The Guernsey regulator has today announced the introduction of a Private Investment Fund regime. This new regime follows closely on the heels of the launch of the "Manager Led Product" in May this year which itself was designed to offer an attractive alternative to Luxembourg's Reserved Alternative Fund or "RAIF".

The Private Investment Fund offers promoters a highly flexible form of collective investment scheme which takes only one business day to register with the Guernsey Financial Services Commission.

As the new fund will have a cap of 50 legal or natural persons holding an ultimate economic interest, it is expected to appeal to family offices and similar wealth managers who enjoy a close relationship with a limited number of investors.

Other key features of these private funds include:

  • Absence of a requirement for an offering document or information particulars to be produced,
  • No cap on the size (NAV) of the fund,
  • No minimum subscription or holding for investors,
  • No limit on the number of potential investors to whom the fund can be marketed,
  • Available in both open and closed ended form,
  • Ability to structure the fund as either a company, limited partnership or unit trust,
  • Considerable flexibility in the investment objective of the fund. The applicable rules do not prescribed any investment restrictions,
  • A licensed manager is necessary and will be required to provide the regulator with certain warranties on the ability of the investors to assume loss,
  • A Designated Administrator in Guernsey must be appointed although the Designated Administrator has power to delegate any function,
  • No requirement for a custodian in the case of a closed ended fund. Open ended funds may appoint a custodian domiciled outside Guernsey.

The Rules contain provision for existing registered collective investment schemes in Guernsey to elect to be treated as a Private Investment Fund.

Originally published on November 16th 2016

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