The Guernsey Financial Services Commission (GFSC) introduced the Private Investment Fund Rules 2016 (PIF Rules) which created a new class of private fund under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 (as amended) (POI Law). PIFs may be open-ended or closed-ended, and are targeted at managers with a relatively small investor base who are looking for a more flexible regime.
- there should be no more than 50 investors (or persons holding an ultimate economic interest) in a PIF;
- for open-ended PIFs the manager must apply a continuous rolling test whereby in the previous twelve months no more than 30 new ultimate investors may be added to the PIF;
- a licensee domiciled in Guernsey (other than the locally licensed administrator) must take responsibility for the management of the PIF (Manager) and confirm that it has assessed that the investors are able to sustain any loss of investment in the PIF;
- a PIF is not required to appoint a custodian, although if open- ended, custodial arrangements will need to be approved as part of the application process.
JPFs were introduced in 2017 and effectively replaced three existing Jersey products: Very Private Funds, Private Placement Funds and COBO Only Funds. JPFs are required to obtain a consent from the Jersey Financial Services Commission (JFSC) issued under the Control of Borrowing (Jersey) Order 1958, which sets out certain conditions with which a JPF must comply.
- can only be marketed to 50 or fewer “professional investors” or eligible investors (i.e. investors with a minimum investment value of £250,000);
- can be open-ended or closed-ended;
- has no requirement for Jersey-resident directors (but the JFSC have stated that they would generally expect a JPF to have Jersey-resident directors);
- must appoint a designated service provider (DSP), which is registered pursuant to the Financial Services (Jersey) Law 1998 – in practice the fund’s administrator will generally fulfill this role;
- must communicate an investment warning and disclosure statement to its potential investors ahead of them making an investment into the JPF;
No limit on the number of investors that may be marketed to, but there is a cap on the number of investors that may be admitted to the fund (no more than 50, subject to an exemption for managers acting as agent for investors in a collective investment scheme)
Must appoint a Guernsey licensed administrator. PIF also needs a Guernsey Manager (application can be made for this entity at the same time as the fund)
Application: £5,757 Annual: £5,096 (includes application and annual fees for the Manager)