Jersey: Listed Funds In Jersey

Last Updated: 29 July 2008

INTRODUCTION

A streamlined authorisation process is available in Jersey for closed-ended funds that are or will be listed on designated stock exchanges or markets recognised by the Commission.

The "listed funds" category of unclassified funds in Jersey's collective investment scheme regime enables a closed-ended fund, which is to be listed, to minimise its regulatory burden, as the Commission recognises that the investment vehicle will have to satisfy the requirements of the exchange or market concerned, and is therefore satisfied to streamline the authorisation process in the prescribed circumstances for such vehicles. This contrasts extremely favourably with the often lengthy and involved multi-stage in-principle consent, document review and final approval process for collective investment schemes otherwise carried out by the Commission.

QUALIFICATION AS A LISTED FUND

Generally, a collective investment fund will qualify as a listed fund if the following are satisfied:

  1. The fund must be incorporated as a company (the Commission may, in time, extend the benefit of the listed fund regime to other forms of funds: for instance, unit trusts or limited partnerships).

  2. The company must be a collective investment fund for the purposes of the Collective Investment Funds (Jersey) Law 1988, as amended (the "Law").

  3. The company must be incorporated in Jersey.

  4. The company must have a listing on a stock exchange or market recognised by the Commission.

  5. The company must be a closed-ended fund, which for these purposes is defined as "a fund which is not open for redemptions at the option of holders of securities".

  6. The company's board must be ultimately responsible for the management and control of the fund and this ultimate responsibility cannot be delegated.

  7. At least two Jersey resident directors with appropriate experience must be appointed to the board of the company.

  8. A majority of the company's directors must be independent. The board will be responsible for ensuring that a director meets any such requirements prescribed by the relevant listing authority. However, as a minimum, a director should not be a past (within the foregoing five years) or present employee of the Manager1 or Investment Manager2 or any of their Associates3 even if permitted by the listing authority concerned.

A listed fund must have an auditor appointed, and annual audited accounts must be prepared and filed with the Commission within seven months of the end of the listed funds financial year.

There are no requirements as to investment or borrowing restrictions applicable to listed funds, provided that the approach to borrowing or gearing is clearly disclosed in the offering documentation. However, if the listed fund is permitted to borrow money in excess of 200% of the net asset value of the fund, full details of the manner in which the risk posed by such borrowing will be managed must be disclosed to the Commission and in the offering documentation.

There are no limitations on marketing or, in particular, on the number of persons to whom a listed fund can be marketed.

REGULATORY REQUIREMENTS AND KEY FEATURES

Investor protection

Investor protection is maintained through the requirements that:

  1. full disclosure must be made in any offering document issued by the listed fund; and

  2. any Jersey entity that provides services to the listed fund must be licensed to provide such services by the Commission.

Structure

At present, listed funds may only take the form of companies, incorporated under the laws of Jersey, meaning that the Companies (Jersey) Law 1991, as amended (the "Companies Law") will apply to the listed fund. Key features to note are:

  1. the Companies Law is a modern statute, based upon internationally familiar English company law principles.

  2. there is no minimum authorised or issued share capital requirement imposed.

  3. a number of different types of company are available (see, for further information, our briefings entitled "Companies in Jersey" and "Cell Companies in Jersey").

The Commission will, at some time in the future, give consideration to the inclusion of unit trusts and limited partnerships to the listed funds category.

Promoter

The promoter of a listed fund will not generally be subject to any regulatory review or approval.

Investment manager

The investment manager must either have been previously approved by the Commission or it must:

  1. have relevant experience in managing assets similar to those of the listed fund;

  2. have no criminal convictions or regulatory sanctions imposed on it;

  3. be solvent;

  4. be established and regulated in an OECD member state (or another jurisdiction – as agreed with the Commission – which subjects the investment manager to appropriate regulatory oversight); and

  5. satisfy the Commission's general principles of corporate governance and span of control requirements (meeting the "four-eyes" principle if it cannot handle client monies, and the "sixeyes" principle if it can handle such monies).

If an investment manager does not meet these requirements, it may approach the Commission for approval on a case-by-case basis, with the Commission taking a flexible approach commensurate with offering adequate protection to the listed fund's investors and the Island's reputation.

If a distributor is the "prime mover" behind the fund, then that distributor will be required to meet similar tests to those imposed upon the investment manager.

Once the Commission approves the investment manager, provided there are no material changes to its circumstances, the Commission will not require the investment manager to seek its further approval to act as investment manager to additional listed funds.

Offering documents

The offering document must set out clearly and fully all material information that a prospective investor (including a person who cannot be expected to have any special knowledge of investments of the nature being offered) would reasonably require to enable them to make an informed judgement about investing in the listed fund. This should include the basis upon which the value of the listed fund is calculated.

The offering documentation will be required to include the relevant investment warnings contained in the Commission's guidelines explaining that the fund is only suitable for professional or experienced investors as well as any investment warnings required by any applicable legislation.

