Open and Closed-Ended Funds
Life of the Fund

In Guernsey Protected Cell Companies, it was noted that the protected cell company (PCC) structure lends itself well to multi-class funds. This update provides some background on the regulation of funds in Guernsey.

Open and Closed-Ended Funds

Funds (or schemes) can be established either as 'open-ended' or 'closed-ended' funds.

According to the Protection of Investors (Bailiwick of Guernsey) Law 1987 (as amended), an open-ended fund permits investors to (i) have their units redeemed or repurchased by, or out of funds provided by, the scheme, or (ii) sell their units on an investment exchange at a price related to the value of the property to which they relate.

By comparison, a closed-ended fund will not generally permit redemption by the investor at the investor's option. An investor is usually locked in for the duration of the life of the fund, unless he can sell his interest to a third party.

Only open-ended funds can be authorized under Guernsey law and therefore regulated by the authorities.


Funds, whether open-ended or closed-ended, may be structured in any of the following ways:

  • corporate entities (including the use of the PCC structure);

  • unit trusts; or

  • limited partnerships.

Life of the Fund

An open-ended fund will not usually have a fixed life. However, a closed-ended fund will usually have a fixed life. Alternatively, it may be structured in such a way so as to give investors the opportunity to elect whether to continue their commitment in the fund after a certain date.


The finance industry in Guernsey is regulated by the Guernsey Financial Services Commission (GFSC).

The following legislation is relevant in the regulation of funds in Guernsey: (i) the Protection of Investors (Bailiwick of Guernsey) Law 1987, as amended, and (ii) the Control of Borrowing (Bailiwick of Guernsey) Ordinance 1959, as amended.

The Protection of Investors Law
This legislation provides the framework for the authorization of open-ended funds and the licensing of various service providers.

The GFSC is empowered under this law to make rules relating to these matters, namely with regard to the prerequisites for authorization and the continuing obligations of the fund and the service providers.

Authorized funds may be established in any of the following classes:

  • Class A. These are UCITS-equivalent(Undertakings for Collective Investments in Transferable Security) funds, which closely follow the rules that apply to UK collective investment schemes under the Financial Services Act 1986. Class A funds may be marketed in the United Kingdom, Australia, Hong Kong, Japan, the Netherlands, Republic of Ireland and Switzerland, upon application to the relevant authorities in those jurisdictions.

  • Class B. These permit greater flexibility than Class A funds as regards investment and borrowing, and are suitable for the retail as well as institutional market.

  • Class Q. These are targeted at qualifying professional investors, that is, organizations or companies with net assets of at least £2 million or individuals with a minimum net worth of £500,000.

For a current list of authorized funds, please refer to the GFSC's web site at

The Control of Borrowing Ordinance
Closed-ended funds are not eligible for authorization under the Protection of Investors Law. However, these funds require GFSC approval under the Control of Borrowing Ordinance for the raising of monies by the issue of shares, units or other forms of participation to members of the public.

There are no formal rules under the Control of Borrowing Ordinance. Therefore, the application procedures for approval of a closed-ended fund are more flexible.

However, in giving its approval under the Control of Borrowing Ordinance, the GFSC will, as in the case of authorization under the Protection of Investors Law, have regard to the status and reputation of the promoters, and their track record.

For further information on this topic please contact Sean Cheong at Collas Day by telephone (+44 1481 723191) or by fax (+44 1481 711880) or by e-mail ([email protected]).
The materials contained on this web site are for general information purposes only and are subject to the disclaimer.