01 July 2020

A guide to funds and private equity in Jersey

Jersey is one of the world’s major international finance centres. Its successful combination of stability and reliability combined with tax neutrality has kept Jersey at the forefront of global finance for almost half a century. During this time Jersey has gained a strong reputation as a prime location in which to establish offshore investment funds.

The industry has developed within the Island’s stable political and fiscal infrastructure. Government determination to encourage high quality business to the Island, and the support offered by the sophisticated and comprehensive infrastructure of laws and regulations, combine to promote investor confidence.

The wealth of experience and expertise offered by the Island’s highly skilled financial service providers gives an unparalleled welcome to businesses and investors alike and Jersey enjoys ease of access to the major UK investor market. Although a number of Jersey’s service providers have particular experience with private equity, real estate and funds of funds, Jersey has a growing reputation for more emerging asset classes.

With a business day that begins before Tokyo closes and continues well into New York trading time and a close proximity to Europe whilst retaining independence from the European Union, Jersey offers both location and time zone benefits. Jersey offers seasoned and proven service providers across a variety of disciplines so substance/management of entities can be demonstrated “on the ground” (e.g. administration, accounting, banking and custody providers).

Please download the full guide to funds and private equity in Jersey for more information. 

Jersey funds regulation in brief

Jersey regulatory classifications provide a “safe harbour” with 3 day approval from the Jersey Financial Services Commission (“JFSC”) for the majority of non-retail funds.

Alternative investment fund managers directive

All Jersey funds (other than Notification Only Funds) are eligible to be marketed into the European Union and European Economic Area (“EU/EEA”) in accordance with the Alternative Investment Fund Managers Directive (“AIFMD”) through national private placement regimes and (once available) through the passporting regime. Jersey funds with a Jersey manager which are not actively marketed into the EU/EEA fall outside the scope of AIFMD. See “Alternative Investment Fund Managers Directive” on page 12.

Fund categories

Jersey funds are divided into the following main categories:

Jersey private fund regime

Fast and flexible, with minimal requirements for funds with fewer investors:

  • Replaces “COBO only” and “very private” funds
  • Up to 50 investors, must not be listed on a stock exchange
  • No limit on fund size, no investment or borrowing restrictions
  • Open or closed for redemptions by investors 
  • Open to ‘professional’ investors and those investing £250,000 
  • “Fast track” approval (self-certification by the fund administrator)

Without EU marketing 

  • 48-hour regulatory approval 
  • No requirement for:
    • Audit
    • Jersey directors 
    • A PPM 
  • No ongoing regulation

EU marketing (sub-threshold Jersey AIFM)

  • 10-day regulatory approval 
  • No requirement for:
    • Audit
    • 2 Jersey directors 
  • No ongoing regulation (except limited applicable AIFMD rules)

EU marketing (Jersey AIFM is NOT sub-threshold)

  • 10-day regulatory approval 
  • 2 Jersey directors (or 3, if the AIFM will directly handle client assets)
  • No ongoing regulation (except limited applicable AIFMD rules)

Regulated public funds 

Suitable for funds with more than 50 investors or where a regulated product is needed:

  • 3-day approval (10 days for a new “special purpose” service provider company) 
  • No investment or borrowing restrictions
  • Eligible for EU marketing

Expert Funds

“Expert Investors” only (any one of 9 categories, one of which is an investor of $100,000 or more):

  • Open or closed for redemptions by investors 

Listed Funds

Closed-ended funds (no absolute investor right to redeem):

  • Units listed on an approved stock exchange or market 

Eligible Investor Funds

“Eligible Investors” only (any one of 11 categories, one of which is an investor of $1,000,000 or more):

  • Open or closed for redemptions by investors
  • Must be marketed into at least one EU/EEA country 

Notification Only Funds

No regulation means less cost. Cannot be marketed in EU countries (but suitable for all other investors):

  • “Eligible Investors” only (any one of 11 categories, one of which is an investor of $1,000,000 or more)
  • No authorisation process (simply file a notice)
  • No ongoing regulation 
  • No limit on the number of investors, no investment or borrowing restrictions, no audit requirement for limited partnerships and unit trusts 

Investment vehicles which are not funds

Vehicles which hold a single asset or which carry on a business (such as property development) generally fall outside Jersey’s funds regulations. An investment vehicle will not be regulated as a fund in Jersey unless it is a scheme or arrangement for the investment of capital which (a) has as its object or one of its objects the collective investment of capital; and (b) operates on the principle of risk spreading, or units are to be bought back or redeemed continuously or in blocks at short intervals upon the request of the holder and out of the assets of the fund, or units will be issued continuously or in blocks at short intervals. 

Fund vehicles

Jersey funds can generally be established as:

  • a limited partnership (there are three kinds in Jersey, with and without legal personality); 
  • a unit trust; or 
  • a company (including as a protected cell or incorporated cell company). 

Special purpose entities as service providers

A “special purpose” Jersey vehicle (“SPV”) can be established to act as manager, investment manager/adviser, general partner or trustee to one or more Jersey or non-Jersey funds.

These SPVs generally do not need to be regulated where they act for Jersey Private Funds or as a general partner or trustee of a Notification Only Fund. It is not usually possible to establish an SPV investment manager/adviser in Jersey for a Notification Only Fund.

Jersey “special purpose” service providers

Where appointed in relation to a CIF, such an SPV must be licensed by the JFSC. An expedited approval process exists allowing licensing in around two weeks with the support of a local administrator. 

The full guide to funds and private equity in Jersey covers the following topics:

  • Jersey Private Funds
  • Expert Funds
  • Listed Funds
  • Regulated Eligible Investor Funds
  • Retail Funds and other CIFs
  • Recognised Funds
  • Notification Only Funds
  • Alternative Investment Fund Managers Directive (“AIFMD”)
  • Fund vehicles
  • The International Stock Exchange ("TISE")
  • Taxation
  • Fund service providers

For further assistance or professional advice please contact one of our partners listed on this page or a member of our Jersey investment funds team

Our people