Investment restrictions

Full details of the investment and borrowing strategy of the fund must be set out in the prospectus. No investment or gearing restrictions will be prescribed by the Commission in relation to listed funds, though the approach to borrowing and gearing must be clearly disclosed to investors.

Every listed fund must appoint an administrator or manager that is regulated by the Commission and has a physical presence in Jersey. The administrator or manager is responsible for ensuring that the investment manager complies with the terms of the offering documentation and all applicable law when managing the fund. This responsibility cannot, generally, be delegated.

Safe custody arrangements

A listed fund must have adequate safe custody or prime brokerage arrangements (if applicable) in place in respect of the fund assets, although there is no requirement for these to be carried out by an independent Jersey custodian.

If the listed fund is a hedge fund and a prime broker is appointed, the prime broker must be part of a group with a minimum credit rating of A1/P1.

Administration and monitoring of the investment manager

There must be a regulated Jersey manager or administrator with staff and a physical presence in the Island appointed to provide services to the listed fund.

The responsibility of the administrator or manager (as applicable) shall include taking reasonable measures to satisfy itself that the actions of the investment manager do not breach the investment and borrowing restrictions applicable to the listed fund as set out in the offer document, and to promptly notify the board of directors of the fund company of any concerns it has in that regard so that appropriate action may be taken.

The "reasonable measures" that the administrator or manager to fulfil their responsibility may be outsourced in accordance with the Commission's policy, though the responsibility itself cannot be outsourced.

As well as the monitoring function, the fund company's board of directors must regularly review the fund's investment strategy and risk profile, including all associated matters and the investment strategy of the investment manager.

The administrator or manager (as applicable) will be required to maintain in Jersey sufficient records in relation to the listed fund in order to fulfil its obligations.

Each Jersey functionary of a listed fund must obtain a permit from the Commission and must be managed and operated in accordance with the terms of the codes of practice to be published by the Commission from time to time.

THE AUTHORISATION PROCESS

Assuming that the fund complies with all of the criteria of the listed funds category, the authorisation process itself is quick and straightforward and, provided the Commission are satisfied that the fund meets the Commission's criteria for a listed fund, the relevant consents and permits for a new listed fund should be issued within a matter of (generally, three) days.

The administrator or manager of the fund must complete and sign an application form setting out the main features of the listed fund and confirming that the fund meets the Commission's requirements for listed funds. This application form must be countersigned by the directors of the fund company and then lodged with the Commission together with the draft offering documentation and prescribed fee.

The Commission will review the application form to confirm that it has been completed properly, but will not carry out a regulatory review of the listed fund nor will it review the fund documentation, save in exceptional circumstances.

If satisfied that the Fund satisfies the Commission's criteria for a listed fund, the Commission will authorise the listed fund on the basis of the application form, and will then issue the relevant consents and permits.

POST LAUNCH REQUIREMENTS

The Commission does not undertake any on-going proactive supervision of funds, so post-launch requirements are principally dictated by the terms of the consents granted.

The terms of the consents

The Commission will tailor the consents to suit each particular case.

Filing of audited accounts

Public companies must file with the Registrar of Companies a signed copy of the accounts for each financial period together with a copy of the report thereon by the auditors.

Annual confirmation

All consents granted under the COBO4 for the issue of securities will include a condition which will require the directors of the fund to confirm on an annual basis that to the best of their knowledge, having taken reasonable steps to ascertain the position, there have been no breaches of the consent, other than those (if any) previously disclosed to the Commission.

Material changes

All material changes to any information provided to the Commission in connection with a listed fund must be notified to the Commission as soon as possible within twenty-eight days of any such change.

Further, the Commission must be notified immediately if a listed fund is refused permission to be listed on a recognised market or exchange or permission is revoked or any other material event occurs in connection with the listing.

Footnotes

1. The term "Manager" means any functionary to whom the board of directors has delegated overall responsibility for the executive management of the fund.

2. The term "Investment Manager" includes an investment adviser and may be the Manager if no separate investment manager is to be appointed.

3. The term "Associate" means any company which is a subsidiary or a holding body of that company or a subsidiary of any such holding body and any individual, partnership or other unincorporated association or firm which has direct or indirect control of that company and any company which is directly or indirectly controlled by any such individual, partnership or other unincorporated association, or firm. 4 COBO means the Control of Borrowing (Jersey) Order 1958, as amended. The COBO regulates the raising of money, the issue of securities and the circulation of offers for the subscription, sale or exchange of securities in Jersey or by Jersey vehicles.

4. COBO means the Control of Borrowing (Jersey) Order 1958, as amended. The COBO regulates the raising of money, the issue of securities and the circulation of offers for the subscription, sale or exchange of securities in Jersey or by Jersey vehicles.

Jersey

Jonathan Heaney, Partner

Cayman Islands

Jonathan Tonge, Partner

Mark Lewis, Partner

London

David Whittome, Partner

British Virgin Islands

Heidi de Vries, Partner

Hong Kong

Philip Millward, Partner

Carol Hall, Partner

Dubai

Rod Palmer, Partner

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.

 
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