Over the course of the last few years, Ocorian's award-wining Family Office team has seen the demand from family offices for fund solutions grow significantly. Regulated fund structures, such as a Jersey Private Trust (JPF) have become the eminent structure for family offices to perform their primary role of managing family capital and investments.
Ahead of Ian Rumens' trip to the Middle East next week where he will join Lynda O Mahoney in visiting several Family Offices in the region, Ian discusses below what a JPF is, what makes the structure attractive to Middle Eastern investors and how to establish a JPF with the help of Ocorian.
What is a Jersey Private Fund?
A JPF is a regulatory fund structure created for a small number of sophisticated investors, ideal for family offices and club investors when investing in alternative asset classes. It offers high levels of flexibility, efficient ongoing regulatory requirements, and a streamlined fast-track regulatory authorisation process for the establishment of private investment funds.
Why is Jersey attractive to Family Offices in the Middle East?
The Middle East has seen a rise in the establishment of fund structures for Family Offices in recent years, with the JPF resonating the most. The use of a fund structure provides a familiar and fixed legal framework, allowing family offices to manage multi-asset classes and enter club-type investment deals with relative ease.
The trend towards JPF's can further be attributed to several factors, including favourable regulatory frameworks and a stable legal and political environment. Middle Eastern investors are also attracted to Jersey due to its tax regime. Jersey does not have a capital gains tax, inheritance tax, or value-added tax (VAT), and non-resident investors in Jersey funds are generally not subject to Jersey income tax.
Who is a Jersey Private Fund appropriate for?
A JPF is suitable for funds making offers to 50 or fewer professional or eligible investors who desire a cost-effective and non-intrusive regulatory investment platform. A professional investor includes people who invest as principal and agent by way of business, individuals with a net worth of over $1m (excluding their principal place of residence), and investment structures with assets valued at $1m or more. An eligible investor, on the other hand, makes an initial investment or investment commitment of £250,000 (or currency equivalent) in the JPF.
How can I establish a Jersey Private Fund?
The timescale for authorising a JPF is two working days subject to prior approval of the JPF's designated service provider (DSP). A JPF can be established using any of the common forms of investment vehicle, including a limited liability company and a non-Jersey vehicle, and no investment or borrowing restrictions are set by the Jersey Financial Services Commission (JFSC). A JPF can be either closed or open-ended provided that the test for the 50 or fewer offers/investors is met.
A promoter of a JPF does not need the prior approval of the JFSC. The principal role of the DSP will be to apply for JFSC consent and update the JFSC in respect of information supplied and support the JPF with its anti-money laundering obligations.
To establish a JPF, an application must be made to the JFSC by the DSP containing details of the JPF, including its name, registered address, minimum investment amounts (if applicable), the 'relevant consent' being applied for, its investment policy, the name and function of each Jersey based service provider, any regulatory exemptions being relied on by Jersey-based service providers (if applicable), and confirmation as to whether an auditor will be appointed.
The success of a JPF stems from the fact it accommodates managers who are not targeting a broad investor base, focusing only on professional investors, which allows for a lighter touch in the regulatory environment. The JPF regime provides an efficient investment platform for family offices and club investors when investing into alternative asset classes.
How can Ocorian help as a Designated Service Provider?
To meet diverse and challenging investment targets, families are tending to utilise a cocktail of structures to ensure their customised investment platform provides adequate corporate governance, transparency and continues to invest in a sustainable and ethical manner.
This may require the use of solutions in multiple jurisdictions, with different legal structures such as trusts or foundations investing via various fund structures such as limited partnerships and protected cell companies which requires an unorthodox client servicing team with a unique skill set.
Ocorian is fully licensed to function as the DSP assisting with the establishment and ongoing administration of JPFs. Ocorian's specialist and experienced teams provide comprehensive administration and support services which are tailored to the requirements of the JPF regime and other vehicles used to further a family's aims. We are experts in assisting individuals and family offices in the administration of real estate, private equity, venture capital and other alternative asset classes.
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.