The Guernsey private investment funds regime

The PIF is an attractive product, providing flexibility and cost-effectiveness due to speed to market and "light touch" regulation and is the best option for a wide-range of managers and asset classes, including small venture capital funds launched by first-time managers, right the way through to large private equity or real estate funds.

Two alternate PIF routes

Under the PIF Rules 2025, there are two alternate routes available for PIFs in Guernsey:

• Qualifying PIF (QPIF): To use this route all investors will have to meet qualifying investor criteria which are designed to ensure investors are restricted to suitably sophisticated investors
  
  
• Family PIF: This route enables a bespoke private wealth structure to be created as a PIF, requiring a family relationship between investors

Although neither route requires the appointment of a GFSC-licensed manager, one can be appointed if desired.  Where a PIF takes the form of a limited partnership with a Guernsey general partner, the general partner will need a licence even if the PIF is a Qualifying PIF or a Family PIF (although note that certain GFSC rules will not apply to that licensed general partner).  Where a manager or general partner needs to obtain a licence, the application is made at the same time as the PIF registration application and is fast- tracked on the same one business-day turnaround.

Points common to both routes

Under both routes:

1. there are no caps or limits on fund size, number of investors or numbers of offers made to potential investors, although offers must be private and not widely made to the general public
   
   
2. there is a one business day-turnaround at the GFSC for the PIF application
   
   
3. there are no requirements for a private placement memorandum or other information particulars (a "PPM"), although it is common for a PPM to be provided to potential investors
   
   
4. the PIF can be closed-ended or open-ended
   
   
5. the PIF does not need to be audited (but an auditor can optionally be appointed)
   
   
6. where the Guernsey manager or general partner is licensed it is not subject to certain GFSC rules which typically apply to licensed managers, including rules relating to capital adequacy, although it must be audited
   
   
7. there is no requirement to appoint a manager but where one is appointed, if it is a Guernsey manager then it will need to be licensed, albeit reduced licensing requirements will apply in certain circumstances (eg larger capital adequacy requirements)
   
   
8. conflict of interest requirements apply to the directors of any PIF manager, the directors of PIF (where the PIF is a company), the directors of the general partner of the PIF (where the PIF is a limited partnership) and the directors of the corporate trustee (where the PIF is a unit trust)
   
   
9. where the manager or general partner is applying for a licence it must provide a completed business risk assessment

Points unique to each route

Qualifying PIF

The QPIF is only open to Qualifying Private Investors (QPIs), who are able to evaluate and bear the risks and strategy of investing in the PIF.  The QPI concept includes: a "Professional Investor", an "Experienced Investor", a "Knowledgeable Employee", a "High Net Worth Investor", an "EU Professional Client", a "UK Professional Client" and a "US Accredited Investor".  A QPI will also comprise any investor that a GFSC-licensed manager or administrator of the PIF warrants is able to sustain any losses on their investment in the PIF.

As part of the PIF application, the PIF’s administrator must provide the GFSC with a declaration that effective procedures are in place to ensure restriction of the fund to QPIs. The PIF's administrator must obtain and retain (for provision to the GFSC on request) a written acknowledgement from each investor as to their understanding of the regulatory status of, and risks of investment in, the PIF, as well as their acceptance of such risks and confirmation of their ability to withstand the potential economic consequences of investment in the PIF.

A QPIF that has no separate manager will be a "self-managed fund" for economic substance purposes and will be subject to economic substance requirements in Guernsey.  Where the PIF is a limited partnership, the general partner will be the manager and so the PIF will not be a "self-managed fund".

Family PIF

A Family PIF is only open to investors who either share a family relationship or are an "eligible employee" of the family in question.  The PIF cannot be marketed outside the family group.

As part of the PIF application, the PIF’s administrator must provide the GFSC with a declaration that effective procedures are in place to ensure that all investors fulfil the family requirement.

A Family PIF is a viable option for a regulated family office, although it is worth noting that a family office or investment club of family investors does not need regulating in Guernsey.

A Family PIF that has no separate manager will be a "self-managed fund" for economic substance purposes and will be subject to economic substance requirements in Guernsey.  Where the PIF is a limited partnership, the general partner will be the manager and so the PIF will not be a "self-managed fund".

About Walkers private investment fund team

Walkers has a dedicated private investment funds team in Guernsey who work with a broad base of clients on a diverse range of products.  We can provide a complete package of Guernsey regulatory, corporate, partnership, tax and economic substance advice in relation to fund formation and on-going advice during the investment fund life-cycle. Our Guernsey team works closely with our investment funds experts across our global network to ensure that each client obtains the appropriate multi-jurisdictional advice.

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.