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
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.