The Jersey Private Fund guide updates have gone live as of 6 August, in a move the jurisdiction and those active in the private funds ecosystem see as key in continuing to build the local industry, and attract more providers and investors.
As noted by the Jersey Financial Services Commission (JFSC), key changes include a lifting of the 50-offer/investor cap, expanding the definition of a professional investor, the listing of interests in JPFs with the JFSC’s consent, and the introduction of a 24-hour authorisation process for JPF applications submitted by registered Designated Service Providers.
Kirsten Faichnie, Investment Funds & Corporate partner at international law firm Walkers, commented on the upsides seen to flow from the new regime:
- In more turbulent markets, where speed and efficiency are vital to the success of a new launch, the faster 24-hour application turnaround significantly increases Jersey’s appeal to international fund managers. This adds a real-time competitive advantage compared to other jurisdictions with slower regulatory procedures.
- The removal of the 50-investor / offers cap greatly improves the accessibility of Jersey-based funds and increases their ability to scale and grow, provided offers are to a “restricted group of investors”. The reform allows them to accommodate larger institutional investor groups and cater to global fundraising strategies – beneficial to both the fund and the island’s wider ecosystem.
- The revised and expanded ‘professional investor’ definition in the JPF Guide and the relevant “professional investor regulated scheme” exemption now aligns more closely with UK and US standards, enabling the easier onboarding of a broader range of institutional and sophisticated investors. This demonstrates Jersey’s willingness to move towards harmonisation with other global investment hubs and simplifies cross-border fundraises. For example, by removing the need for additional categorisation work or investor eligibility carve-outs.
- The JPF Guide now allows a JPF to be listed with consent from the JFSC providing more options for managers seeking a technical listing, with no active trading to the members of the public, for, perhaps, regulatory requirements or for tax efficiency, or where securities are ‘privately placed’ with no public offering.
- With the updated eligibility criteria and no public offer under the ‘restricted group of Investors’ test’, managers can continue to rely on National Private Placement Regimes (NPPRs) or reverse solicitation when marketing into the EU and UK or admitting investors from, reducing regulatory friction in many scenarios when compared to the more costly, onerous and complex passport route under AIFMD.
- With the removal of the 50-investors / offers cap on a JPF, it is expected that a number of existing more highly regulated collective investment funds (CIFs) (including, for example, an Expert Fund, an Eligible Investor Fund or a Listed Fund) will seek to convert to a JPF, which will be possible provided that the CIF meets all the eligibility criteria in the JPF Guide and confirmation is provided that the CIF has not been ‘offered to the public’. This will allow more regulated fund products to become subject to a lighter touch regulatory regime under the JPF Guide in the appropriate circumstances.
- While the reforms bring greater flexibility, designated service providers must be aware that these changes do not automatically apply to existing JPFs. They will have to ensure compliance across both legacy and new JPFs. This will likely temporarily increase the administrative burden for compliance teams (by updating investor documentation and COBO consents); however, this is greatly outweighed by the long-term process efficiency.
Tatiana Collins, Investment Funds & Corporate partner at Walkers, added: “The Jersey Private Fund (JPF) has been hugely popular since its launch in 2017, and a global success story for Jersey. The recent changes to the JPF regime will further enhance the appeal of Jersey as a jurisdiction of choice for fund managers and investors and ensure that the popularity of the JPF is maintained in the years to come.”
Dilmun Leach, Investment Funds & Corporate partner and vice chair of the Jersey Funds Association, said: “We were one of several organisations who worked alongside the Government of Jersey, the JFSC, the Jersey Funds Association and Jersey Finance to help shape the recent changes to the Jersey Private Fund regime. This collaboration from industry bodies across the island demonstrates Jersey’s commitment to the funds sector to maintain our excellence as a fund domicile.”
The full Private Fund guide can be read here: https://www.jerseyfsc.org/industry/guidance-and-policy/jersey-private-fund-guide/
