Jersey: Funds Quarterly Legal And Regulatory Update - 1 January 2015 To 31 March 2015

Last Updated: 23 April 2015
Article by Niamh Lalor

Most Read Contributor in Jersey, September 2018

FATCA

1. New FATCA IGA guidance notes

On 3 February 2015, the Jersey Chief Minister's Department published the latest version of the Guidance Notes on the Taxation (International Tax Compliance) (Jersey) Regulations 2014 in relation to the implementation of obligations arising under the intergovernmental agreements (IGAs) with the US and UK.

The IGAs' aim is to improve international tax compliance through domestic reporting and the automatic exchange of information. The Guidance Notes provide practical assistance to businesses and staff of Jersey's tax office when dealing with entities affected by the IGAs and, if and when agreed, other bilateral automatic exchange of information agreements implementing FATCA-based reporting (including the Common Reporting Standard).

2. FATCA reporting deadlines

30 June 2015 marks the deadline for the first reports of FATCA information required under the US/Jersey IGA. The equivalent deadline under the UK/Jersey IGA is 30 June 2016.

Certain funds might, however, be able to benefit from the reporting exemption for certain regularly traded interests. If seeking to rely on this exemption, attention should be drawn to the fact that the interpretation of what constitutes interests "regularly traded on an established market" differs markedly between the US and UK IGAs.

Ahead of the 2015 and 2016 reporting deadlines, funds must obtain from investors all information as is necessary in order to fulfil the FATCA due diligence and reporting requirements. In light of this, it has become vital for funds to include provisions in their constitutional documents which oblige investors to supply all such requested information.

Jersey/ JFSC

3. Managed Accounts – supporting documentation published

Following on from The Financial Services (Investment Business (Qualifying Segregated Managed Accounts – Exemption)) (Jersey) Order 2014, the Jersey Financial Services Commission (JFSC) has published supporting documentation for the qualifying segregated managed accounts (QSMA) regime, namely a Notice of Fees, a Form to Report the Quarterly Statistical Information and a Notification Form re: commencement of QSMA activity.

4. Update on the AML/CFT Handbooks

Following on from the 2014 series of Consultation Papers and the AML 1 – 3 Feedback Paper published by the JFSC in December 2014, the following handbooks are now available:

  • the revised AML/CFT Handbook for Regulated Financial Services Business noting, amongst other things, the delay in consulting on Section 14 – Funds and Fund Services Business;
  • the revised AML/CFT Handbook for the Legal Sector; and
  • the AML/CFT Handbook for the Accountancy Sector.

5. Civil liability for breaches of the Codes

On 20 February 2015, the Financial Services Commission (Amendment No. 6) (Jersey) Law 2015 was registered, which makes changes to the Financial Services Commission (Jersey) Law 1998 to include provisions to enable the JFSC to impose civil financial penalties for material contraventions of the Codes of Practice and the AML/CFT Handbook.

For further information, please see our briefing Civil Liability for Breaches of the Codes – Update.

6.  Update on Jersey Financial Services Ombudsman Law

The Financial Services Ombudsman (Jersey) Law 2014 (Appointed Day) (No. 2) Act 2015 came into force on 10 March 2015 allowing for the opening of necessary information gateways with the JFSC. Specifically it will:

  • require the JFSC to provide the Office of the Financial Services Ombudsman (OFSO) with information held by the JFSC and required by the OFSO to calculate or raise a levy;
  • make it an offence to disclose information received for the purposes of complaints, case-fees or levies, subject to certain exceptions; and
  • specify other powers of the OFSO to provide non-restricted information and guidance.

7. JFSC Business Plan 2015

The JFSC published its Business Plan 2015 in January, in which it outlined its strategic goals and priorities. Among the 10 priorities listed for 2015 is a 'Funds regime review', for which it will continue to work with stakeholders to undertake a review of the current Jersey Funds and Fund Services Business regime. The business plan mentions that consideration is being given to the regime's current effectiveness and opportunities that may exist to enhance or simplify it, whilst still ensuring that it complies with all relevant international standards.

