Existing statutory prospectus content requirements for Jersey investment funds that fall within the definition of 'certified funds' will soon be replaced by a new prospectuses order, the Collective Investment Funds (Certified Funds - Prospectuses) (Jersey) Order 2012. The order was signed on May 17 2012 by the minister for economic development and will come into force in November 2012. It demonstrates Jersey's commitment to continuing to meet the international standards laid down by the International Organisation of Securities Commissions for funds and prospectus regulation.
The new order amalgamates and amends the existing prospectuses orders - namely, the Collective Investment Funds (Unclassified Funds) (Prospectuses) (Jersey) Order 1995, which applies to funds established as unit trusts and open-ended investment companies, and the Companies (General Provisions) (Jersey) Order 2002, which applies to funds established as closed-ended companies.
Only certified funds are caught by the new order - that is, funds that have been issued with a certificate pursuant to the Collective Investment Funds (Jersey) Law 1988. This includes expert funds, listed funds and unclassified funds, but excludes unregulated funds, recognised funds and private placement funds. Furthermore, prospectuses for both closed and open-ended structures are caught by the requirements of the new order, whether established as corporate, unit trust or limited partnership vehicles. This represents a change for fund structures established as closed-ended limited partnerships, which to date have not been subject to the strict application of the 1995 order or the 2002 order mentioned above.
The Jersey Financial Services Commission has issued guidelines to the funds industry detailing how it views the application of the new order to existing prospectuses and to the disclosure requirements where sub-custodians within the same corporate group are appointed to a fund.
Under the guidelines, a prospectus need not comply with the new order if the following conditions are satisfied:
- Evidence is provided to the commission that a draft form of the prospectus has been issued to prospective investors within one month of the date on which the new order comes into force;
- The final prospectus for which approval is sought is in substantially the same form as that draft prospectus; and
- The prospectus complies with those requirements in relation to prospectus content that were applicable when the draft prospectus was issued.
The new order requires a prospectus to set out details concerning any delegate of a fund service provider. In relation to sub-custodians, the guidelines confirm that detailed disclosure of each sub-custodian engaged is not required where they are part of the same corporate group. The prospectus can instead make reference to use of members of the same corporate group as sub-custodians.
Any prospectus that meets the above conditions but is not issued formally in final form within one year of the end of the month following the introduction of the new order must comply with the terms of the new order in full.
In the case of certified funds that are compliant with neither the 1995 order nor the 2002 order (eg, expert/listed funds established as limited partnerships), prospectuses prepared for funds certified before the date on which the new order comes into force will be grandfathered for a period of one year following such date unless, during the marketing period of the fund, a significant change occurs in the matters stated in the prospectus or a significant new matter arises that should be included in the prospectus. In such case the grandfathering period will elapse at that point.
In the case of prospectuses that have been prepared and certified under the 1995 order, such prospectuses will be grandfathered for one year following the date on which the new order comes into force. During that period, the 1995 order will continue to apply, unless during that year any significant change occurs in the matters stated in the prospectus or any significant new matter arises that ought to be stated in the prospectus. In such case the grandfathering period will elapse at that point.
Prospectuses that have been prepared and certified under the 2002 order will be grandfathered for an unlimited period. The 2002 order will continue to apply until a new issue of units in the fund is marketed, at which point the grandfathering period will elapse and the prospectus must comply with the requirements of the new order.
The application of the new order should be considered when updating or preparing new prospectuses for a certified fund, while bearing in mind the commission guidelines in respect of draft prospectuses and the grandfathering provisions outlined above.
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