This note is designed to provide basic information about
establishing Jersey private placement funds.
One of the latest additions to Jersey's variety of
investment vehicles available to arrangers of funds is the Private
Placement Fund ("PPF"). This fund is designed for
Professional and Sophisticated Investors worldwide, and the swift
authorisation procedure under which consent can be obtained from
the Jersey Financial Services Commission ("JFSC") as well
as its cost effectiveness makes this option even more attractive.
The PPF vehicle is used widely and is a flexible fund option.
Before a fund can be classified as a PPF it has to satisfy a
certain eligibility criteria, namely;
It should be a closed-ended fund established or managed in
Jersey (this means that the fund can be established outside of
Jersey but managed in Jersey);
Only Professional or Sophisticated Investors allowed;
Maximum of 50 investors.
The PPF provides a great deal of flexibility and allows
promoters who want to move quickly to take advantage of an
Requirements to set up a PPF
Besides the above-mentioned eligibility criteria one has to
comply with, there is also the requirement for a Private Placement
Memorandum ("PPM"). The PPM should contain information
that will enable the investor to fully consider the merits of
investing in the fund and information relating to the risks
Other information that is generally included is:
conflict of interests;
terms of the PPF;
regulatory matters; and
The PPM will, in short, contain all the information needed for
the investors to make an informed decision and for the JFSC to
analyse the structure.
A PPF is obligated to satisfy certain requirements in terms of
management. Each different Jersey entity has different
requirements. For these purposes, a Jersey company is required to
have not less than two Jersey resident directors with relevant
experience, where a company is not established in Jersey then no
less than two directors resident in Jersey need to be appointed to
the fund or two resident directors with appropriate experience
appointed as managers to the fund. The limited partnership, on the
other hand, must have at least one partner that is either a Jersey
company with no less than two resident directors, or has one
general partner that is a Jersey company, which has at least two
resident directors. Lastly, with a unit trust, each trustee and the
manager must be a Jersey company with no less than two resident
directors. A PPF must also appoint a Jersey administrator as its
Designated Service Provider.
Professional and Sophisticated Investors
The definition of the Professional Investor, contained in the
PPF Guide, includes any person who habitually invests by way of
business, or invests in any structure with assets over
US$10,000,000 as well as senior employees, directors, partners,
shareholders or consultants of the PPF or its investment management
or advisory team, who receive their interests by way of
remuneration or carried interest. A Sophisticated Investor is an
investor who makes a minimum initial investment or investment
commitment of £250,000 (or the equivalent in any other
currency) in the PPF, whether through the initial offering or
subsequent acquisition. This means that investors in the PPF would
have to invest a minimum of £250,000 and this will be an
added requirement for the establishment and investment in the
Regulation and Process of approval
The PPF is regulated by the JFSC and the regulator requires the
following to be submitted:
a written statement of confirmation from the promoter
confirming that it has complied with the guidelines as set out in
the PPF Guide;
a counter signature form the administrator certifying
that it has completed its due diligence and has no reason to
believe the promoter's confirmation is incorrect;
a written confirmation from the administrator, that the
funds PPM meets the requirements of the PPF Guide;
details of all the principal persons of the
After the above have been processed, the JFSC will grant consent
and the fund can be launched (The JFSC has a published turnaround
time of 3 working days).
Other fund options
The PPF compliments the other fund regimes available in Jersey
very private funds;
fully classified funds; and
Finally, the PPF allows promoters to test the market and once
the structure is up and running, it can be converted into one of
the more public type 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.
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