Updates to the Jersey Private Fund Guide

The Jersey Private Fund (‘JPF’) regime has been a huge success since its inception in 2017 with over 700 authorised to date, offering sponsors a fast-track (48 hour) regulatory approval process for a flexible and cost-effective fund with access to EU and non-EU private markets.

On 2 July 2024, the Jersey Financial Services Commission (‘JFSC’) issued updates to the Jersey Private Fund Guide (‘JPF Guide’) following consultation and feedback from industry members, and as a whole, has sought to refine and improve the existing regime.

The material updates are as follows:

1. Investor eligibility:

  • Clarification that investor eligibility is determined and satisfied upon admission into the JPF, and such eligibility may be relied upon despite a status change for the investor (for example a departing employee director, partner, or expert consultant etc).
  • Updating the definition of ‘eligible’ in relation to employees of investment businesses or other service providers, by removing the ‘senior’ employee definition and replacing with ‘financial sophisticated’.
  • Clarification regarding transfers of interest, whereby there is no requirement for the transferee to qualify as a ‘professional investor’ on the same criteria as the transferor, provided the transferee meets the definition of professional or eligible under the JPF Guide.

2. Governing body:

Clarified the JFSC’s expectation that there should be at least one or more Jersey resident director appointed to the JPF board/governing body.

3. Carry and co-investment vehicles:

It is now recognised that a co-investment scheme may form part of the JPF’s carry and/or incentive arrangement and provides greater flexibility as the vehicles can be admitted into the JPF without counting towards the ’50 or fewer’ investors test (provided they meet the criteria of the JPF Guide).

4. Arrangements that fall outside of the JPF regime:

  • The JPF Guide has been revised in respect to schemes that would be ‘exempt’ and therefore not treated as a JPF (under Annex B of the JPF Guide), where there are employee or family connections between investors in the vehicle. The definitions around employee or family connections (including ‘relative’) have been widened and now include trusts established for a person satisfying the new definition of ‘family connection’.
  • Where a JPF is established outside of Jersey, it is expected that the management and control be in Jersey. That being said, it is possible for both to be outside of Jersey subject to the provision of information to the JFSC to establish the ‘indirect but relevant nexus to Jersey’.

The collaborative approach by the JFSC with industry participants and the subsequent amendments brought forward are only believed to make the regime even more attractive to global fund managers, providing further flexibility to a reliable, well-regulated and cost-efficient jurisdiction, strengthening Jersey’s position as one of the leading domiciles of choice for private alternative investment funds.

Our team has a vast range of experience establishing and operating JPFs since the regime was introduced, supporting sponsors throughout the life of their fund product from setup and marketing to compliance and administration.