A guide to funds and private equity in Jersey

A guide to funds and private equity in Jersey

As one of the major international finance centres, Jersey has a firm reputation as a prime location in which to establish offshore investment funds. Government decision to encourage high-quality business to the Island, and the back offered by the sophisticate and comprehensive infrastructure of laws and regulations, combine to promote investor confidence .
Jersey offers a range of fund types and structures to suit the needs of sophisticate sponsors and investors including Jersey Private Funds, Notification only Funds ( besides known as eligible Investor Funds ) and collective investment Funds ( CIFs ), such as Jersey Expert Funds and Jersey Listed Funds .
Our team of leading Jersey funds lawyers have substantial know advising on the wax spectrum of fund strategies and asset classes including private equity, real estate of the realm, infrastructure funds, sustainable investment funds, hedge funds, secondaries funds, and a growing digital assets practice.

Please continue reading for our wax template to funds and individual fairness in Jersey for more information on fund structures available in the jurisdiction and associated regulation .

Contents

Please pawl on the links below to jump to the relevant section :
Carey Olsen is a leading offshore law firm advising on the laws of Bermuda, the british Virgin Islands, the Cayman Islands, Guernsey and Jersey from a network of nine external offices .
We provide legal services in relation to all aspects of corporate and finance, trusts and secret wealth, investment funds, insolvency, restructure and challenge resoluteness .
Our clients include global fiscal institutions, investment funds, private equity and real estate houses, multinational corporations, public organisations, autonomous wealth funds, high net worth individuals, family offices, directors, trustees and private clients .
We work with leading onshore legal advisers on international transactions and cases involving our jurisdictions .

Our investment funds and private equity team

Clients value our longstanding have in investment funds and our active function in the grocery store. We advise on all fund structures, including open and closed-ended, limited partnerships, unit trusts and companies in the british Virgin Islands, the Cayman Islands, Guernsey and Jersey .
Recognised as the lead legal adviser to funds across the Channel Islands ( Monterey ), and with strong Caribbean and Asia practices, we represent more companies and funds listed on the London Stock Exchange than any early offshore law firm ( Corporate Advisers Rankings Guide ) and regularly advise on listings on the NYSE and HKEx, Euronext, CSX and TISE ( once the CISE ) .
We advise recognition and debt funds, clean technical school funds, real estate funds, retail and list funds, secret equity funds, venture capital funds, hedge funds and infrastructure funds .
Among our clients are fund managers, investing and private banks, institutional investors, boutique investment firms, indemnity groups, pension funds, private fairness houses and trust companies. We besides have longstanding relationships with onshore legal advisers who instruct us on a regular footing. Our lawyers understand the requirements and priorities of each interest group and we tailor our services consequently. We find innovative solutions and are particularly adept in challenging economic times .
The lastingness of our relationships with regulators in our jurisdictions means our clients benefit from our in-depth cognition of the latest developments in regulation and conformity standards .

Our services:

  • Fund formation and regulation
  • Fund listings

  • Mergers, acquisitions and migrations

  • Restructurings and reorganisations

  • Start-ups and spin-offs

Our approach

Our clients benefit from address contact with the spouse who is leading on their work. Our teams are structured according to the scale and expertness needed for each education and we ensure cost efficiencies through the deputation of work to lawyers at the appropriate level .
We make a point of getting to know you, your business and your circumstances ; always ensuring our advice is aligned to your ambitions and goals. Our function goes beyond delivering legal services and we aim to contribute to your success and to add respect wherever we can. This can take a act of forms including trail, cognition sharing, legal secondments, regulative and legislative updates and customer briefings .
We maintain highly-competitive and diaphanous fee rates that are visible from the beginning .
Jersey is one of the global ’ s major external finance centres. Its successful combination of stability and dependability combined with tax disinterest has kept Jersey at the forefront of ball-shaped finance for about half a hundred. During this time Jersey has gained a impregnable repute as a prime location in which to establish investment funds .
The diligence has developed within the Island ’ s stable political and fiscal infrastructure. Government determination to encourage high quality business to the Island, and the confirm offered by the sophisticate and comprehensive infrastructure of laws and regulations, combine to promote investor assurance .
The wealth of experience and expertness offered by the Island ’ s highly skilled fiscal service providers gives an alone welcome to businesses and investors alike and Jersey enjoys ease of access to the major UK investor grocery store. Although a number of Jersey ’ s service providers have detail experience with private fairness, real estate and funds of funds, Jersey has a growing reputation for more issue asset classes .
With a business day that begins before Tokyo closes and continues well into New York trade clock and a close proximity to Europe whilst retaining independence from the European Union, Jersey offers both placement and time zone benefits. Jersey offers seasoned and test service providers across a variety show of disciplines so substance/management of entities can be demonstrated “ on the anchor ” ( e.g. administration, account, banking and custody providers ) .

Summary

Jersey is a leading funds domicile :

  • Politically and financially stable 

  • Well known to global investor community

  • London time zone and connections

  • Many large service providers 

  • EU market access but outside AIFMD 

  • Tax neutral

Jersey regulative classifications provide a “ safe seaport ” with 3 day approval from the Jersey Financial Services Commission ( “ JFSC ” ) for the majority of non-retail funds .

