Jersey: Jersey Private Funds

With effect from 18 April Jersey is introducing a new regime in respect of private funds - simplifying the regulatory regime, and extending the benefits of flexibility and speed across Jersey's private funds space.

Executive summary

Under the Jersey private funds regime:

  • All funds with up to 50 investors will come under one simple regime.
  • The regulatory framework will be consistent across the private funds space, extending the current benefits of Jersey's existing very private regime to all private funds.
  • A fast track 48-hour regulatory approval process will apply, with no prior approval of promoters or key persons being required.
  • The features and operation of private funds will be relatively unconstrained, with a variety of legal vehicles being able to be used, funds being able to be closed- or open-ended, requirements for Jersey connections being relaxed, and offering documents being permitted, but not required.
  • Private funds will be able to be promoted to "professional" and other "eligible" investors, with the eligibility criteria being both straightforward and relatively broad: for example including those whose ordinary business is managing, holding or advising on investments, as well as persons who can meet certain asset or investment thresholds (such as making an investment of at least £250,000 (or currency equivalent)).

Alongside the various elements of flexibility, appropriate regulatory oversight will be maintained. This will be achieved through a requirement for a Jersey-regulated 'Designated Service Provider' to be appointed to all Jersey private funds, following the trend of focusing regulation on a key service provider, rather than the product.

The detail

Private funds

The private funds regime will apply to all 'private funds'. A 'private fund', for the purposes of the Jersey regime, is defined by reference to the number and type of investors.

Maximum of 50 investors

A fund is considered to be a vehicle involving the pooling of capital and which operates on the principle of risk spreading, and a Jersey 'private fund' ("JPF") is defined as a fund with no more than 50 investors.

In addition to the 50 investor limit, the regime prescribes that a JPF cannot be formally offered to more than 50 prospective investors. In this regard, there is some helpful guidance making it clear that the limit applies to formal offers, rather than, for example, pre-marketing material.

Helpfully, it is clear that when calculating the number of investors there is no need to 'look through' to the number of underlying investors if a discretionary investment manager is investing in the JPF on behalf of such investors. However, it is also made clear that one would look through a dedicated feeder vehicle deliberately structuring to circumvent the 50 investor limit.

Type of investors

Both professional and other eligible investors are able to invest in a JPF. These categories are relatively broad, and include, for example:

  • Any person investing or committing £250,000 (or currency equivalent) or more.
  • A person whose ordinary business is acquiring, managing, holding or advising on investments.
  • Persons with investible assets of at least US$1m (or currency equivalent).
  • Persons with relevant financial services industry experience.
  • Professional clients, as defined under MiFID.

Retail investors cannot invest in a JPF, although a discretionary investment manager can make an investment on their behalf, provided that they are satisfied as to the suitability of the investment to the investor. Provision is also made for investment in a JPF by the promoter and other related persons by way of founder interests and for the purposes of carried interest participation.

Out of scope

Certain vehicles which may involve the pooling of capital, or the spreading of risk, remain expressly out of scope of the private funds regime. The rules in respect of such vehicles (which in a number of instances are the rules that apply to forming a private company in Jersey) will remain unchanged. Vehicles which are out of scope include holding companies, joint venture arrangements, special purpose and securitisation schemes, and vehicles with a relevant family or employment connection.

The features of the regime

The Jersey private funds regime has a number of beneficial features, as follows:

  • A JPF can be established as any type of vehicle: as a company (including cell companies), as a partnership (including limited partnerships, separate and limited liability partnerships) or as a unit trust.
  • A JPF can be closed- or open-ended.
  • Both Jersey and non-Jersey vehicles can be established under the Jersey private funds regime (provided any non-Jersey vehicle has a relevant connection to Jersey).
  • There are no restrictions on the investment or borrowing policies of a JPF.
  • No offering document is required to be produced for a JPF.
  • A JPF is not required to have Jersey directors, a Jersey general partner of Jersey trustee (as applicable).
  • A JPF is not required to be audited.

There are some conditions imposed, as follows:

  • If an offering document is produced, it must contain all material information an investor would reasonably require as to the merits and risk of the investment.
  • A JPF cannot be listed on a stock exchange.
  • A prescribed investment warning is required, which must be acknowledged by investors.
  • Although there is no requirement for Jersey directors or for management and control of the JPF to be in Jersey, there is an expectation that in a majority of cases that one or more Jersey persons would participate in the management of the JPF.
  • A JPF must appoint a Designated Service Provider in Jersey (as to which, see below).

Process and regulation

A fast track 48-hour regulatory approval process will apply in respect of JPFs.

No prior approval of the promoters of JPFs will be required, and Jersey's promoter policy, which applies to more widely marketed funds and those promoted to retail investors, will not apply. In addition, the individual regulatory approval process in respect of key persons connected with the fund, which can apply to other fund types in Jersey, does not apply. Similarly, other aspects of Jersey's regulatory framework which govern the ongoing activities of the fund have also been relaxed for JPFs, including the fund codes of practice and outsourcing policy, all in an effort to streamline the operational efficiency of JPFs.

Certain core regulatory rules will continue to apply, however, such as AML rules, sound business practice policy and, if marketing in the EEA, relevant marketing rules. In addition, and in order to ensure effective but proportionate regulation, certain reliance is placed on the Designated Service Provider in Jersey in respect of oversight and reporting.

Designated Service Provider

In overview, the JPF regime endeavours to provide flexibility and ease for those structuring private funds through Jersey, but with some constraints so as to ensure that there is still an appropriate degree of regulation of such vehicles. In large part, this is achieved through the requirement that every JPF must appoint a Designated Service Provider in Jersey. The Designated Service Provider must be a regulated Jersey businesswith substance in Jersey. This function will ordinarily be undertaken by the fund administrator appointed by the JPF, but may also be undertaken by a Jersey manager, investment manager or trustee. The Designated Service Provider will have certain due diligence, compliance, monitoring and reporting obligations in respect of the JPF. In keeping with regulatory trends, the principle behind the requirement is for regulation to be focussed on a key service provider, rather than on the JPF as the product.

Conclusion

The objective of the Jersey private funds regime is clear: a simplified, and streamlined, regime, allowing Jersey to compete in the fast-evolving international funds landscape, but with appropriate regulatory supervision being maintained.

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
Similar Articles
Relevancy Powered by MondaqAI
Carey Olsen
Appleby
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Carey Olsen
Appleby
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