria of the Expert Fund regime, the authorisation process itself is quick and straightforward and, provided the Commission are satisfied that the Fund meets the Commission's criteria for and Expert Fund, the relevant consents and permits for a new Expert Fund should be issued with a matter of days.

The administrator, manager or trustee of the fund must complete and sign an application form setting out the main features of the Expert Fund and confirming that the fund meets the Commission's requirements for Expert Funds. This application form must be countersigned by either the directors of a fund company or the general partner of a limited partnership fund, or by the manager or trustee of a unit trust fund, and then lodged with the Commission together with the draft offering documentation and prescribed fee.

The Commission will review the application form to confirm that it has been completed properly, but will not carry out a regulatory review of the Expert Fund nor will it review the fund documentation, save in exceptional circumstances.

If satisfied that the Fund satisfies the Commission's criteria for an Expert Fund, the Commission will authorise the Expert Fund on the basis of the application form, and will then issue the relevant consents and permits.


The Commission does not undertake any on-going proactive supervision of funds, so post-launch requirements are principally dictated by the terms of the consents granted.

The terms of the consents

The Commission will tailor the consents to suit each particular case.

Filing of audited accounts

Public companies must file with the Registrar of Companies a signed copy of the accounts for each financial period together with a copy of the report thereon by the auditors.

Annual confirmation

All consents granted under COBO for the issue of securities will include a condition which will require the directors of the fund to confirm on an annual basis that to the best of their knowledge, having taken reasonable steps to ascertain the position, there have been no breaches of the consent, other than those (if any) previously disclosed to the Commission.

This memorandum is intended to provide an outline of the legal regime governing private companies in Jersey, and is not intended to be comprehensive in its scope. It is recommended that clients seek legal advice on any particular matters.

Jonathan Heaney, Partner

Cayman Islands
Jonathan Tonge, Partner
Mark Lewis, Partner

David Whittome, Partner

British Virgin Islands
Richard May

Hong Kong
Philip Millward, Partner
Carol Hall, Partner

Rod Palmer, Partner

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.