Alternative investment fund managers directive

All Jersey funds ( other than Notification Only Funds ) are eligible to be marketed into the European Union and european Economic Area ( “ EU/EEA ” ) in accordance with the Alternative Investment Fund Managers Directive ( “ AIFMD ” ) through national private placement regimes and ( once available ) through the passporting regimen. Jersey funds with a Jersey coach which are not actively marketed into the EU/EEA accrue outside the scope of AIFMD. See “ Alternative Investment Fund Managers Directive ” .

Fund categories

Jersey funds are divided into the follow independent categories :

Jersey private fund regime

Fast and flexible, with minimal requirements for funds with fewer investors :

  • Replaces “COBO only” and “very private” funds

  • Up to 50 investors, must not be listed on a stock exchange

  • No limit on fund size, no investment or borrowing restrictions

  • Open or closed for redemptions by investors 

  • Open to ‘professional’ investors and those investing £250,000 

  • “Fast track” approval (self-certification by the fund administrator)

Without EU marketing

  • 48-hour regulatory approval 

  • No requirement for:

    • Audit

    • Jersey directors 

    • A PPM 

  • No ongoing regulation

EU marketing ( sub-threshold Jersey AIFM )

  • 10-day regulatory approval 

  • No requirement for:

    • Audit

    • 2 Jersey directors 

  • No ongoing regulation (except limited applicable AIFMD rules)

EU market ( Jersey AIFM is NOT sub-threshold )

  • 10-day regulatory approval 

  • 2 Jersey directors (or 3, if the AIFM will directly handle client assets)

  • No ongoing regulation (except limited applicable AIFMD rules)

Regulated public funds 

desirable for funds with more than 50 investors or where a regulated product is needed :

  • 3-day approval (10 days for a new “special purpose” service provider company) 

  • No investment or borrowing restrictions

  • Eligible for EU marketing

adept Funds
“ Expert Investors ” entirely ( any one of 9 categories, one of which is an investor of $ 100,000 or more ) :

  • Open or closed for redemptions by investors 

Listed Funds
Closed-ended funds ( no absolute investor right to redeem ) :

  • Units listed on an approved stock exchange or market 

eligible investor Funds
“ eligible Investors ” only ( any one of 11 categories, one of which is an investor of $ 1,000,000 or more ) :

  • Open or closed for redemptions by investors

  • Must be marketed into at least one EU/EEA country 

Notification Only Funds

No regulation means less price. Can not be marketed in EU countries ( but desirable for all other investors ) :

  • “Eligible Investors” only (any one of 11 categories, one of which is an investor of $1,000,000 or more)

  • No authorisation process (simply file a notice)

  • No ongoing regulation 

  • No limit on the number of investors, no investment or borrowing restrictions, no audit requirement for limited partnerships and unit trusts 

Investment vehicles which are not funds

Vehicles which hold a single asset or which carry on a business ( such as property development ) broadly fall outside Jersey ’ mho funds regulations. An investment fomite will not be regulated as a fund in Jersey unless it is a schema or arrangement for the investment of capital which ( a ) has as its object or one of its objects the collective investment of capital ; and ( bacillus ) operates on the principle of risk diffuse, or units are to be bought back or redeemed endlessly or in blocks at light intervals upon the request of the holder and out of the assets of the fund, or units will be issued continuously or in blocks at short intervals .

Fund vehicles

Jersey funds can generally be established as :

  • a limited partnership (there are three kinds in Jersey, with and without legal personality); 

  • a unit trust; or 

  • a company (including as a protected cell or incorporated cell company). 

Special purpose entities as service providers
A “ special aim ” Jersey vehicle ( “ SPV ” ) can be established to act as coach, investment manager/adviser, general collaborator or regent to one or more Jersey or non-Jersey funds .
These SPVs generally do not need to be regulated where they act for Jersey Private Funds or as a general partner or trustee of a Notification only Fund. It is not normally possible to establish an SPV investment manager/adviser in Jersey for a Notification alone Fund .

Jersey “special purpose” service providers

 

GP or trustee 

Investment adviser or manager

Jersey Private Fund

Not regulated

 Not regulated

Regulated Public Fund  

10 day “fast track” regulation

10-day “fast track” regulation

Notification Only Fund

Not regulated

N/A

Where appointed in relative to a CIF, such an SPV must be licensed by the JFSC. An expedite approval process exists allowing licensing in around two weeks with the support of a local administrator .
See “ Fund Service Providers ” below .
A Jersey Private Fund must have 50 or fewer investors at all times. These funds are largely unregulated and the JFSC does not review the constituent documents .

Key features

  • Maximum of 50 investors at any time and a maximum of 50 initial offers and must not be listed on a stock exchange.

  • May be open or closed for redemptions by investors.

  • Investors must qualify as ‘professional’ investors and/or subscribe for interests with a value of at least £250,000, and sign a simple investment warning (usually included in the subscription document).

  • No investment or borrowing restrictions. 

  • A Jersey regulated ‘designated service provider’ (“DSP”) must be appointed to ensure that the necessary criteria and applicable anti-money laundering legislation are complied with, to carry out due diligence on the promoter and to file an annual compliance statement. 

