Jersey: Forging Ahead:

Innovations in Jersey’s Fund Industry
Last Updated: 24 January 2008
Article by Andrew Weaver and Sarah Bolton

Since Jersey introduced the Expert Fund Guide in February 2004 its status as a jurisdiction for alternative investment funds has grown, to the point where it now comes second only to the industry leader the Cayman Islands. Subsequent developments, including the Non-Domiciled Fund Guide, the Listed Fund Guide, recognition of the jurisdiction by the Dutch financial services regulator, and a push at government level to invite fund management businesses and family offices to relocate to the Island have enhanced this position. But Jersey is not resting on its laurels and significant developments are taking place in the legislative regime governing funds and their functionaries. Further radical proposals have just been approved which could result in Jersey claiming a leading position alongside Cayman.

Key Regulatory Issues:

Jersey has worked hard to maintain its position as a jurisdiction where regulation is adequate for the protection of investors, without being too intrusive, recognising that different categories of investors require, and may appreciate, different degrees of regulation and protection. The focus of the Jersey Financial Services Commission ("JFSC") over the past few years appears to have been to reduce, where applicable, the scope of prescriptive regulation in relation to investment funds and at the same time to ensure that service providers of those funds are appropriately regulated.

This desire to regulate more effectively service providers resident in Jersey and to be less prescriptive about the fund vehicles themselves, has achieved formal recognition in a significant legislative change to be implemented in November, 2007 pursuant to which fund service providers (including investment management, investment advisory, fund administration, custody, depository and registrar functions) will cease to be regulated under the Collective Investment Funds (Jersey) Law 1988 and will fall to be regulated as a new class of financial services business to be named Fund Services Business under the Financial Services (Jersey) Law 1998. The Collective Investment Funds Law will remain in place as the principal source of regulation for the fund vehicles themselves, but it is intended that the regulatory emphasis should fall upon the functionaries in Jersey. In addition to moving the regulatory umbrella to the Financial Services Law, the JFSC is introducing for the first time codes of practice with which the Jersey funds service providers will be expected to comply. The basis of this regulation, however, is that of establishing a set of clear principles to which industry participants are required to adhere without being prescriptive as to the manner in which these requirements can be met. In this way the JFSC is able to allow a degree of flexibility to industry participants without imposing upon them a particular model or method of acting.

New Class Of Unregulated Funds

There is a substantial degree of co-operation and collaborative effort between the JFSC and private participants in the funds industry in Jersey in framing, developing and introducing regulatory change. A prime example of this is the announcement by the JFSC of the introduction early in 2008 of an unregulated class of fund. Over the summer a team comprising representatives of the Jersey Funds Association, Jersey Finance Limited and the JFSC, have worked together to consider the terms of reference for such a class. The new class of fund will be available only to ‘eligible investors’ – those with a minimum initial investment of $1m or certain defined classes of high net worth, sophisticated or institutional investors. Provided the fund can ensure compliance with this requirement there will be no other regulatory obligations placed upon it in Jersey and, in particular, it will not be required to appoint any Jersey-based service providers. If introduced this will, at last, create a very credible European alternative to the Cayman Islands as a domicile of choice for hedge funds and other alternative investment funds. It will also mean that fund sponsors and promoters will have a wide and flexible choice of fund categories in Jersey to choose from.

Pressing Home The Advantage

These and other initiatives can only strengthen Jersey’s position as a key player in the global offshore funds industry, particularly as Jersey also has some other pretty convincing weapons in its armoury. These include Expert Funds which are lightly regulated investment vehicles which can be established on a fast track basis and are available to expert and sophisticated investors. The success of these funds – 105 launched in the twelve months ending in August 2007 giving a total of 319 since their introduction – has surpassed industry expectations and flags to the world Jersey’s intention to target different products, such as property, venture capital and private equity funds.

There will, of course, be challenges along the way. The European-based fund market is an obvious prime target, but other competitor jurisdictions in the region, such as Guernsey, Dublin and Luxembourg will be refining their fund legislation and products to attract a share of the business. Cayman will continue to have some advantages in attracting U.S. based fund business, namely proximity and familiarity, but there is certainly scope for attracting European and other managers and investors who want a flexible jurisdiction coupled with the security and enhanced reputation which arises from association with Jersey.

Despite these challenges, Jersey has good reason to feel confident that it can beat the competition. New and innovative products added to a solid funds tradition put Jersey in a strong position. It may have been the case in the early days of the hedge fund industry that managers were seeking to set up in the least regulated jurisdictions. However, the industry has matured and investors and managers are increasingly seeking top-quality jurisdictions with sufficient, but not excessive regulation. A further driving force is the fact that tax authorities in the home jurisdictions of both the managers and investors are increasing their scrutiny to ensure that offshore status in each case is legitimate, and if, for example, board meetings are required, Jersey is clearly a logical choice for European managers and directors rather than the Caribbean jurisdictions. Coupled with all of this, and adding weight to its reputation generally, is Jersey’s initiative to attract hedge fund managers to become resident themselves in Jersey.

Jersey is at the forefront in developing legislation which responds to the demands of managers, lawyers and investors for increasingly complex fund products. An obvious example is the introduction of segregated cell legislation with innovations to make it more attractive than similar structures in other jurisdictions. Protected Cell Company legislation was introduced in 2006 allowing segregation of assets within separate cells. However, there was some concern that other jurisdictions might not recognise this segregation, particularly as the PCC, including its cells, remained as one legal entity. The response has been to introduce the innovative Incorporated Cell Company. Each cell in the ICC has separate legal status, which enhances the ability to ring-fence the assets, but still allows the manager and other service providers to maintain greater control than if each cell were replaced by separate subsidiaries in a traditional umbrella structure. The potential for the innovative use of the ICC structure is only gradually being realised, and will spread beyond funds.


Ultimately, the success of any jurisdiction hinges upon the willingness of the private and government sectors to co-operate to create a business-friendly environment. In Jersey there is a consensus that maintaining a certain level of regulation actually attracts the best business and reassures investors and onshore jurisdictions. Couple this with an increasingly user-friendly legislative framework and you have a winning combination.

This article first appeared in Legal Week on 1 November 2007.

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

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

In association with
Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.