24th December 2016
On 16 November 2016, the Guernsey Financial Services Commission launched its regime for Private Investment Funds (PIF), which will provide fund managers with greater flexibility and simplicity.
The PIF regime addresses the perceived gap in the suite of fund products available in the Bailiwick of Guernsey. Where there is a close relationship between investors and the fund manager the new PIF regime removes the formal requirement for information particulars such as a prospectus and significantly reduces the cost and processing time of launching a fund. The duration of the applications process would be one business day.
Under the new regime, PIFs can be open or closed-ended and may be established as companies, limited partnerships or unit trusts; the PIF will be subject to the Private Investment Fund Rules 2016 (the Rules), which set out the mandatory requirements for a private investment fund and provisions relating to the management of conflicts of interest, submission of statistical information and audited accounts.
The Rules allow PIFs to have up to 50 legal or natural persons with an economic interest and can be marketed to an unlimited number of potential investors. Additionally, PIFs will be registered funds and will require a licensed manager to provide warranties on the fitness of the promoter and the ability for the investors to assume loss.
Commenting on this development, Jon Young Head of Langham Hall Guernsey highlighted the appeal “The introduction of the PIF completes the suite of fund products available in Guernsey and ensures that fund managers have the choice of products to meet theirs and their investors requirements. In the short time since this product was launched, Langham Hall has received a number of enquires, a clear sign that the regime has been well received.”
The PIF regime will require the appointment of a Designated Administrator licensed by the GFSC, for which Langham Hall can assist.
It is thought that the PIF regime will prove particularly attractive to sub threshold managers under the Alternative Investment Fund Managers Directive (AIFMD). The island is also well placed under the AIFMD, following the launch of the Manager Led Product (MLP) back in May 2016. By placing the regulations on the AIFM only, duplication of regulatory requirements over several entities is avoided. Regulatory standards are maintained by virtue of the regulatory requirements on the AIFM.
If you would like to discuss this or any other matter, please contact:
Jon Young - Head of Guernsey
T. +44 1481 731 750
M. +44 77 8116 4521
Marie Fitzpatrick - Business Development Director
T. +44 20 3597 7909
M. +44 78 2793 1648