  • A non-Jersey administrator can be appointed.

  • Jersey “special purpose” vehicles established to act as service providers (such as a general partner, trustee or investment manager/adviser) are generally not required to be regulated.

Due to requirements imposed on Jersey as conditions to its EU/EEA market access, extra requirements apply if the fund is actively “ marketed ” into the EU/EEA ( as defined in the AIFMD ) :

Not actively marketed into the EU/EEA 

Where the store will not be marketed into the EU/EEA :

  • No need to prepare an offering memorandum.

  • There is no need for Jersey directors or service-providers and no audit requirement. 

  • The fund is not regulated by the JFSC on an ongoing basis. 

Marketed into the EU/EEA the AIFM is sub-threshold 

Funds which are to be actively “ marketed ” into the EU/EEA in accordance with the AIFMD and which have appointed a sub-threshold AIFM :

  • For a Jersey AIFM, a simple JFSC consent is required (there is no ongoing regulation).

  • Minimal requirements will apply under the Code of Practice for Alternative Investment Funds and AIF Services Business published by the JFSC.

Marketed into the EU/EEA (AIFM is not sub-threshold)

Funds which are to be actively “ marketed ” into the EU/EEA in accord with the AIFMD through national private placement regimes ( or when available, through passporting ) :

  • JFSC consent obtained in 48 hours (draft PPM to be filed with the JFSC).

  • An “AIF Certificate” is needed to permit EU/EEA marketing. For the Ongoing JFSC regulation is limited to compliance with the limited applicable AIFMD provisions. 

  • The JFSC assess the suitability of the fund’s promoter having regard to its track record and relevant experience, reputation, financial resources, and spread of ultimate ownership, in light of the level of sophistication of the target investor group.

  • Where the AIFM is a Jersey entity ( such as a general collaborator or regent or an external director ), it must be regulated by the JFSC, in accordance with the AIFMD. See “ Fund Service Providers ” below .

adept Funds are attractive for non-retail schemes, whether joint ventures, hedge funds, individual fairness vehicles or other schemes aimed at “ Expert Investors ”. Expert Funds can be established quickly and cost effectively and must comply with the Jersey Expert Fund Guide ( the “ EF Guide ” ) .

Approval process

The JFSC does not need to review the fund structure, documentation or the promoter. alternatively the investment company administrator certifies to the JFSC that the fund complies with the EF Guide and once the documentation and the fund ’ randomness offer document are filed, the JFSC aims for a 3 day turnaround on the application for approval. The EF Guide provides fund promoters with certainty, efficiency and cost effectiveness in the establishment of a fresh investment company .

What is an expert fund?

  • The definition of “Expert Investor” is crucial. An investor must fall within any one of the 10 categories, which include a person or entity: in the business of buying or selling investments; with a net worth of more than US $1million, excluding principal place of residence; with at least US $1million available for investment; connected with the fund or a fund service provider (there is a flexible approach to carried-interest arrangements); or (the simplest category) making an investment or commitment of US $100,000 or more (or currency equivalent). 

  • The investment manager/adviser must be established in an OECD member or any other state or jurisdiction with which the JFSC has entered into a Memorandum of Understanding or equivalent; regulated in its home jurisdiction (or, if not required to be, approved by the JFSC, which usually occurs on an expedited basis); without convictions or disciplinary sanctions; solvent; and experienced in using similar investment strategies to those adopted by the Expert Fund. If the investment manager/adviser does not meet these requirements, it may approach the JFSC on a case by case basis. Of course, if permission is granted then, absent any material change, the investment manager/adviser will not need specific approval to establish further Expert Funds. An investment manager/adviser is not required for certain self-managed funds, such as direct real estate or feeder funds.

A little count of extra requirements are imposed on technical Funds :

  • Two Jersey resident directors with appropriate experience must be appointed to the board of the general partner/trustee/fund company. 

  • A licensed Jersey administrator or manager (which may be a special purpose vehicle) must be appointed (save in the case of a unit trust where a trustee is often the only required Jersey service provider). 

  • A Jersey custodian or (in the case of hedge funds) an international prime broker must be appointed for funds which are open for redemption at the option of investors. 

  • The offer document must set out all material information in respect of the fund. 

  • Investors must sign a prescribed form of investment warning (usually contained in the subscription document). 

  • The fund must be audited. 

Flexibility

There are no investing or adopt restrictions imposed on the fund, nor is there any limitation on the total of investors such a fund may have .
The EF Guide aims to provide a “ safe harbor ” available to the majority of non-retail funds. On occasion, where derogations from the EF Guide are required, these are considered on an expedite footing .

Ongoing requirements

ongoing requirements are limited. future changes to the fund by and large do not require regulative approval unless they are contrary to the EF Guide or there is a change to the investment company ’ s directors or overhaul providers .

AIFMD

expert Funds are eligible to be marketed into the EU/EEA in accordance with the AIFMD through national private placement regimes ( and, when available, third nation passporting ) .
Listed Funds must comply with the Jersey Listed Fund Guide ( the “ LF Guide ” ). The LF Guide does not place any restrictions or qualification criteria on who can invest in a Listed fund and provides certainty to those wishing to establish a listed fund in a quick and cost-efficient manner. There is no minimal investment necessity .

