The introduction of Jersey's unregulated funds regime has
widely be recognised as a success. Client interest has been very
positive and the number of unregulated funds established reached 35
in the first year.
The regime, introduced on 19 February 2008, allows eligible
funds to merely notify the Jersey Financial Services Commission of
their establishment, rather than going through a full authorisation
process. The speed and simplicity of the system will provide Jersey
with a significant advantage in competing with other European and
offshore jurisdictions and becoming a funds jurisdiction of choice,
particularly for alternative/hedge funds and sophisticated
Two forms of unregulated fund have been introduced; an
Unregulated Eligible Investor Fund and an Unregulated Exchange
Unregulated Eligible Investor Fund
An Unregulated Eligible Investor Fund is available to investors
injecting a minimum of US $1 million each into the fund, or a
sophisticated investor. The investors will be required to
acknowledge in writing their acceptance of the risks involved in a
prescribed form. In addition, the fund must take steps to ensure
that its investors meet the legal requirements to invest in the
The fund may be open-ended or closed-ended and may take the form
of a company (or cell company), unit trust or partnership.
There will be no requirement for an Unregulated Eligible
Investor Fund to have a Jersey-based administrator or custodian,
nor for it to have any Jersey resident directors. There is also no
need for Jersey-based auditors to be appointed to the fund.
The fund may only list on a stock exchange which permits
restrictions upon transfers of interests within the fund. This is
in order to ensure that only eligible investors are allowed to
invest in the fund.
Unregulated Exchange Traded Fund
An Unregulated Exchange Traded Fund is a form of unregulated
listed fund which need not be regulated by the Jersey Financial
Services Commission on the basis that it is already regulated by a
stock exchange. There will be a prescribed list of stock exchanges
for which funds listed on them may classify as Unregulated Exchange
An Unregulated Exchange Traded Fund may only take the form of a
closed-ended fund, but may be established as a company (or cell
company), unit trust or partnership.
There are no criteria for minimum investment by investors,
unlike or an Unregulated Eligible Investor Fund.
As with an Unregulated Eligible Investor Fund, there is no need
for Jersey-based auditors to be appointed to the fund.
The new regime allows Jersey to compete with other jurisdictions
already offering lightly-regulated fund products. In particular,
Jersey will continue to make strong advances in the
alternative/hedge funds market. As such, unregulated fund regime is
an exciting and innovative development for Jersey and will provide
both investors and Jersey fund advisers with attractive new fund
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.
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