Key takeaways
- Guernsey's streamlined private investment fund (PIF) regime
provides a highly flexible and cost-efficient fund solution
catering for all asset classes across a wide range of
managers
- The PIF Rules provide appropriate funds with a fast-tracked,
proportionate and "light touch" regulatory regime
- This guide discusses the two PIF routes to obtaining regulatory approval, and their features
The Guernsey Financial Services Commission
(GFSC) has updated and streamlined Guernsey's
PIF regime. The PIF was already a very attractive product,
providing flexibility and cost-effectiveness due to speed to market
and "light touch" regulation. The update increases
flexibility and cost-efficiency further, as it removes the caps on
investor numbers, and the PIF does not need to be audited. This
makes the PIF the best option for a wide-range of managers and
asset classes – the new PIF is suitable for small venture
capital ("VC") funds launched by first-time managers,
right the way through to large private equity or real estate
funds.
PIFs are now governed by the Private Investment Fund Rules and
Guidance, 2025 (the PIF Rules 2025). Under the PIF
Rules 2025, there are two alternate routes available for PIFs in
Guernsey:
Qualifying PIF (QPIF): This
replaces both the prior "Licensed Manager PIF" and the
"Qualifying Private Investor PIF". All PIFs currently
registered under these two prior regimes will become QPIFs. To use
a QPIF all investors will have to meet qualifying investor criteria
which are designed to ensure investors are restricted to suitably
sophisticated investors. These criteria combine and expand on the
qualifying criteria that applied previously.
Family PIF: This PIF existed previously (albeit it
was previously named the Family Relationship PIF) and enables a
bespoke private wealth structure to be created as a PIF, requiring
a family relationship between investors.
There is no requirement for the appointment of a GFSC-licensed manager for any of the PIFs, although one can be appointed if desired. Where a PIF takes the form of a limited partnership with a Guernsey general partner, the general partner will need a licence (although note below regarding certain GFSC rules not applying to that licensed general partner). Where the manager or general partner needs to obtain a licence, the application is made at the same time as the PIF registration application and is fast-tracked on the same one business-day turnaround.
Points common to both routes
Under both routes:
- there remains a one business day-turnaround at the GFSC for the
PIF application;
- there are no caps or limits on fund size, numbers of investor
or numbers of offers made to potential investors, although all
offers must be private and not widely made to the general
public;
- there are no requirements for a private placement memorandum or
other information particulars (a PPM), although it
is common for a PPM to be provided to potential investors;
- the PIF does not need to be audited – the PIF only needs
to appoint an auditor if the PIF's constitutional documents
require one, making the QPIF a best-in-class option for both a
small VC fund looking to maximise its returns for investors, and
also a first-time manager seeking to be as cost-efficient as
possible. Where an auditor is appointed, they must operate from a
place of business in Guernsey (existing PIFs using a non-Guernsey
auditor are exempted from this requirement);
- the PIF can be closed-ended or open-ended;
- where the Guernsey manager/general partner is licensed it is
not subject to certain GFSC rules and requirements which typically
apply to licensed managers, including rules relating to capital
adequacy and conduct of business, as well as the requirement to be
audited;
- conflict of interest requirements apply to the directors of the
PIF manager, the directors of PIF (where the PIF is a company), the
directors of the general partner of the PIF (where the PIF is a
limited partnership) and the directors of the corporate trustee
(where the PIF is a unit trust); and
- where the manager/general partner is applying for a licence it must provide a completed business risk assessment.
Points unique to each PIF
QPIF
The QPIF is only open to "Qualifying Private Investors" (QPIs), who are able to evaluate and bear the risks and strategy of investing in the PIF. However, the QPI concept has been extended and includes: a "Professional Investor", an "Experienced Investor", a "Knowledgeable Employee", a "High Net Worth Investor", an "EU Professional Client", a "UK Professional Client" and a "US Accredited Investor". A QPI will also comprise any investor that a GFSC-licensed manager or administrator of the PIF warrants is able to sustain any losses on their investment in the PIF.
As part of the PIF application, the PIF's administrator must provide the GFSC with a declaration that effective procedures are in place to ensure restriction of the fund to QPIs. The PIF's administrator must obtain and retain (for provision to the GFSC on request) a written acknowledgement from each investor as to their understanding of the regulatory status of, and risks of investment in, the PIF, as well as their acceptance of such risks and confirmation of their ability to withstand the potential economic consequences of investment in the PIF.
A QPIF that has no separate manager will be a "self-managed fund" for economic substance purposes and will be subject to economic substance requirements in Guernsey. Where the PIF is a limited partnership, the general partner will be the manager and so the PIF will not be a "self-managed fund".
Family PIF
A Family PIF is only open to investors who either share a family
relationship or are an "eligible employee" of the family
in question. The PIF cannot be marketed outside the family
group.
As part of the PIF application, the PIF's administrator must
provide the GFSC with a declaration that effective procedures are
in place to ensure that all investors fulfil the family
requirement.
A Family PIF is a viable option for a regulated family office,
although it is worth noting that a family office or investment club
of family investors does not need regulating in Guernsey.
A Family PIF that has no separate manager will be a
"self-managed fund" for economic substance purposes and
will be subject to economic substance requirements in Guernsey.
Where the PIF is a limited partnership, the general partner will be
the manager and so the PIF will not be a "self-managed
fund".
Our view
These changes improve Guernsey's PIF product in ways that
can really benefit managers further by using Guernsey as a fund
domicile. In particular, the new QPIF benefits VC funds and
first-time managers who are looking to launch smaller funds in the
most cost-efficient way whilst being able to market to a wide a
pool of investors as possible.
Given the widening of the QPI concept and removal of the audit
requirements, existing PIFs that automatically convert into a QPIF
may want consider amending their existing fund documentation to
take advantage of these changes.
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.
