Jersey Private Funds Factsheet

• The definition of professional investor includes 12 broad categories of investors that can invest in a JPF, and includes:
  • Professional clients as defined by the UK Financial Conduct Authority’s Conduct of Business Sourcebook ;
  • ‘US accredited investors’ as defined by the US Securities and Exchange Commission in rule 501 of Regulation D – Rules Governing the Limited Offer of Sale of Securities Without Registration Under the Securities Act of 1933.
• May be open or closed-ended
• May be listed, with the consent of the JFSC
• No requirement to appoint an auditor
• Every JPF must appoint a regulated full substance designated service provider (DSP) in Jersey0
• May be an alternative investment fund (AIF), in which case Jersey’s Alternative Investment Fund Managers Directive (AIFMD) legislation and Code of Practice for AIFs and AIF services business will apply
• No explicit requirement to appoint Jersey-resident directors (or Jersey resident GP or trustee director as appropriate), although the Jersey Financial Services Commission (JFSC) would ordinarily expect it
• The Designated Service Provider and, to the extent applicable, the governing body of the JPF are required to comply with the Money Laundering (Jersey) Order 2008 and the JPF will be a “specified Schedule 2 business” for the purposes of the Proceeds of Crime (Jersey) Law 1999 and the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008

Provided that certain criteria are met:

• The JPF will not be required to comply with the Code of Practice for Certified Funds
• The promoter of the JPF will not require prior JFSC approval
• Personal questionnaires will not be required for any director, beneficial owner/controller, money laundering reporting/compliance officer or service provider to the JPF other than the DSP (through the DSP’s own regulatory requirements)
• The JPF will not be required to have an offering document but may do so (however, if the fund is marketed into the EEA, it must comply with the applicable sections of the AIF code of practice and may require an offer document)
• The JFSC’s policy on outsourcing will not apply to the JPF (but will apply to the DSP)

A JPF established in Jersey may take the following forms:

• A company (including a protected cell company, incorporated cell company or any cell thereof);
• One or more limited partnerships (including limited partnerships, limited liability partnerships, separate limited partnerships or incorporated limited partnerships)
• A unit trust constituted under the laws of Jersey
• Almost any non-Jersey structure, provided certain conditions are met, so long as COBO consent is required.

A JPF must appoint an existing full-substance Jersey-based DSP and cannot change the DSP without JFSC approval (the DSP cannot be a managed entity for fund services business (FSB) purposes).

If there are 15 or fewer offers/investors, the DSP may be registered by the JFSC to conduct any class of FSB, trust company business and/or investment business within the meaning of the Financial Services (Jersey) Law 1998 (FSJL).

Where there are more than 15 offers, the DSP must be registered by the JFSC under the FSJL to carry on one or more of class V (administrator), class U (manager), class X (investment manager) or class ZG (trustee) of FSB.

While the JPF regulation focusses on the DSP rather than the fund itself, the duties and responsibilities of the DSP do not replace those of the JPF’s governing body, which remains responsible for marketing and capital raising etc.

Jersey service providers to a JPF may continue to rely on the Financial Services (Investment Business) (Restricted Investment Business – Exemption) (Jersey) Order 2001 and/or the Financial Services (Trust Company Business) (Exemption No.5) (Jersey) Order 2001 (the PIRS orders), so as not to be required to be licensed to provide services to a JPF.

The Designated Service Provider and, to the extent applicable, the governing body of the JPF are required to comply with the Money Laundering (Jersey) Order 2008 and the JPF will be a “specified Schedule 2 business” for the purposes of the Proceeds of Crime (Jersey) Law 1999 and the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008

The DSP is responsible for:

• Making all reasonable enquiries to ensure that the JPF meets all the establishment and ongoing eligibility criteria (these are set out in the JFSC’s JPF Guide)
• Ensuring that all due diligence is carried out and that all relevant AML requirements are met
• Ensuring that all documentation relating to any due diligence enquiries will be readily retrievable in Jersey
• Completing and submitting an application form for authorisation of the JPF and any notices of  change or event
• Completing and submitting an annual JPF compliance return

As defined in the JPF Guide, a professional investor is a person or entity that meets the criteria set out in paragraph 1 of Annex A of the Guide.

An overview of who qualifies as a Professional Investor under the JPF Guide, a professional investor may include:

• Individuals or entities whose regular business involves investing or providing investment advice
• High-net-worth individuals with over USD $1 million in net assets (excluding their primary residence and insurance rights)
• Entities with at least USD $1 million in assets available for investment
• Regulated financial service providers and their associates involved with a JPF
• Financially sophisticated employees, directors, partners, or consultants of professional firms or service providers
• Carried interest schemes, co-investment vehicles, and family trusts linked to qualifying individuals
• Governments and public authorities, both domestic and international
• Professional clients as defined under EU and UK financial regulations
• US accredited investors under SEC Rule 501 of Regulation D
• Other eligible investors as referenced in the JPF Guide or approved on a case-by-case basis

If all the criteria are met, a JPF may be authorised by the JFSC within 24 hours. Fees are specified by the JFSC and available on their website.

Separate application timescales and fees are applicable for the incorporation or registration of the Jersey company or partnership or where the JPF is also an AIF.