The hugely popular Jersey Private Fund ("JPF") has been a global success story for Jersey since its launch in 2017 following the publication of the Jersey Private Fund Guide (the "JPF Guide") by the Jersey Financial Services Commission (the "JFSC").
This simplified Jersey private fund product was established on the basis of a light-touch regulatory regime, with emphasis placed on the regulated Jersey fund administrator (the "designated service provider" or "DSP") to assess the suitability and track record of a fund promoter and to keep the JFSC notified of any changes to the fund over its lifespan.
Jersey has a wealth of regulated administrators with experience in all asset classes able to provide the support and services of the DSP role.
Key Features of a JPF:
- A JPF benefits from a fast track approval process (48 hours from the submission of a fully completed JPF application and the requisite application fee).
- JPFs are very cost effective to establish with very little on-going regulatory requirements.
- The number of offers for investment and/or investors in a JPF must not exceed 50 (for these purposes, an "offer" means an "offer that is capable of acceptance" by an investor and accordingly, pre-marketing materials sent to prospective investors will not constitute an offer).
- Each investor must be a "professional investor" (as defined in the JPF Guide) and / or make a minimum investment of £250,000 (or an equivalent amount in another currency) and acknowledge certain prescribed investment warnings.
- A JPF may be open or closed ended with no investment or borrowing restrictions.
- A JPF can be established in the form of a company (including a protected cell company, an incorporated cell company or any cell thereof), a partnership (including a limited partnership, limited liability partnership, separate limited partnership, or incorporated limited partnership) or a unit trust; or where established overseas, in the equivalent forms available in the relevant overseas jurisdiction.
- There is no requirement for a JPF to have an offer document but if the JPF has one, that document must contain all material information required by investors and their professional advisers for the purposes of making an investment in the JPF.
- There is no requirement to appoint Jersey directors or to audit the JPF from a Jersey perspective, although these may be necessary where the JPF is marketing into Europe for the purposes of the Alternative Investment Fund Managers Directive (the "AIFMD").
- Each JPF must appoint a DSP which is an existing Jersey full substance entity and there may be no change to the DSP without the prior approval of the JFSC.
- The promoter of a JPF will not need the prior approval of the JFSC.
- Jersey service providers to a JPF may rely upon the Financial Services (Investment Business) (Restricted Investment Business – Exemption)) (Jersey) Order 2001 and/ or the Financial Services (Trust Company Business) (Exemption No.5) (Jersey) Order 2001 (together the "PIRS Orders") in order to avoid the requirement to be licensed to provide services to a JPF.
- A JPF that is to be marketed into the European Union or European Economic Area may do so through National Private Placement Regimes ("NPPRs"). The JPF will require the issue of an AIF certificate by the JFSC, and will need to comply with the Code of Practice for Alternative Investment Funds and AIF Services Business (the "AIF Codes").
- Where the AIFM of the JPF is "sub-threshold", only minimal requirements of the AIF Codes will apply. To qualify as a sub-threshold AIFM, the manager must manage leveraged assets valued at less than €100 million or manage unleveraged and closed-ended assets valued at less than €500 million.
- Where a Jersey tax resident entity (for example, the corporate general partner of a JPF or a self-managed JPF) will be conducting fund management business, it will be required to comply with the requirements of the Taxation (Companies - Economic Substance) (Jersey) Law 2019, as amended.
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.