Jersey Private Fund Regime - Key Requirements and Eligibility

• A JPF is a private fund product which is lightly regulated

• A JPF can be established in various forms

• A JPF requires a designated services provider in Jersey

The introduction of the JPF amalgamated and replaced three other Jersey private fund products: the Very Private Fund, Private Placement Fund and COBO Only Fund.  New applications under the older regimes are no longer possible.

Speed of establishment, together with appropriate and proportionate regulation for the sophistication of the investor base, are the unique selling points of this new fund product.

What does this mean for existing private funds?

Key requirements and eligibility criteria

• 50 or fewer offers/investors – marketing can only be to 50 or fewer "professional" or "eligible" investors (generally those investors who invest or commit to invest a minimum of GBP250,000 or currency equivalent) and a JPF may only have a maximum of 50 investors at any one time:

• where there are 15 or fewer offers – the designated service provider ("DSP") (described below) may be registered for any class of Fund Services Business ("FSB") or Trust Company Business; or

• where there are 16 – 50 offers – the DSP must be registered by the JFSC as a Class V (Administrator), Class U (Manager), Class X (Investment Manager) and/or Class ZG (Trustee) of FSB;

• Structure – can be formed as a company (including but not limited to a private limited company or a cell company which creates cells), partnership or unit trust and, if established outside of Jersey, shall be incorporated or constituted in such equivalent form as is permitted under the laws of such country or territory outside of Jersey;

• Open or closed-ended – open-ended or closed-ended funds are permitted, provided that there are no more than 50 offers/investors in the JPF;

• Promoter – no requirement to have a promoter or, if a promoter is appointed, for the promoter to be approved by the JFSC, although the DSP must conduct due diligence on the promoter;

• Directors – no express requirement for Jersey-resident directors (albeit the JFSC does expect at least one or more resident Jersey directors to be appointed) (unless the fund is also marketed to EU/EEA investors, in which case the JPF or its general partner (as applicable) will need to have at least two Jersey resident directors);

• Offering document – no requirement for an offering document, although where there is an offer document, it must contain all of the material information which investors (and any professional advisers) would reasonably require, and expect to find and have brought fairly to their attention, for the purpose of making an informed judgement about the merits of investing in the JPF and the associated risks;

• Investment warning and disclosure statement – no set restrictions on investment and borrowing, but there is a requirement for a specific investment warning and disclosure statement;

• Accounts – no requirement for audited accounts, although any qualified audit must be reported (except in the circumstances when adopting modified GAAP) (unless the JPF is also marketed to EU/EEA investors, in which case the JPF will need to appoint an auditor unless the manager of the JPF is a sub-threshold AIFM);

• Designated service provider –  must appoint a DSP, which is registered pursuant to the Financial Services (Jersey) Law 1998 (generally the Jersey based fund administrator);

• Notice of changes – must have any notice of change or event signed off by the DSP (eg material amendment of offering material, structural changes) and notified to the JFSC within 28 calendar days;

• Annual return – must file an annual return that has been signed off by the DSP;

• No Personal Questionnaires – no requirement for the Directors to complete and file personal questionnaires in relation to the JPF itself;

• AIFMD – additional requirements may apply where the JPF is marketed into the EU/EEA through National Private Placement Regimes, including the issue of an AIF certificate by the JFSC to the JPF and compliance with the applicable sections of the Jersey AIF Code. Where the AIFM of the JPF is "sub-threshold", only minimal requirements of the AIF Codes will apply. To qualify as a subthreshold 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;

• No listing – a JPF must not be listed (including a technical listing) on any stock exchange;

• Economic substance - where a 'resident company' (a company tax resident in Jersey) or a 'resident partnership' (a partnership with the place of effective management in Jersey), for example, a self-managed corporate JPF or a general partner of a JPF partnership, will be conducting 'fund management business', it will be required to comply with the requirements of the Taxation (Companies - Economic Substance) (Jersey) Law 2019 or Taxation (Partnerships - Economic Substance) (Jersey) Law 2021 (as applicable); and

• POCL registration - A JPF will need to register in Jersey with the JFSC under the Proceeds of Crime  Supervisory Bodies) (Jersey) Law 2008 in respect of carrying on certain Schedule 2 activities as a fund, as specified in the Proceeds of Crime (Jersey) Law 1999.

What happens to qualifying funds

Funds qualifying under the JPF regime will receive approval within 48 hours from when a complete and satisfactory application has been received by the JFSC.  At the time of writing, a one-off application fee of GBP1,849 is due, followed by an annual fee of GBP1,475 (which shall be pro-rated from the date on which the JPF is approved).

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.