Funds which will be made available to a restricted circle of
persons, in particular no more than fifty persons, and will not be
listed on a stock exchange within one year, are treated as private
funds in Jersey ("Private Funds").
Private Funds are regulated on a case-bycase basis by the Jersey
Financial Services Commission ("JFSC"). On 26 January
2012, the JFSC issued a Private Placement Funds Guide
("Guide"), effective immediately, making it quicker and
easier to establish a closed-ended Private Fund, including a
property fund or private equity fund, which meets the requirements
of the Guide ("Private Placement Fund") .
The Guide does not replace the existing regulatory regime
available for Private Funds. However, it provides a published
regulatory policy, including a streamlined authorisation process
which should take as little as 3 working days, for funds which
comprise Private Placement Funds.
A Private Placement Fund must:
be a company (standalone, protected cell or incorporated cell
company), partnership (limited partnership, special limited
partnership or incorporated limited partnership) or unit
be established in Jersey or managed in Jersey;
have at least two Jersey resident directors if a company, or a
Jersey corporate trustee or general partner with at least two
Jersey resident directors;
not be offered to more than fifty investors, all of which must
be Professional Investors or Sophisticated Investors;
be administered by a Jersey administrator.
Only Professional Investors or Sophisticated Investors as
defined by the Guide may invest in a Private Placement Fund.
There are eleven categories of Professional Investor. These
include: (a) a person whose ordinary activities involve the person
acquiring, holding, managing or disposing of investments for the
purposes of the person's business; (b) certain persons (not
including an individual) who have property with a market value of
not less than US$10 million (or currency equivalent); (c) certain
service providers to the Private Placement Fund, including an
investment manager, and senior employees, directors, partners,
members of shareholders of the service provider.
A Sophisticated Investor includes any investor who makes a
minimum initial investment of £250,000 (or currency
THE OFFER DOCUMENT
A Private Placement Memorandum issued by a Private Placement
Fund must contain all information specified in the Guide and all
such material information which:
investors and their professional advisers would reasonably
require, and would reasonably expect to find and to have brought
fairly to their attention in the Private Placement Memorandum for
the purpose of making an informed judgement about: the merits of
purchasing securities in the Private Placement Fund; and the nature
and levels of the risks accepted by making such a purchase;
is within the knowledge of the persons responsible for issuing
the Private Placement Memorandum or which would have been within
the knowledge of such persons by the making of reasonable
The promoter or investment manager of a Private Placement Fund
must be of good standing and meet the requirements of the Guide. In
particular, the promoter must be established in an OECD member
state or any other state or jurisdiction with which the JFSC has
entered into a Memorandum of Understanding (or equivalent); and
be regulated in that state or jurisdiction; or
possess amongst its Principal Persons (as defined) relevant
experience in relation to promoting, managing or advising on
institutional, professional or sophisticated investors'
investments using similar strategies to those to be adopted by the
Private Placement Fund. The accounts of a Private Placement Fund
must be audited.
A Private Placement Fund must appoint a money laundering
reporting officer and money laundering compliance officer.
Consent to the issue of securities in a Private Placement Fund
will be issued by the JFSC on a fast-track basis relying upon the
receipt of certain written self-certifications, including by the
promoter and administrator, a copy of the Private Placement
Fund's proposed Private Placement Memorandum and details of the
Principal Persons of the promoter. The Guide provides that the JFSC
will use its best endeavours to issue the requisite regulatory
consent within 3 days of receiving the correctly completed
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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