JFSC Jersey Private Fund Guide [UPDATE 2 JULY 2024]

The JFSC has updated our Jersey Private Fund Guide to improve the Jersey Private Fund regime.

The updates are the product of significant collaboration with the Government of Jersey, the Jersey Funds Association (JFA), the Jersey Association of Trust Companies (JATCo) and Jersey Finance Limited.

About the Jersey Private Fund Guide

The Jersey Private Fund (JPF) Guide:-

• Sets out the JPF regime.
• Provides fund promoters with a cost-effective, fast-track (48-hour) regulatory approval process for their private fund. This can be offered to up to 50 investors that meet specific eligibility requirements.

What has changed?

The changes are shown in the consolidated redline version of the updated guide marked up against the 2022 version

• https://www.jerseyfsc.org/media/7674/consolidated-redline-jpf-guide-2022-vs-2024.pdf

The JPF Guide is up-to-date and includes:

1. Carry and/or co-investment vehicles.
   • A recognition that co-investment can sometimes form part of a fund's carry/incentive arrangement.

Investor Eligibility

2. General: 
• The JFSC has clarified that investor eligibility is satisfied upon admission. That eligibility can continue to be relied upon despite a status change, such as a departing 'employee, director, partner or expert consultant’.
3. Transfers (for example, death or bankruptcy): 
• For any involuntary interest, such as on death or bankruptcy, the transferee does not need to qualify using the same criteria as the transferor, but the transferee will need to meet the investor eligibility requirements as defined in the JPF Guide.
4. Service providers: 
• The JFSC has expanded the categories of ‘professional investor’ for the benefit of the JPF's service providers by:
  • Replacing 'senior employee' with 'financially sophisticated employee' take a more inclusive approach to the changing demographics within JPF fund management and/or advisory teams, including a reference to 'expert consultant' for added flexibility.

5. Governing body
• The JFSC has clarified that it expects at least one or more Jersey resident directors to be appointed to a JPF board or its governing body.
• The 2024 JPF annual compliance return will request additional data by asking:-
  • How many Jersey resident or non-Jersey resident directors are on the board of the JPF or its governing body, and
  • How many of those directors are employees of the Jersey-based designated service provider (DSP) or a group entity of the DSP?

6. Arrangements that fall outside of JPF:
• The JFSC has changed the section that deals with arrangements not to be treated as JPFs. These include:-
  • Specific family (including family office) arrangements and some incentive arrangements (for example, carry and/or co-investment vehicles).
• The definitions of employees and family connections (including the term 'relative') have been widened. They now include:-
  • Trusts are established for a person satisfying the broader definition of 'family connection' (not just for a specific person or their dependents).
• The JFSC has also clarified our expectation that a JPF should:-
  • Be established in Jersey and/or,
  • Have its governing body and management and control in Jersey.
• Where a JPF is established in a country or territory outside of Jersey, with its governing body, management, and control outside of Jersey, the JFSC will request additional data on the JPF from the DSP after authorisation to establish the JPF’s indirect but relevant nexus to Jersey.

6. Additional fundamental changes
• The guide now includes specific consequential changes/references to
  • The Money Laundering (Jersey) Order 2008 and
  • The JFSC's Outsourcing Policy.
• From July 2024, the JFSC removed the option for a regulated person only registered for investment business under the Financial Services (Jersey) Law 1998 to apply to act as the DSP for a ‘very private’ (15 or 5 or fewer offers/investors) JPF.
• The JPF Guide has been updated to reflect this change of policy.

SOURCE

• https://www.jerseyfsc.org/news-and-events/updated-jersey-private-fund-guide-published-today/