A new private placement fund regime has been introduced in Jersey, with the issue of the Jersey Private Placement Fund Guide by the Jersey Financial Services Commission (JFSC). The Guide, which applies to closed-ended Private Placement Funds (PPFs), is set to revolutionise the Jersey funds industry. it relaxes the JFSC's traditional 'promoter test', against which the JFSC vets new promoters of funds, making it much simpler for new and existing promoters to establish funds in Jersey. it also offers a streamlined 72-hour authorisation process for the approval of funds which meet the PPF criteria.
PPFs can be offered to up to 50 potential investors anywhere in the world. investors must be 'professional investors', 'sophisticated investors' or investment Managers acquiring an interest in the PPF on behalf of non-professional or non-sophisticated investors.
The PPF regime is available to funds which satisfy the following requirements:
- The PPF must be a closed-ended fund which is established or managed in Jersey.
- The PPF, which can be set up as a company, a unit trust or a limited partnership, must have at least two Jersey residents with appropriate experience on the board of directors of the fund, the trustee or manager or the general partner of the fund, as applicable. The same applies to a PPF established outside Jersey, unless that fund appoints a Jersey-based manager with at least two Jersey residents on its board of directors.
- The PPF's promoter must meet certain suitability requirements as to, for example, regulation in its jurisdiction of establishment and no history of disciplinary sanctions.
- The PPF must appoint a 'Designated Service Provider' (i.e. a Jersey administrator licensed to conduct fund services business), with responsibility for: carrying out due diligence in relation to the promoter; providing the registered office of a Jersey corporate fund or limited partnership, the trustee or manager of a Jersey unit trust or, in the case of a non-Jersey company, its manager; providing the Money Laundering Reporting Officer and Money Laundering Compliance Officer and supporting the PPF in relation to its Jersey anti-money laundering obligations.
- The private placement memorandum issued by the PPF must comply with the disclosure requirements set out in the guide; however there are no mandatory investment or leverage restrictions applicable to PPFs.
- The PPF must prepare accounts in accordance with any generally accepted accounting principles and they must be audited.
The launch of the guide is timely, given the focus of the investment funds community on the alternative Investment Fund Managers (AIFM) Directive. The AIFM Directive preserves the ability for Jersey (and other 'third country') private placement funds to be offered to professional investors in the EU, subject to national private placement regimes, until at least 2018.
it is anticipated that the new PPF regime will be of particular interest to promoters of specialised and alternative investment funds aimed at sophisticated and professional investors, including private equity, mezzanine, infrastructure and real estate funds.
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.