In particular, if a non-Jersey based service provider providing certain services in or from within Jersey or a Jersey-based service provider ("Service Providers") provides, by way of business, services that fall within the scope of the Financial Services (Jersey) Law 1998, as amended (the "FSJL") (including carrying on investment business ("IB"), trust company business ("TCB"), general insurance mediation business, money services business, fund services business or AIF services business) then, pursuant to Article 7 of the FSJL, it is prohibited from carrying on such services unless and until it meets the requisite regulatory and registration requirements under the FSJL, which will depend on the type of service provided by in respect of the underlying investment entity.
However, Service Providers may be able to rely on certain exemptions from the FSJL requirements. For example, where a Service Provider is providing TCB or IB services in respect of the underlying investment vehicle which qualifies as a "professional investor regulated scheme" ("PIRS") then such Service Provider would be exempt from the TCB or IB (as applicable) licence requirements.
An investment vehicle qualifies as a PIRS under Article 3 of the Financial Service (Investment Business (Restricted Investment Business – Exemption)) (Jersey) Order 2001, as amended (the "FS Exemption Order") where:
- relevant consent has been issued in respect of the scheme (being a relevant consent issued by the Jersey Financial Services Commission to the underlying investment company, unit trust or partnership, as applicable, under the Control of Borrowing (Jersey) Order 1958); and
- each investor in the scheme:
- has made a minimum subscription of £250,000 or is a "professional investor" (as defined in the FS Exemption Order); and
- has received and signed a prescribed investment warning.
A "professional investor" in respect of a PIRS means:
- 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;
- any person who carries on investment business in relation to the professional regulated scheme;
- any employee of a person referred to in the second limb of this definition who is engaged in carrying on investment business in relation to the professional investor regulated scheme and, where the person referred to in the second limb is a company, any director of that company and, where the person referred to in the second limb is a partnership, any partner or that partnership; or
- any company which is wholly owned by, or a limited partnership all the limited partners of which are, or a trust established for the benefit only of, one or more persons referred to in the second or third limb of this definition.
Subject to the PIRS requirements under the FS Exemption order being met, a Service Provider:
- who acts as a functionary (including a person who acts as an agent or counter-party, and includes a manager, investment manager, advisor, investment advisor, administrator, paying agent, distributor, subscription agent, placement agent, sales agent, dealer, trustee, custodian, custody agent, depository or general partner) in relation to a PIRS; and
- carries on a restricted IB pursuant to Article 2(1) of the FS Exemption Order (including, without limitation, dealing in investments, discretionary investment management or giving investment advice) in relation to the PIRS; and/or
- provides any TCB services listed in Article 2(4) of the FSJL (including, without limitation, acting as a formation agent, director, secretary, partner, trustee, nominee unitholder or providing registered or correspondence address) in respect of the PIRS.
is exempted from the FSJL licence and regulatory requirements in respect of those services pursuant to the FS Exemption Order and the Financial Services (Trust Company Business (Exemptions No.5)) (Jersey) Order 2001) (respectively). This significantly eases the regulatory and compliance burden on the relevant Service Providers and, in turn, allows them to be agile and act for such investment vehicles quickly and efficiently.
The information contained in this guide is necessarily brief and general in nature and does not constitute legal or taxation advice. Appropriate legal or other professional advice should be sought for any specific matter.