Approval process

Listed Funds are established on authentication by the fund administrator that the investment company complies with the criteria set out in the LF Guide. The JFSC issues the relevant security on reception of the documentation and the fund ’ s offer document. As a result, a Listed investment company can be established in Jersey within 3 days .
What is a Listed fund ?
A Listed fund is a fund meeting the following criteria :

  • The fund must be listed on an exchange or market recognised by the JFSC. The list of pre-approved exchanges is numerous and global in scope, and includes all exchanges upon which listings are ordinarily sought, including the London Stock Exchange (the Main Market, AIM and the SFM), NYSE, NASDAQ, HKEx, Euronext, Johannesburg Stock Exchange and the TISE.

  • The investment manager/adviser must be of good standing, established and regulated (if appropriate) in an OECD member state or a jurisdiction with which the JFSC has memorandum of understanding.

The JFSC understands that some investment managers/advisers may not be regulated because the type of natural process they undertake is not regulated in their home legal power : real property investment management being one exercise. In such cases, provided the investing coach is ( i ) the subsidiary company of an entity that is regulated in sexual intercourse to do or advising on investment funds in its home legal power, ( two ) an entity or the subordinate of an entity with a market capitalization of above US $ 500m, or ( three ) a director with a trade record of at least 5 years or whose principal persons can demonstrate relevant experience or qualifications, it will remain eligible for the fast-track authorization process. If an investment manager/adviser does not meet these requirements, it may approach the JFSC on a case by event footing. Of course, if license is granted then, absent any corporeal change, the investment manager/adviser will not need specific approval to establish farther Listed Funds. An investing manager/adviser is not required for certain self-managed funds, such as direct real estate or self-feeder funds .
A little count of samara structural requirements are imposed on list Funds :

  • The fund must be closed-ended (meaning that it is not open for redemptions at the option of investors). 

  • The fund’s offering document must carry a clear investment warning and contain all    information necessary for potential investors to make an informed decision. 

  • The fund must be audited. 

  • A licensed Jersey administrator or manager (which may be a special purpose vehicle) must be appointed. 

  • Adequate arrangements for the safe custody of assets must be in place (though there is no requirement to appoint a custodian). 

  • A majority of the directors of the board of the fund company (including the Chairman) must be independent. Independence will generally be a matter for the board itself to determine, often using the requirements of any relevant listing authority for guidance. 

  • Two Jersey resident directors must be appointed to the board of the fund company. 

Flexibility

There are no investing or borrowing restrictions imposed on list Funds. There is no terminus ad quem on the count or type of investors in such funds .
The LF Guide aims to provide a “ dependable harbor ” available to the majority of funds which are listed. On occasion, where derogations from the LF Guide are required, these are considered on an expedite basis .
The LF Guide merely applies directly to funds structured as companies, but applications for express partnerships or unit trusts can be made on a individual footing .
Listed Funds are now normally only exploited if there is a specific desire for a closed-ended listed fund to be regulated or for it to be actively “ marketed ” into an EU/EEA nation in accord with the AIFMD .

Ongoing requirements

ongoing requirements are limited. future changes to the fund generally do not require regulative approval unless they are contrary to the LF Guide or there is a change to the investment company ’ s directors or overhaul providers .

AIFMD

Listed Funds are eligible to be marketed into the EU / EEA in accord with the AIFMD through national individual placement regimes ( and, when available, third gear country passporting ) .

Flexibility

Regulated eligible investor Funds are exchangeable to Expert Funds in structure, authority requirements and ongoing regulation, with the following key differences :

  • The fund must be an AIF, for the purposes of AIFMD

  • The offering document is not required to comply with the usual disclosure requirements

  • All investors must be “Eligible Investors” (see below)

Like Expert Funds, these Funds are attractive for non-retail schemes ( including joint ventures, hedge funds, individual equity vehicles and other schemes aimed at “ Eligible Investors ” ) and can be established cursorily and cost effectively .
What is an eligible investor ?
An investor must qualify in any one of 11 categories of “ Eligible Investor ”, which include those investors :

  • who make a minimum initial investment or commitment of US $1,000,000 (or equivalent) 

  • whose ordinary business or professional activity includes dealing in, managing, underwriting or giving advice on investments (or an employee, director, consultant or shareholder of such a person) 

  • who is an individual whose property has a total market value of not less than US$10,000,000 or equivalent 

  • which is a company, limited partnership, trust or other unincorporated association and which either (i) has a market value of US $10,000,000 or equivalent (calculated either alone or together with its associates), or (ii) has only “Eligible Investors” as members, partners or beneficiaries 

  • which is, or acts for, a public sector body

  • which is the trustee of a trust which either (i) was established by an “Eligible Investor”, or (ii) is established for the benefit of one or more Eligible Investors 

  • which is, or is an associate of, a service-provider to the fund (or an employee, director, consultant or shareholder of such a service-provider or associate and who acquires the investment as remuneration or reward

