Answer ... Managers and advisers are generally formed as limited companies resident in Jersey, the UK or other jurisdictions. Manager and adviser entities are also often formed as LLPs.

Answer ... Both companies and LLPs offer limited liability. LLPs offer a degree of flexibility because the partners are free to draft a bespoke partnership agreement without regard to the requirements of the company law.

That said, Jersey has a modern companies law which is based on English company law, but offers a certain amount of extra flexibility, for example dividends can be paid so long as a company is solvent i.e it will continue to be able to pay its debts as they fall due, and such dividends are not required to be paid solely out of a company's profits.

Answer ... Managers or advisers that are based in Jersey are likely to be subject to the FSJL, which is the primary piece of legislation governing financial services in Jersey. In particular a person acting as a manager or adviser of an alternative investment fund is likely to be carrying on fund services business or investment business for the purposes of the FSJL, and so would be required to apply for a licence and be regulated by the JFSC. There are various exemptions which would allow a Jersey entity to provide services to a private fund without having to become regulated.

Answer ... If no exemption to the requirements of the FSJL is available, a fund manager will be required to apply to be licenced and regulated by the JFSC under the FSJL and be subject to the Code of Practice for Fund Services Business (FSB Codes). Under the JFSC's Licencing Policy the JFSC must be satisfied that the applicant is a fit and proper person to carry on the relevant activity, and there are detailed requirements set out in the FSB Codes. However, if the manager/adviser appoints a Jersey administrator (to act as its 'manager of a managed entity' or MoME), then the manager will only be subject to the core principles of the FSB Codes rather than the detailed requirements. The core principles include conducting business with integrity, having due regard for the interests of the fund, demonstrate adequate risk management systems, demonstrate adequate financial resources and insurance, deal with the JFSC in an open and co-operative manner, and not make statements that are misleading, false or deceptive.

Answer ... To make an application to carry on fund services business the applicant will be required to complete an application form which will need to be submitted to the JFSC along with the applicant's latest audited accounts and a business plan giving details of, for example, the rationale of the business, its business risk assessment, AML/CFT policies, financial resources available to the applicant, and details of directors and key persons.

The applicant's directors and ultimate beneficial owners with a 10 per cent interest or more (known as 'principal persons') will be required to complete and submit electronic personal questionnaires to the JFSC and be approved by the JFSC.

The JFSC aims to process applications to be licenced for fund services business within 30 days of receiving the application where the 'principal persons' have not previously been approved by the JFSC, and 10 working days if they have previously been approved.

Answer ... The Expert Fund Guide requires that the fund's investment manager/adviser must meet certain criteria, for example that it is established in an OECD member state or a state with which the JFSC has a memorandum of understanding, that it is regulated (or not required to be regulated in its home state) and that there are no disciplinary actions being taken against it.

The manager of Open-Ended Unclassified Collective Investment Funds must meet the criteria set out in the JFSC's Promoter Policy, which sets out certain guidelines on what the JFSC will expect to see based on factors such as the manager's experience and track record, reputation and financial resources.

Answer ... Investors in Jersey funds (and transferees of fund interests) must meet the relevant criteria, for example investors in expert funds must fall within the definition of 'expert investor'. An expert fund must also appoint a Jersey custodian (or in the case of a hedge fund a prime broker with a credit rating of A1/P1 or long term equivalent) if the fund will allow for redemptions at the option of the investors. Otherwise restrictions on the issue, redemption and transfer of fund interests would be a matter for the constitutive documents for the fund.

In relation to redemptions, Open-Ended Unclassified Collective Investment Funds may only suspend redemptions in exceptional circumstances, having regard to the interests of investors, and the manager must immediately notify the JFSC of any suspension and during the period of suspension a notice must be published at least monthly in a newspaper where details of the pricing of the units are normally published.

Answer ... Yes. If a manager is licenced by the JFSC for fund services business, then the JFSC will need to approve the directors and 10 per cent or more ultimate beneficial owners under the 'personal questionnaire' process and as part of the licence application. The JFSC's prior consent will also be required for a change in control of the manager. Broadly, any incoming or outgoing director or person with a 10 per cent interest or more in the manager will need the prior consent of the JFSC to the proposed change in control.

Answer ... Yes. If the manager is licenced for fund services business, then the delegation may fall within the scope of the JFSC's Outsourcing Policy and Guidance Notes (Outsourcing Policy). The Outsourcing Policy broadly requires the manager to ensure that any party it outsources to is fit and proper; put in place a written agreement; monitor the performance of the activity; ensure that the outsourcing can be terminated; notify the JFSC of the intention to outsource and any changes to the outsourcing; and ensure that the JFSC can carry out its regulatory function.

In addition, if the Jersey manager is an AIFM under the AIFMD and it is outsourcing certain roles, then it will be necessary to ensure that it maintains contractual responsibility for risk and portfolio management and does not become a letterbox entity.

Answer ... Yes, although the regulatory status of the services will need to be considered carefully as to whether any additional licences or exemptions will need to be procured or used.

For example, hedge fund managers may provide fund services business to their funds and be licenced for fund services business accordingly. Whereas in relation to services provided to managed accounts (i.e. non-funds), they may be carrying out investment business, which requires an additional and more onerous investment business licence, but they may be exempt from the requirement to procure an investment business licence under the Financial Services (Investment Business (Qualifying Segregated Managed Accounts – Exemption)) (Jersey) Order 2014.