In January 2012 the JFSC launched a new private placement funds
regime, making it quicker and easier to establish close-ended
funds, including property funds and private equity funds, for offer
to not more than 50 persons, all of which are professional
investors or sophisticated investors.
This pragmatic new regime allowing regulatory consent to be
obtained within 3 days has been warmly welcomed by Jersey's
funds industry as a new addition to the broad range of fund
products already offered by Jersey.
Funds which qualify under the private placement funds guide
issued by the Jersey Financial Services Commission (JFSC), may now
be formed in Jersey using a streamlined formation process which
excludes the promoter policy test usually applied to private funds.
The fast-track formation process is facilitated by a
self-certification procedure, including sign-off by an
administrator in Jersey, permitting formation in as little as 3
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 promoter of a private placement fund must be of good
standing and, among other things, be established in an OECD member
state or any other state or jurisdiction (of which there are many)
with which the JFSC has entered into a Memorandum of Understanding
(or equivalent) on investment business and investment funds and
either (a) be regulated in that state; or (b) possess amongst its
principal persons 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 fund.
The pragmatic private placement funds regime has been warmly
welcomed by the Jersey funds industry as a new addition to the
broad range of fund products already offered by Jersey, each of
which lends to Jersey's reputation as a leading jurisdiction
for the establishment and servicing of investment funds.
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 and
both a money laundering reporting officer and money laundering
compliance officer must be appointed.
Consent to the issue of securities in a Private Placement Fund
will be issued by the JFSC relying upon the receipt of certain
written self-certifications, 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 the correctly completed application.
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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Probably the most significant change from previous practice in Guernsey law under the Companies (Guernsey) Law 2008, which came into effect on the 1 July 2008, was the consignment to history of the concept of capital maintenance, which was discarded in favour of a solvency model as the basis of a company’s ability to pay distributions and dividends.
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