The regimen expressly recognises that a discretionary investment director may make investments on behalf of investors who do not qualify as “ Eligible Investors ”, provided that it is meet that the investment is desirable for the underlie investors and they are able to bear the economic consequences of the investment .
AIFMD
Regulated eligible investor Funds are eligible to be marketed into the EU/EEA in accordance with the AIFMD through national secret placement regimes ( and, when available, third state passporting ) .
This class encompasses open-ended funds which are to be offered to retail investors and other CIFs which do not qualify as an Expert Fund, Listed Fund or Regulated eligible Investor Fund. The first stagecoach of the approval process is the approval of the showman. This approval can be sought simultaneously with the submission of documents for review by the JFSC. Once such approval has been obtained, any JFSC comments on the documents have been resolved and the JFSC has approved the identity of the fund ’ south service providers, the JFSC will issue the necessity consents. The extent of the JFSC ’ sulfur review and of the regulative requirements it imposes will depend on the nature of the fund and, in especial, on any minimum level of investment or early restrictions on who can invest and whether the fund is open or closed-ended .
Under the JFSC ’ s published policy, in assessing a proposed promoter or promoting group, the JFSC will have regard to its : path record and relevant experience, repute, fiscal resources, and ranch of ultimate possession. Their judgment will depend on the type of investor to which the proposed fund is targeted : the higher the minimum investment and/ or the more that the fund is targeted towards professional or institutional investors who have cognition of the diligence and have the experience and resources to look after themselves, the more the JFSC is inclined to relax their requirements .
This category of funds are intended to be freely marketed to retail investors in the United Kingdom or elsewhere and which are broadly more heavily regulated than other types of Jersey funds. Recognised Funds are, in practice, rarely established and fall outside the setting of this scout .
telling only Funds ( besides known as ‘ Eligible Investor Funds ’ ) may be open/closed-ended and they are restricted to sophisticate investors ( including those investing a minimum sum equivalent to US $ 1 million ) .
There is no audit necessity ( unless the investment company is a company ), no need for Jersey service-providers or Jersey directors and no investment or adopt restrictions imposed on a Notification alone Fund. Nor is there any limitation on the number of investors such a fund may have .
The key benefits of this government for fund promoters are that it provides alone tractability coupled with the certainty of being able to establish the fund at any prison term merely by filing the ask detect and without the need to obtain JFSC blessing .
presentment merely Funds can be established as a Jersey company ( including as a PCC or ICC ), as a limited partnership with at least one general partner which is a Jersey company or as a unit faith with at least one regent or coach which is a Jersey company .
A Notification only fund :

  • can be open or closed-ended and may be sold to or held by an unlimited number of “Eligible Investors” 

  • does not need to produce audited accounts (unless a company) 

  • has no need for Jersey service-providers or for any Jersey directors on the fund company, the trustee or the general partner 

  • has no investment or borrowing restrictions and no limitation on the number of investors

  • may be listed, provided that the exchange permits transfer restrictions (to ensure that only Eligible Investors are allowed to invest in the fund) 

  • must obtain a written acknowledgement from each investor confirming their acceptance of the risks involved in the fund (typically dealt with on the application form)

The 11 categories of “ Eligible Investor ” are the same as for the Regulated Eligible Investor Fund. Investors must satisfy at least one of those categories .
The regimen besides expressly recognises that a discretionary investing coach may make investments on behalf of investors who do not qualify as “ Eligible Investors ”, provided that it is satisfy that the investment is suitable for the underlie investors and they are able to bear the economic consequences of the investment .

Notification Only Funds: the fund vehicle

once the store vehicle is established in the common way, no far regulative approvals of any kind will be required if the store meets the requirements for qualifying as a Notification lone Fund. A notice must be filed with the JFSC confirm that the relevant eligibility requirements are met. Existing funds established on or after 19 February 2008 can convert to become Notification Only Funds .
The common application routine for incorporating a company or registering a restrict partnership will apply, each of which can often be completed on the same working day. Using a unit of measurement confidence avoids even these requirements. A Notification Only Fund has no duty to have any Jersey house physician directors or any Jersey based administrator, custodian or early service providers .

AIFMD

telling only Funds are not eligible to be marketed into the EU/EEA pursuant to the AIFMD. consequently, these Funds are most normally used for raising capital outside the EU/EEA .
Jersey is outside the European Union and regarded as a “ third country ” for AIFMD purposes. Jersey has implemented an AIFMD government only to the extent necessity to allow Jersey funds and Jersey managers to access investors in EU/EEA countries .
The AIFMD rule in Jersey overlays the existing regimen to provide maximal tractability. For Jersey funds ( and other non-EU funds ) with a Jersey Manager :

  • Outside AIFMD – where the fund is not an “AIF” or is not “marketed” into the EU/EEA (as defined in the AIFMD), the fund and its manager are not subject to Jersey’s AIFMD implementation regime. 

  • Article 42 requirements only – the fund can be “marketed” into the EU/EEA through national private placement (“NPP”) regimes by complying with only the requirements of AIFMD Article 42 (annual reports, pre-investment disclosure and regulatory reporting on liquidity, risk management arrangements and leverage). This reduces costs as other AIFMD requirements do not apply, including that no depositary is needed (although a small number of EU/EEA countries require a depository before permitting marketing). 

  • Full compliance – A Jersey manager can opt for full AIFMD compliance under Jersey’s regime, to be ready for the extension of the AIFMD passporting regime to third countries.

