Guernsey Updates the Private Investment Fund (PIF) Regime

• Guernsey's streamlined private investment fund (PIF) regime provides a highly flexible and cost-efficient fund solution catering for all asset classes across a wide range of managers
  
  
• The PIF Rules provide appropriate funds with a fast-tracked, proportionate and "light touch" regulatory regime
  
  
• This guide discusses the two PIF routes to obtaining regulatory approval, and their features

The Guernsey Financial Services Commission (GFSC) has updated and streamlined Guernsey's PIF regime. The PIF was already a very attractive product, providing flexibility and cost-effectiveness due to speed to market and "light touch" regulation.  The update increases flexibility and cost-efficiency further, as it removes the caps on investor numbers, and the PIF does not need to be audited.  This makes the PIF the best option for a wide-range of managers and asset classes – the new PIF is suitable for small venture capital ("VC") funds launched by first-time managers, right the way through to large private equity or real estate funds. 

PIFs are now governed by the Private Investment Fund Rules and Guidance, 2025 (the PIF Rules 2025).  Under the PIF Rules 2025, there are two alternate routes available for PIFs in Guernsey:

Qualifying PIF (QPIF): This replaces both the prior "Licensed Manager PIF" and the "Qualifying Private Investor PIF".  All PIFs currently registered under these two prior regimes will become QPIFs.  To use a QPIF all investors will have to meet qualifying investor criteria which are designed to ensure investors are restricted to suitably sophisticated investors.  These criteria combine and expand on the qualifying criteria that applied previously.  

Family PIF: This PIF existed previously (albeit it was previously named the Family Relationship PIF) and enables a bespoke private wealth structure to be created as a PIF, requiring a family relationship between investors. 

There is no requirement for the appointment of a GFSC-licensed manager for any of the PIFs, although 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 (although note below regarding certain GFSC rules not applying to that licensed general partner). Where the 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:

• there remains a one business day-turnaround at the GFSC for the PIF application;
  
  
• there are no caps or limits on fund size, numbers of investor or numbers of offers made to potential investors, although all offers must be private and not widely made to the general public; 
  
  
• 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;
  
  
• the PIF does not need to be audited – the PIF only needs to appoint an auditor if the PIF's constitutional documents require one, making the QPIF a best-in-class option for both a small VC fund looking to maximise its returns for investors, and also a first-time manager seeking to be as cost-efficient as possible. Where an auditor is appointed, they must operate from a place of business in Guernsey (existing PIFs using a non-Guernsey auditor are exempted from this requirement);
  
  
• the PIF can be closed-ended or open-ended;
  
  
• where the Guernsey manager/general partner is licensed it is not subject to certain GFSC rules and requirements which typically apply to licensed managers, including rules relating to capital adequacy and conduct of business, as well as the requirement to be audited;
  
  
• conflict of interest requirements apply to the directors of the 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); and
  
  
• where the manager/general partner is applying for a licence it must provide a completed business risk assessment.

Points unique to each PIF

QPIF

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. However, the QPI concept has been extended and 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".

Our view

These changes improve Guernsey's PIF product in ways that can really benefit managers further by using Guernsey as a fund domicile.  In particular, the new QPIF benefits VC funds and first-time managers who are looking to launch smaller funds in the most cost-efficient way whilst being able to market to a wide a pool of investors as possible.  

Given the widening of the QPI concept and removal of the audit requirements, existing PIFs that automatically convert into a QPIF may want consider amending their existing fund documentation to take advantage of these changes.  

About our 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 investment fund, corporate, partnership, regulatory, 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.