Preparing for a private placement regime under Alternative
Investment Fund Manager Directive (AIFMD)
Following the introduction of the AIFMD in late 2010, Jersey
has, true to its previous announcements, released the Jersey
Private Placement Fund regime. This new regime is aimed at
providing fund managers with a flexible and uncomplicated fund
regime for private placement access to the European market until at
A PPF is a closed ended fund established in Jersey, i.e. a
Jersey fund vehicle or a foreign fund vehicle which is managed in
Jersey as a closed ended fund.
Units in the fund vehicle cannot be offered to more than 50
potential investors overall who must be professional investors or
sophisticated investors as defined in the PPF guidelines. Like with
the other Jersey fund regimes, all legal vehicles available in
Jersey, incorporated in particular protected or cell companies or
one of the four different types of limited partnerships can be a
The fund can also consist of more than one limited partnership
but for all fund vehicles it is important that they are serviced by
a Designated Service Provider which is in essence a Jersey based
administrator who holds a fund services business license. The main
function of the Designated Service Provider is to provide a
registered office to the fund vehicle, to carry out the necessary
promoters/ investment manager due diligence checks, make the
required certifications to the Regulator and to support the fund
with its anti-money-laundering obligations.
PPF's are restricted to professional investors or
sophisticated investors, which are defined in various classes in
the Law, the easiest being a person who has invested £250,000
into the fund. Each investor must have received and acknowledged an
investment warning, contained in the subscription agreement and in
the form set out in the PPF Guide.
The fund must also have two resident directors and the
fund's Private Placement Memorandum (PPM) must contain certain
prescribed content and be submitted to the Regulator together with
the application. As with other Jersey fund regimes there are no
investment restrictions or gearing limitations for the PPF.
The most significant innovation of this fund regime is that the
Regulator has abandoned its usual promoter policy and will instead
rely on certificates from the Designated Service Provider that the
promoter of the fund is of good standing, solvent and that it and
its principal persons have not been in the last 5 years subject to
disciplinary sanctions or convictions.
To qualify for a PPF the promoter must be established and
regulated in an OECD member state or another jurisdiction with
which the JFSC has a regulatory memorandum of understanding. If the
promoter is not regulated in its country of origin it must instead
possess amongst its principal person's relevant experience in
relation to promoting, managing and advising of institutional
professional or sophisticated investors using similar strategies.
The consequence of this dramatic change in policy is that the
commission can therefore now offer a fast track authorisation
process for the PPF of 72 hours from submission of a complete
A complete application for a PPF will contain the following:
A written statement from the promoter that the new fund
satisfies the promoter requirements set out in the PPF guidelines,
countersigned by the Designated Service Provider confirming that it
has carried out its own general due diligence in relation to the
A draft of the PPM.
A written certificate of the Designated Service Provider
confirming that the PPM complies with the content requirements of
Complete personal details of all of the promoter's
principal persons and anybody named in the PPM.
PPFs are not subject to taxation in Jersey provided that all
income and profits other than bank interest are generated outside
of Jersey. They also fall outside of the scope of the European
Savings Directive so that gross profits can be distributed to
With the introduction of this new fund regime and the number of
International Tax Exchange Agreements Jersey has already entered
into with various European union countries, together with its
reputation as a highly regulated jurisdiction, Jersey seems well
prepared to turn the AFIM Directive from a threat for offshore
jurisdictions to an exciting new business opportunity.
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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