  • For Jersey Private Funds, a small amount of additional regulation will be needed (please refer to the ‘Jersey Private Funds’ section, below). However, Jersey CIFs (and their AIFMs) are already considered appropriately regulated for these purposes, so they are exempt from the need to obtain any further approvals from the JFSC. Notification Only funds cannot be marketed into the EU/EEA, so there is no AIFMD overlay for such funds. 

NPP regimes have proved effective in many EU/EEA countries and Jersey funds continue to be established and marketed in those countries, thereby avoiding the more burdensome and costly AIFMD requirements. It is elementary and price effective to establish a “ extra purpose ” Jersey coach with sufficient bodily process and substance in Jersey for AIFMD purposes. Where required, investment advice can still be received from an onshore adviser .
Jersey has extensive experience with establishing funds and “ special determination ” managers for private equity, real estate, and funds of hedge funds, with a growing reputation for more emerge asset classes ( e.g. mezzanine and early debt funds and infrastructure funds ) .
A Jersey fund can be established as :

  • a limited partnership: a standard limited partnership, separate limited partnership or incorporated limited partnership or limited liability partnership; 

  • a unit trust; or 

  • a company: a standard Jersey company, protected cell company (“PCC”) or incorporated cell company (“ICC”). 

Unit trusts

A unit of measurement trust is not a separate legal entity but is constituted by an agreement in write, normally known as a “ confidence musical instrument ”, between a director and a trustee ( or by a regent which besides acts as director ). The hope concept has been recognised in Jersey for over one hundred years and trusts by and large are now governed by the provisions of the Trusts ( Jersey ) Law, 1984. The assets of a unit trust are held by its regent and are managed by the director, who may appoint one or more investment managers/advisers to assist it. Contracts in sexual intercourse to the management and administration of the hope fund will be entered into by the coach, whereas the trustee will enter into contracts in relation to the assets themselves, such as bank deposits, borrowings and security agreements. There is no restrict to the number of investors .

Limited partnerships

Limited partnerships ( “ LPs ” ) are nowadays the prefer vehicles for closed-ended secret fairness funds and can be established in three ways :

  • “Traditional” Jersey LPs (“JLPs”), which are similar to English LPs, are established under the Limited Partnerships (Jersey) Law 1994.

  • Separate LPs (“SLPs”), which have separate legal personality and are therefore similar to Scottish LPs, are established under the Separate Limited Partnerships (Jersey) Law 2011.

  • Incorporated LPs (“ILPs”), which have separate legal personality and are bodies corporate, are established under the Incorporated Limited Partnerships (Jersey) Law 2011.

A JLP/SLP/ILP is normally created by a written partnership agreement which is signed after the LP has been issued with a security of adjustment. A JLP/SLP/ILP consists of one or more cosmopolitan partners who are jointly and individually apt for all the debts of the partnership and one or more restrict partners, who are not liable for any debts of the partnership beyond the amounts they contribute or agree to contribute. Among the features which make these Jersey limited partnerships attractive to fund promoters as fund vehicles, GP vehicles and stock interest vehicles are the pursuit :

  • JLPs are treated as transparent for all UK tax purposes and counsel’s advice is that SLPs and ILPs will receive the same treatment. 

  • Jersey LPs are “stackable” – a JLP/SLP/ILP can act as a general partner or limited partner to another JLP/SLP/ILP (or any foreign LP) without prejudicing the limited liability of its limited partners. This makes them ideal for carried interest and other profit distribution structures. 

  • A JLP/SLP/ILP can distribute both capital and profits without formality provided that it is solvent before and after the distribution. 

  • The names of the limited partners do not appear on any register which is open to public inspection (public information is limited to the limited partnership’s name and registered office, the general partner’s place of incorporation and registered/principal office and the term, if any, for which the LP is to exist).

  • Subject to any requirements of the applicable regulatory category: no Jersey service providers are required; the general partner is not required to be a Jersey company, be resident in Jersey or have Jersey directors, there is no ongoing registration charge, no requirement to file any annual return or accounts and no audit requirement (where the LP is regulated its accounts must be audited but do not need to comply with any GAAP). 

  • A limited partner may have greater involvement in management than in some other jurisdictions. There is no limit on the number of limited partners who may be members of a limited partnership. The general partner need not make any capital contribution to the limited partnership. 

  • There is great flexibility in defining the extent of the limited partners’ rights (including rights of redemption), any rights of any partner(s) to receive carried interest, profit share and/or other payments and the scope of any restrictions on the general partner’s discretion. 

  • For SLPs and ILPs, the laws under which they are established have been tailored to reinforce the existence of separate legal personality and body corporate status (e.g. ILPs have perpetual succession and detailed winding up provisions, similar to a Jersey company). 

More information on Jersey limited partnerships is available in our brief on Jersey limited partnerships .

Companies

Companies are incorporated under the provisions of the Companies ( Jersey ) jurisprudence 1991 ( the “ Companies Law ” ). fund companies which are established as open-ended so that investors have the right to realise their investing in the caller will normally issue redeemable predilection shares to facilitate this, as par or no par measure shares .
All companies formed under Jersey jurisprudence have freestanding legal personality and are capable of suing and being sued in their own names. Management and restraint is vested in a board of directors although, particularly in the font of open-ended companies, it is often the case that investment management will be delegated to a management company .

