The Guernsey Financial Services Commission has recently updated the Private Investment Fund regime to improve its attractiveness to new fund promoters.
Until recently the fund's manager had to provide the Commission with a certification to the effect that investors in the fund were able to sustain losses that they may incur in the fund at the time of making their investment. The revised guidance and application form now only requires the manager to provide a declaration that as far as the manager can reasonably ascertain, the investors are able to sustain a loss.
Whilst, the manager will still be expected to make careful and appropriate enquiries prior to making the declaration, it is anticipated that this subtle relaxation of the application requirements will attract more promoters to the Island.
With the regulatory process taking a single business day and no requirement for scheme particulars, the Private Investment Fund regime allows fund promoters to launch new funds investing in a wide range of asset classes extremely quickly and in a cost effective manner. Since its introduction in late 2016, the Island has already seen a number of promoters including leading private equity firm GMT Partners and boutique asset manager Pearl Diver Capital choose to launch funds under the regime.
When comparing the regime to those available in other jurisdictions, it is worth noting that there is no limit on the number of potential investors to whom the fund can be marketed, although the total number of investors which can be admitted to the fund is capped at 50. Additionally, there is no minimum subscription amount prescribed in the Rules, a feature which may appeal particularly to discretionary asset managers wanting to place a small portion of their clients' investment portfolio in these flexible investment vehicle.
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.
