Jersey's financial regulator has updated its private fund regime after "significant collaboration with the Government of Jersey, the Jersey Funds Association (JFA), the Jersey Association of Trust Companies (JATCo) and Jersey Finance Limited."
The Jersey Private Fund (JPF) Guide sets out the JPF regime which the Jersey Financial Services Commission said provides fund promoters with a cost-effective, fast-track (48 hour) regulatory approval process for their private fund, which can be offered to up to 50 investors that meet certain eligibility requirements.
The changes include:
Carry and/or co-investment vehicles
A recognition that co-investment can, in some cases, form part of a fund's carry/incentive arrangement.
Investor eligibility
General: clarification that investor eligibility is satisfied upon admission. That eligibility can continue to be relied upon despite a status change, for example a departing 'employee, director, partner or expert consultant’.
Transfers (for example death or bankruptcy): for any involuntary interest, such as on death or bankruptcy, there is no requirement for the transferee to qualify through the same criteria as the transferor, but the transferee will, itself, need to meet the investor eligibility requirements as defined in the JPF Guide.
Service providers: expansion of the categories of ‘professional investor’ for the benefit of the JPF's service providers, by:
replacing 'senior employee' with 'financially sophisticated employee' to take a more inclusive approach to the changing demographics within JPF fund management and/or advisory teams
including a reference to 'expert consultant' for added flexibility
"We have clarified that our expectation is that there should be at least one or more Jersey resident directors appointed to a JPF board or to its governing body. The 2024 JPF annual compliance return will request additional data by asking how many Jersey resident or non-Jersey resident directors are on the board of the JPF or its governing body, and how many of those directors are employees of the Jersey-based designated service provider (DSP) or a group entity of the DSP", the island regulator said.
Arrangements that fall outside of JPF:
"We have made changes to the section that deals with arrangements that are not to be treated as JPFs. These include certain family (including family office) arrangements as well as some incentive arrangements (for example carry and/or co-investment vehicles).
"The definitions of employees and family connections (including the term 'relative') have been widened and now include trusts established for a person satisfying the wider definition of 'family connection' (not just for a specific person or their dependents)."
The regulator also clarified its expectation that a JPF should:
be established in Jersey and/or,
have its governing body and management and control in Jersey.
Where a JPF is established in a country or territory outside of Jersey, having its governing body and management and control outside of Jersey, post authorisation it will request additional data on the JPF from the DSP, to establish the JPF’s indirect but relevant nexus to Jersey.
It has also added certain consequential changes/references to the Money Laundering (Jersey) Order 2008 and the JFSC's Outsourcing Policy in the guide.
From July 2024, it have removed the optionality for a regulated person who is only registered for investment business under the Financial Services (Jersey) Law 1998 to apply to act as the DSP for a ‘very private’ (15 or fewer offers/investors) JPF.