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Our previous post concerned direct
investments by large family offices. This post focuses on how such
investments are structured. In particular, we are increasingly
asked to advise on the applicability of the Jersey Private Funds
(JPF) regime to structures established by family members or family
offices to hold a variety of investments. JPFs can take the form of
companies (including cell companies), unit trusts or limited
partnerships. A number of considerations arise in this regard.
To advise fully, an analysis of the participants in the
structure is required. Even if the structure has most of the
features of an investment fund, if it is set up for the purposes of
investment by a single family office then, more often than not, it
will benefit from a specific exemption based on each participant in
the scheme being connected by way of a "family
connection". Care is required in assessing the precise
connection between the participants and that they are able to rely
on the exemption, but the definition is otherwise relatively broad
and includes blood and other relationships such as adopted or step
children, or children born outside of marriage.
Multi-family office co-investment structures might also be
exempt, for example where the structure is essentially a joint
venture between separate families. In this case, however, it will
be necessary to examine the features of the arrangement in order to
be certain that it may properly be categorised as a joint
venture.
On the other hand, where a structure is established for the
purpose of enabling a family to pool their capital with selected
third parties or where it permits co-investment by employees of the
family office, it is likely to be supervised as a JPF. Such
structures are frequently managed by an external manager. In
this case, the JPF will be subject to a very straightforward regime
which largely dis-applies the more onerous regulatory and
compliance requirements applicable to collective investment funds
and exempts service providers to the fund from local licensing
requirements. JPFs can be authorised within a streamlined 48-hour
process once the necessary submissions have been made to the Jersey
regulator. This briefing provides further
information on the establishment and operation of JPFs
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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