Jersey: Expert Funds In Jersey

Last Updated: 26 October 2008


Jersey has always been a very attractive jurisdiction for the establishment of collective investment funds for a variety of reasons. The Expert Funds regulatory regime was established to make Jersey more attractive to promoters wishing to establish funds aimed at sophisticated, institutional and high net-worth investors.

The Expert Fund classification benefits from significantly less regulation, and enables Expert Funds to be established in a matter of days. The Expert Fund regime establishes a streamlined authorisation process, and permits the certification by a regulated Jersey financial services provider – typically the administrator - of the fund's compliance with the Commission's guidelines. This contrasts extremely favourably with the often lengthy and involved four-stage in-principle consent, document review and final approval process for collective investment schemes otherwise carried out by the Commission.


Generally, a collective investment fund will qualify as an Expert Fund if each investor signs an acknowledgement of receipt of a prescribed form of investment warning and falls within one of the following categories:

  1. they invest a minimum of US$100,000.00 (or equivalent); or
  2. their ordinary business or professional activity includes the buying or selling of investments or the provision of investment advice; or
  3. they have a net worth, or joint net worth with their spouse, exceeding US$1,000,000.00 (excluding that person's principal place of residence); or
  4. it is a company, partnership, trust or other association which has assets available for investment of not less than US$1,000,000.00 or every member or partner of which falls within the definition of expert investor; or
  5. it is a functionary or an associate of a functionary to the Expert Fund or an employer, director, partner or consultant of such a person; or
  6. it is a government, local authority, public authority or supra-national body in Jersey or elsewhere.

An Expert Fund must be a collective investment fund for the purposes of Jersey collective investment funds law. It can be structured as a company, a limited partnership or a unit trust. It may be either open or closed-ended.

Where the fund is established as a limited partnership, at least two Jersey resident directors with appropriate experience must be appointed to the board of directors of the general partner.

An Expert Fund must have an auditor appointed, and annual audited accounts must be prepared.

Full details of the investment strategy must be set out in the offering documentation.

There are no requirements as to investment or borrowing restrictions applicable to Expert Funds, provided that the approach to borrowing or gearing is clearly disclosed in the offering documentation. However, if the Expert 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 an Expert Fund can be marketed.


Investor protection

Investor protection is maintained through the requirements that:

  1. full disclosure be set out in any offering document issued by the Expert Fund;
  2. any Jersey entity that provides services to the Expert Fund must be licensed to do so by the Commission; and
  3. prospective investors sign an agreed form of investment warning before their investment is accepted.

Investor requirements

All investors must qualify as expert investors and must sign an investment warning prior to investing in the fund. There is no limit on the number of investors.

In addition, the Commission believes that those involved in establishing and providing services to an Expert Fund should be able to invest in the fund, and will adopt a flexible approach in relation to "carried interest" investments to be made by or on behalf of those connected with the Expert Fund.


Expert Funds can take any form recognised under the laws of Jersey. A key feature of such funds is that the fund board, general partner, manager or trustee (which will have at least two Jersey directors) is ultimately responsible for the management and control of the Expert Fund in accordance with and subject to the applicable law.


  1. The Companies (Jersey) Law 1991 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 our briefings entitled "Companies in Jersey" and "Cell Companies in Jersey").

Unit trusts

  1. In contrast to an investment company, a unit trust is not a separate legal entity as such, but a trust arrangement whereby legal ownership of the fund's assets is vested in a trustee who holds the assets of the fund on trust for the benefit of the unit-holders.
  2. The unit trust will generally be constituted by means of a trust instrument made between a trustee company and an independent manager. Typically the manager will promote, manage and administer the scheme. Subscription proceeds will be paid to the trustee which will act as custodian of the investment assets of the fund. In addition, the trustee will generally supervise compliance by the manager with its obligations under the trust instrument.
  3. The trust instrument will generally contain provisions regulating the issue, redemption and valuation of units, the appointment and removal of the trustee and the manager, their duties and remuneration, borrowing powers, investment restrictions and for the winding-up of the trust.
  4. Jersey has a modern statute-based trusts law.
  5. For most practical purposes a unit trust scheme will operate and be regulated in the same manner as a corporate investment fund.

Limited partnerships

  1. Limited partnerships may be established and operated in each jurisdiction under comprehensive and modern legislation.
  2. A limited partnership may be an appropriate structure for a number of different purposes. A principal use will be to provide an additional form of investment vehicle for mutual funds, in particular for the venture capital industry. A limited partnership can also be an attractive structure for various tax planning purposes as the partnership is generally treated as being fiscally transparent.
  3. There is no maximum imposed on the number of limited partners of a limited partnership.
  4. The general partner will manage the business of the partnership and have unlimited liability for its debts. The liability of investors taking interests as limited partners (and who do not participate in the management of the business) will be limited generally to the amount of their investment.


The promoter of an Expert 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 Expert 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 manager to appropriate regulator 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 six-eyes 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 Expert 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 Expert Funds.

Offering documents

The overriding principle of the Expert Fund regime is that any offering document must set out clearly and fully all material information that a prospective investor would reasonably require to enable them to make an informed judgement about investing in the Expert Fund. This should include the basis upon which the value of the Expert 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 expert investors as well as any investment warnings required by any applicable legislation, and will also be required to contain an acknowledgement that all investors must sign confirming that they fully understand and accept the risks of investing in that Expert Fund.

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 Expert Funds, though the approach to borrowing and gearing must be clearly disclosed to investors.

Every Expert Fund must appoint an administrator, manager or (in the case of a unit trust) trustee that is regulated by the Commission and has a physical presence in Jersey. The administrator, manager or trustee 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

An Expert Fund must have adequate safe custody or prime brokerage arrangements in place in respect of the fund assets, although there is no requirement for these to be carried out by an independent Jersey custodian, other than for an open-ended Expert Fund. An open ended Expert Fund will be required to source its custody arrangements from a Jersey custodian or, if it is a hedge fund, it may appoint a prime broker that is part of a group with a credit rating of A1/P1 or better.

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 Expert Fund.

The responsibility of the administrator, manager or trustee (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 Expert Fund as set out in the fund prospectus, and to promptly notify the entity that appointed the investment manager of any concerns it has in that regard so that appropriate action may be taken.

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

The functionary will be required to maintain in Jersey sufficient records in relation to the Expert Fund in order to fulfil its obligations.

Each Jersey functionary of an Expert 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.


Assuming that the fund complies with all of the criteria of the Expert Fund regime, the authorisation process itself is quick and straightforward and, provided the Commission are satisfied that the Fund meets the Commission's criteria for and Expert Fund, the relevant consents and permits for a new Expert Fund should be issued with a matter of days.

The administrator, manager or trustee of the fund must complete and sign an application form setting out the main features of the Expert Fund and confirming that the fund meets the Commission's requirements for Expert Funds. This application form must be countersigned by either the directors of a fund company or the general partner of a limited partnership fund, or by the manager or trustee of a unit trust fund, 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 Expert Fund nor will it review the fund documentation, save in exceptional circumstances.

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


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 COBO 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.

This memorandum is intended to provide an outline of the legal regime governing private companies in Jersey, and is not intended to be comprehensive in its scope. It is recommended that clients seek legal advice on any particular matters.

Jonathan Heaney, Partner

Cayman Islands
Jonathan Tonge, Partner
Mark Lewis, Partner

David Whittome, Partner

British Virgin Islands
Richard May

Hong Kong
Philip Millward, Partner
Carol Hall, Partner

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

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
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
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 (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

To Use 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.


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.


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