In December 2020, the Guernsey Financial Services Commission (Commission) published a consultation paper containing proposals to amend the rules in respect of Private Investment Fund (PIF) (the PIF Rules) to allow more investor categories to take advantage of an appropriately regulated fund structure.
As a result, the PIF Rules have now been amended and shall apply with immediate effect.
Under the revised PIF Rules, there are three available routes to registration of a PIF:
ROUTE 1
The approach that was provided under the old PIF Rules will be retained. This route requires the creation of a Protection of Investors Law licensed manager in additional to the PIF.
The two new routes to registering PIF:
ROUTE 2
Under this route, all investors will have to meet qualifying investor criteria which are designed to protect more vulnerable investors. At the time of application, the fund administrator (i.e. designated manager) will be required to provide confirmations equivalent to those currently provided by a fund administrator in respect of any Qualified Investor Fund application; and
ROUTE 3
This route enables a PIF to be created as a bespoke private wealth structure; however, it requires a family relationship between investors. Again, at the time of application the fund administrator will need to provide a confirmation that effective procedures are in place to ensure that the PIF is restricted to only eligible family-related investors.
Although the new PIF Rules new approaches open up some options in new PIF applications, all currently registered PIFs will however continue to be registered under the current/first approach in place and this approach will remain available to those wishing to raise money from broader categories of investor.
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.