Protected Cell Companies and Incorporated Cell Companies

Cell company structures ( which are popular for umbrella fund structures ) are besides established under the Companies Law. The cells all parcel the same file function and company secretary, but can have different boards of directors, different capital structures and unlike articles of association. In Jersey, two kinds of cell company structure are available :

  • The Protected Cell Company (PCC): a “second generation” protected cell company that represents the first significant advance from the PCC model used in other jurisdictions (for example, a cell in a Jersey PCC can invest in other cells within the same PCC) – the PCC and its cells together form a single company, but Jersey’s company law provides for the legal segregation of the assets of the PCC and of each of its cells.

  • The Incorporated Cell Company (ICC): a true innovation which provides unmatched segregation of liabilities and flexibility. Each cell of an ICC is a separate company. 

PCCs and ICCs can offer significant advantages and recently introduced changes further increase their flexibility, while maintaining the “ bankruptcy farness ” of each cell .
More information on PCC and ICC structures is available in our brief on Jersey Cell Companies .
The International Stock Exchange ( “ TISE ” ) ( once known as The Channel Islands Securities Exchange ) began its operations in December 2013 replacing the Channel Islands Stock Exchange and provides trading and list of investment funds, debt instruments and shares in companies. TISE is designed to bring the expertness available in the Channel Islands to the growing phone number of external businesses requiring first course offshore fiscal services within the european time-zone .
The TISE provides a list facility and screen-based trade. The TISE is approved as an Affiliate Member of the International Organisation of Securities Commissions ( “ IOSCO ” ). The TISE is formally recognised by the Australian Stock Exchange. The UK Inland Revenue ( now “ HM Revenue & Customs ” ) designated the Exchange as a greet Stock Exchange under Section 841 of the Income and Corporation Taxes Act 1988 ( “ ICTA ” ). Both Jersey and Guernsey are besides “ Designated Territories ” under part 270 of The Financial Services and Markets Act 2000 .
Carey Olsen Corporate Finance Limited, a member of the Carey Olsen Group, is a class 1, 2 and 3 Listing Member of the TISE and can act as a store ’ south patron for list purposes .
Jersey funds have comparison on Euronext and Carey Olsen has acted on Euronext listings .
The paragraph below summarise the current tax position in Jersey .

General

Profits of a capital nature are not liable to Jersey income tax ( unless arising from the development of nation or buildings in Jersey ). accordingly, gains made on the disposal of assets held by a fund by direction of investment will not be liable to Jersey income tax. There are no capital taxes in Jersey .
A voluntary exemption from tax income in Jersey is available for fund vehicles, should this ever be considered necessary .

Companies

Jersey fund companies which are house physician for tax purposes in Jersey will be subject to income tax in Jersey at a rate of zero per cent. Dividends on shares and redemption proceeds may be paid by the investment company company without withholding or deduction for or on account of Jersey income tax and holders of shares ( other than residents of Jersey ) will not be subject to any tax in Jersey in regard of the contain, sale or other disposal of such shares .

Unit trusts

Funds established as unit trusts are nontaxable from tax on foreign income and bank interest ( either mechanically or, where there are Jersey nonmigratory individual unitholders, by application ) .
Unitholders who are not house physician for income tax purposes in Jersey are not subject to tax in Jersey in deference of any income or gains arising in respect of units held by them ( other than any Jersey informant income excluding bank deposit interest ) .
Unitholders who are nonmigratory for income tax purposes in Jersey will be discipline to income tax in Jersey on any income originate from units held by them or on their behalf and income tax is required to be deducted by the trustee ( s ) on requital of any such distributions .

Limited partnerships

A Jersey limited partnership is not subject to assessment to taxation in Jersey in its own name. The partners are assessed in their own names as follows :

  • Investors who are not resident for taxation purposes in Jersey will not be liable to Jersey income tax in practice on distributions from (or interest receivable from a loan made to) the limited partnership and confirmations in this regard are generally obtained from the Comptroller of Taxes in Jersey. 

  • Investors who are resident for taxation purposes in Jersey are charged to Jersey income tax on the whole of their share of the income profits arising to the limited partnership. 

Other taxes

In Jersey, no stamp duty is levied on the initiation, transfer, redemption or cancellation of shares, units or limited partnership interests. Stamp duties may be collectible in Jersey where such securities form character of the Jersey estate of a die individual on a sliding scale at a rate of up to 0.75 %. Jersey does not otherwise levy taxes upon capital, inheritances, capital gains or gifts nor are there differently estate duties .
capable to the requirements applicable to the fund ’ s regulative class, the service providers to a Jersey store can be ( one ) an established Jersey avail supplier and/or ( two ) a “ limited purpose ” Jersey vehicle which is established to act as coach, investment manager/adviser, cosmopolitan partner or regent to one or more Jersey or non-Jersey funds and/or ( three ) any other ( Jersey or non-Jersey ) person or entity .
AIFMD
Jersey entities which act as the director of a fund ( the “ AIFM ” as defined in the AIFMD ) are subject to regulation by the JFSC .