Transparency

8. UK Register of beneficial ownership update

The UK Small Business, Enterprise and Employment Bill is currently at the House of Lords Committee stage, which requires the Secretary of State to give guidance on what is meant by 'persons with significant influence and control'. The UK Department for Business, Innovation and Skills has published a draft Terms of Reference for the working group, in which it is suggested that the guidance will be produced by October 2015. It also indicates that the legislation's first phase will commence in January 2016, for companies keeping their own registers, and the second phase will commence in April 2016, for companies filing Person with Significant Control information on the public register.

9. 4MLD – political agreement in Europe on beneficial ownership registers

On 15 January 2015, the Chief Minister's Department provided a Summary of its understanding of Jersey' position under, and the likely impact of, the EU Fourth Money Laundering Directive (4MLD), for which political agreement was reached on 16 December 2014.

According to the Summary, due to the relationship Jersey has with the EU (not being a member state) there is no obligation on it to adopt 4MLD and, should Jersey wish to follow the EU approach, its impact would be minimal.

10. BEPS update

On 6 February 2015, the Organisation for Economic Cooperation and Development (OECD) announced an agreement with G20 countries concerning implementation of the base erosion and profit shifting (BEPS) project, and presented the following findings at the G20 Finance Ministers meeting in Istanbul:

  • A mandate for negotiations on a multilateral instrument to streamline implementation of tax treaty-related BEPS measures, offering countries a single tool for efficiently updating their tax treaties in a consistent manner.
  • An implementation package for country-by-country reporting in 2016 and a related government-to-government exchange mechanism to start in 2017 with the aim of increasing transparency through improved transfer pricing documentation standards.
  • The criteria to assess which preferential treatment regimes for intellectual property (patent boxes), and other preferential regimes, can be considered harmful tax practices.

AIFMD

11. House of Lords criticises AIFMD implementation

On 2 February 2015, a report entitled The post-crisis EU regulatory framework: do the pieces fit? was published by the House of Lords EU Select Committee which set out its conclusions on certain European regulatory developments, including the introduction of the European Supervisory Agencies and the European Commission's proposals for a capital markets union. Whilst generally positive, the report is critical of the Alternative Investment Fund Managers Directive (AIFMD) which put in place 'inappropriate definitions and requirements' (leading to significantly increased operational costs for Real Estate Funds, Private Equity Funds and Venture Capital Funds in particular) and was disproportionate in its application due to excessive politicisations. On numerous occasions the report calls for better quality impact assessments at every stage of the legislative process before further significant reforms are introduced.

12. ESMA publishes responses to call for evidence

A call for evidence was issued in October 2014 by the European Securities and Markets Authority (ESMA) to gather views on the extension of the AIFMD passport to third party countries (i.e. non-EU countries) by July 2015. The deadline for the submission of responses to the call for evidence was 8 January 2015. Ogier worked closely with the Jersey Funds Association on preparing a response, which has been published on the ESMA website.

We understand that ESMA is likely to make a decision this summer on whether the AIFMD passport will be extended to third party country AIFMs on a country by country basis.

Case law

13. Weavering judgement reversed

On 12 February 2015, the Cayman Islands Court of Appeal handed down its long awaited judgment in Weavering Macro Fixed Income Fund Limited (in Liquidation) v Peterson and Ekstrom.

In 2011 the directors of the Weavering Fund were found wilfully negligent by the Grand Court in respect of their duty to supervise the Fund's affairs, and were ordered to pay damages of US$111 million to Weavering's insolvent estate.

The Court of Appeal has found that although the Judge had correctly identified the appropriate legal test to determine whether a director is in wilful breach of his duty, i.e. that the director commits a knowing and intentional breach of duty, the evidence given at trial did not support the trial Judge's finding of a wilful breach. An inference that the directors had consciously chosen not to perform their duties to the fund was an insufficient basis for a finding of wilful default. That finding could only have been established on a specific finding of facts that the directors both knew what was expected of them but had decided not to perform in accordance with that expectation. The Court of Appeal decided that the trial Judge had not made such findings.

A fuller briefing with a detailed analysis of the Court of Appeal's decision and its implications for Cayman directors will follow in due course.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions