Answer ... There are two main types of regulatory regime in Guernsey for funds: the authorised fund regime and the registered fund regime.
The authorised fund regime requires a more fulsome application process, with significant involvement of the Guernsey Financial Services Commission (GFSC), which will review and approve all aspects of the structure.
The registered fund regime requires an application to the GFSC, but it is accompanied by a confirmation from the appointed administrator as to certain matters concerning the applicant fund, which reduces the scope of the GFSC’s review and also speeds up the application process.
Answer ... Depending on the type of fund authorisation or registration being applied for, the relevant criteria are set out within the relevant rules.
A Guernsey fund will need to apply for ‘authorised’ status unless it falls within one of the criteria of a ‘registered’ fund. Of the two main classes of authorised fund, it will be ‘Class A’ if it is intended to be marketed to ‘retail’ investors and ‘Class B’ if it is more geared towards institutional and professional investors.
To qualify as a registered fund under the Registered Collective Investment Scheme Rules 2018, the proposed administrator of the fund must provide certain warranties about the fund and its principals to the GFSC, so the fund must have a good relationship with its administrator and will likely have had to go through a lengthy and fairly involved know-your-customer process with it, to get the administrator comfortable with such warranties.
Under the Private Investment Fund Rules 2016, to qualify for registration as this type of fund:
- the fund must have 50 or fewer investors;
- the fund must have 30 or fewer changes in investors in a calendar year; and
- the manager of the fund must be prepared to affirm to the GFSC that it is sufficiently knowledgeable of each investor so as to confirm that it is able to sustain a loss of its investment.
Answer ... Authorised funds, whether open or closed ended, generally take four to six weeks to be authorised from submission to the GFSC. The authorised fund application process is generally a three-stage process: outline, interim and final. The outline stage requires disclosure of the key elements of the fund – strategy, board, manager, leverage and service providers. The interim stage requires submission of the information particulars and investor documents of the fund for review. The final stage requires submission of executed agreements, constitutional documents and service provider agreements (having addressed any questions or comments raised by the GFSC during the application process).
Registered funds, from submission to the GFSC to registration, have a guideline timescale of three working days. The application is made in one pack, with the information documents and administrator undertaking going in at the same time. Private investor funds register in the same way, but with a guideline timescale of one working day for registration.