  • Managers which are already regulated (such as those acting for CIFs) need only comply with the applicable requirements of the AIFMD.

  • For other managers (such as Jersey “special purpose” companies establish to act for Jersey Private Funds):

    • a ‘light touch’ approach applies where the AIFM will qualify as a ‘sub threshold’ manager (by reference to value of the funds under management);

    • otherwise, the usual 10 day application serve applies, including prior meekness of personal questionnaires ( see “ Establishing a special Purpose Service Provider ” ) .

Jersey depositories are national to regulation by the JFSC. This service is provided by many established local anesthetic service providers ( and much by the fund ’ s existing administrator, trustee or custodian ) .
CIFs : special purpose and early service providers
Jersey service providers to CIFs ( including Expert Funds, Listed Funds and Regulated Eligible Investor Funds ) must be licensed by the JFSC to conduct “ investment company services business ” under the Financial Services ( Jersey ) law 1998 ( the “ Financial Services Law ” ) : this includes administrators, custodians, distributors, store managers, investment advisers/managers, general partners and trustees. Established Jersey service providers will already hold these licences. See “ Establishing a limited Purpose Service Provider ” far in this incision .

Notification Only Funds

An exemption from the license requirement exists for limited determination companies established in Jersey to act as general partners and trustees of Notification Only Funds, frankincense ensuring that these structures can remain wholly unregulated by the JFSC ( while distillery being subject to Jersey ’ s anti-money wash regulations ). It is normally not possible to establish an SPV investment manager/adviser in Jersey for a Notification alone Fund .

Jersey Private Funds

subject to any AIFMD relate requirements ( see “ AIFMD ” in this incision, above ) ; special purpose companies established in Jersey are normally excuse from regulation using an applicable exemption, for exercise :

  • for services between “connected companies”;

  • an exemption for trustees and general partners; or 

  • where the fund is a “professional investor regulated scheme”, which requires only that the investor sign a simple specified form of investment warning and either (i) qualify as a “professional investor” (which includes “a person whose ordinary activities involve the person in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of the person’s business or who it is reasonable to expect will acquire, hold, arrange or dispose of investments (as principal or agent) for the purposes of that business”) or (ii) make a minimum investment of £250,000 or currency equivalent.

Please note that a regulate ‘ designated service supplier ’ will besides be needed .
Where a special function Jersey entity needs to be regulated as described above ( for case, where acting for a CIF or acting as an AIFM which is not “ sub-threshold ” ), a simplify license government applies :

  • The entity is administered by a regulated Jersey administrator, which assumes responsibility for ongoing regulatory compliance and often provides one or more directors. 

  • Minimum capital requirement is usually £25,000 (or £10,000 where acting only for one or more related Expert Funds and/or Regulated Eligible Investor Funds), other than for AIFMs where £125,000 is required (increasing where assets under management exceed £250,000). 

  • Each director of the entity (and each of its beneficial owners with a 10% or greater interest) is required to submit a personal questionnaire (see the Appendix) and obtain approval from the JFSC. As international regulatory checks often take three weeks or more to complete for individuals who have not already been approved by the JFSC, these should be completed and submitted as early as possible. 

  • Registration under the Financial Services law typically takes 2 weeks (if, as is usual, Personal Questionnaires are filed in advance).

What is a CIF ?
alone funds which fall within the definition of a “ CIF ” are required to be regulated by the JFSC under the Collective Investment Funds ( Jersey ) police 1988 ( the “ CIF Law ” ). These funds may offer their units to an unlimited phone number of potential investors. Fund structures which are not CIFs must be approved by the JFSC under COBO and ( subject to submission with any blessing conditions and to any AIFMD-related requirements ) are not regulated by the JFSC on an ongoing basis .
A fund will be a CIF if it has as an object the collective investment of capital acquired by means of an “ offer to the public ” of units for subscription, sale or exchange, being any such offer :

  • which is not addressed to an identifiable category of persons (i) to whom it is directly communicated by the offeror or the offeror’s appointed agent (ii) who are the only persons who may accept the offer (iii) who have sufficient information to make a reasonable evaluation of the offer

  • which is communicated to 50 or more persons, or 

  • where the offered units are to be listed on any stock exchange within one year. 

A fund which meets the relevant criterion requires a certificate under the CIF Law if :

  • it is a Jersey company or it is a body corporate with an established place of business in Jersey;

  • it is a unit trust managed from within Jersey or governed by Jersey law; or

  • it is a Jersey limited partnership. 

A Notification Only Fund is a fund which meets the requirements of the Collective Investment Funds ( Unregulated Funds ) ( Jersey ) holy order 2008, but which would be a CIF if it did not meet those requirements .

Personal questionnaires

JFSC approval is required for any individuals who are directors of a CIF fund company, general collaborator or regent ( or who are directors or beneficial owners of any regulate “ special purpose ” Jersey fomite such as an investment manager/adviser ). As international regulative checks can take some time to complete, personal questionnaire forms should be completed and submitted american samoa early as possible for any individuals who have not already been approved by the JFSC. This necessity does not apply to Notification Only Funds and Jersey Private Funds .
For further aid or professional advice please, contact one of the Jersey investing fund partners listed on this page or a member of our Jersey investment funds team .

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