Jersey: Bucking Historic Trends - Jersey, Cayman & BVI Funds

Last Updated: 3 February 2009
Article by Appleby  

Historic trends are frequently considered when comparing offshore jurisdictions, including for the purpose of choosing a fund domicile. Jersey, Cayman and BVI provide no exception. Theoretically, concentrations of offshore funds may be defined with reference to the status of the promoter, target market of a fund in relation to investors and investments, and investment strategy. Typical examples would include established jurisdictions which are commonly associated with funds versus start-up fund promoters, retail versus private investors, and traditional versus alternative investment strategies. In practice, these may translate to statements concerning the jurisdiction of choice for retail funds, hedge funds, private equity funds, and so on. This article outlines the difficulty with identifying historic trends, and the limited role which they should play in choosing a fund domicile, with a focus on Jersey, Cayman and BVI, given the current level playing field in the offshore legal and regulatory environment, including the standard of fund service providers.

Evidence Of Trends

Identifying and comparing historic trends in the context of offshore funds is not easy. Statistics do not exist to verify perceived trends as between jurisdictions (although certain jurisdictions do publish useful statistics in relation to their own fund industry). Meaningful comparison between jurisdictions requires a uniform set of classificatory criteria, for instance in relation to fund promoters, target markets and investment strategies. However, jurisdictions typically approach these matters differently. Definitions are inconsistent (comparing the number of funds, or types of funds, as between jurisdictions is unhelpful if they apply different defining criteria), and regulatory requirements also differ (comparing the number of regulated funds as between jurisdictions is unhelpful if they apply different regulatory thresholds). As a consequence, offshore jurisdictions have failed to date to successfully collaborate in providing comparable statistics to confirm perceived trends.

Choice Of Jurisdiction

Apart from the absence of accurate statistics to support perceived trends, there are more substantive issues to consider in choosing a jurisdiction. By way of background, promoters of funds choose a fund domicile based on an array of factors. Significant slots at conferences, published articles and debates analyse the factors involved in the choice. However, only a couple of factors truly qualify as pre-requisites for an appropriate fund domicile, while the remainder relate to preferences, matters of convenience and the like. Two of the most important pre-requisites may be as follows:

  1. an appropriate legal, regulatory and tax environment; and
  2. responsive and well qualified service providers.

Jurisdictional differences in costs are usually insignificant in the context of overall fund start-up costs and have become less of an issue, along with timing, in the key offshore jurisdictions. Assuming a level playing field in terms of (i) and (ii) above, it is submitted that, irrespective of the speed at which different jurisdictions evolved, the value of any perceived historic trend should be disregarded in the future choice of fund domicile. Instead, professional advice should be sought to assist in focussing on the factors that really count.

Legal Issues

Company, partnership and trust laws are essential to the effective establishment and operation of a fund structure. Although each jurisdiction has evolved at its own pace, Jersey, Cayman and BVI have now all developed a comprehensive legislative framework capable of accommodating a wide range of funds, and providing an appropriate tax efficient legal structure for almost any type of offshore investment fund. Although there are differences in the technical provisions of the laws, competitive spirit has resulted in the development of a set of laws which may be regarded as equivalent to one another in their ability to facilitate fund products. Critical differences between jurisdictions have become few and far between. However, jurisdictional idiosyncrasies do exist and can be used to the advantage of fund structures with appropriate professional advice.

Regulatory Issues

Regulatory treatment of funds has also evolved. Approaches are different in the offshore regulatory environment, certain jurisdictions providing for a few broad categories of fund regulation and others providing a wide array of regulatory categories with each aimed at a specific market segment. However, offshore fund regulation has generally evolved in line with the onshore move to provide for different levels of regulation dependent on the type of investor who will invest in a fund, primarily distinguishing between retail investors on the one hand, and sophisticated or high net worth investors on the other hand. The latter generally regarded as requiring a lower level of regulatory protection. Each of Jersey, Cayman and BVI now has an appropriate and carefully thought out regulatory category to suit any fund. Again, professional advice can assist in choosing the best environment for a particular fund.

Service Providers

An appropriate legal, regulatory and tax environment should be necessary, but on its own insufficient, to attract funds to a given jurisdiction. Professional service providers are required to implement and operate the offshore component of a fund structure. Due to geographic separation from clients, responsiveness and reliability of service providers is equally important. The level of service required will be dependent on fund structure, and will not necessarily be the same as between funds. Although Jersey, Cayman and BVI may have evolved at a different rate to one another, in particular becoming specialised at different times in niche markets, today they each provide a broad spectrum of responsive and appropriately qualified fund service providers. Arguably, all things being equal, choice of service provider, including their ability to service a fund business consistently and at the same or a higher level as it grows, should be the most important driver in choosing one jurisdiction over another.

The Future

Given a level playing field with reference to legal, regulatory and tax considerations, and comparable service providers, perceived trends in choice of fund domicile should be regarded as having historic significance only. This approach is certainly prudent in the case of choosing between Jersey, Cayman and BVI, and further supported by the formation of multi-jurisdictional firms providing consistent legal, administration and other fund services. Cumulatively, these factors eliminate the risk in choosing one jurisdiction over the other for any fund product, including retail funds, hedge funds and private equity funds.

Based on the above, professional advisors should be encouraged to choose a fund domicile (which may include Jersey, Cayman and BVI) with a special focus on the factors that really count.

This article first appeared in the winter 2008/09 issue of Appleby Jersey's Finance newsletter.

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