Valsen Fiduciaries Funds

Jersey Unregulated Fund

The introduction of a new Unregulated Funds Regime (which commenced on 19 February 2008) created two classes of investment fund which can be established without regulatory approval under Jersey’s funds legislation.

The Unregulated Funds Regime provides fund promoters with certainty, flexibility and speed when establishing new funds and is expected to draw an immediate influx of new funds to Jersey.

About Jersey Unregulated Fund

An Unregulated Fund is a Jersey domiciled fund which is either to be offered to certain eligible investors only or is listed on an approved exchange or market and opts out of regulation as a fund in Jersey.

There are two types of Unregulated Funds: Unregulated Eligible Investor Funds and Unregulated Exchange Traded Funds.
Existing Unregulated Eligible Investor Funds have the option of converting to a new product known as the Jersey Eligible Investor Fund, subject to the relevant application process and the eligibility criteria so that they may continue their marketing activities in the EEA under EEA private placement regimes.

Unregulated Eligible Investor Funds

This category is a logical step on from the existing Expert Fund regime and recognizes that high net-worth, institutional and other sophisticated investors are likely to be able to make an adequate assessment of the risks involved in investing in an unregulated fund.

An Unregulated Eligible Investor Fund:

  • May be sold to or held by an unlimited number of “eligible investors”
  • Has no obligation to have any Jersey resident directors or any Jersey based administrator, custodian or other service providers;
  • Does not need to produce audited accounts;
  • May be listed, provided that the exchange permits transfer restrictions (to ensure that only eligible investors are allowed to invest in the fund);
  • Can be open or closed-ended and can be established as a Jersey company, protected cell company or incorporated cell company, as a limited partnership with at least one general partner which is a Jersey company or as a unit trust with at least one trustee or manager which is a Jersey company;
  • Must obtain a written acknowledgement from each investor confirming their acceptance of the risks involved in the fund (typically dealt with on the application form); and
  • Must file a notice with the Jersey FSC confirming that the eligibility requirements are met.

Unregulated Exchange Traded Funds

Achieving listing on an approved exchange is the only substantive requirement for an investment fund to qualify for unregulated status in this category. This route is expected to be particularly attractive, as a “technical” listing may not be overly onerous to achieve and may expand the fund’s potential investor base.
An Unregulated Exchange Traded Fund:

  • Must be listed on any one or more approved stock exchanges (initially comprising 50 exchanges in over 40 countries and which include the London, New York, Irish and Channel Islands stock exchanges, as well as AIM, Euronext and NASDAQ) and will be subject to the rules of any exchange on which it lists; Has no obligation to have any Jersey resident directors or any Jersey based administrator, custodian or other service providers;
  • Has no minimum investment level and no limit on the number of investors;
  • Does not need to produce audited accounts;
  • Can be established as closed-ended as a Jersey company, protected cell company or incorporated cell company, as a limited partnership with at least one general partner which is a Jersey company or as a unit trust with at least one trustee or manager which is a Jersey company;
  • Must include a specified investment warning in its offer documents notifying investors that the fund is not regulated in Jersey; and
  • Must file a notice with the Jersey FSC confirming that the eligibility requirements are met.

Jersey Unregulated Fund Legal Requirements

Requirements

Description

  1. Applicable legislation

Collective Investment Funds (Jersey) Law 1988

  1. Supervising Authority

Financial Service Commission

  1. Corporate vehicle permitted

State the legal form of the fund,

Company;

Partnership; or

Unit Trust;

Any other similar body formed under the laws of Jersey or any other jurisdiction which collects and pools investor funds for the purpose of collective investment.

  1. Share capital or equivalent

    • Minimum subscription

None

    • Minimum investors

None

  1. Directors / Partners / Trustees

    • Minimum number

2

    • Corporate Directors / Partners / Trustees allowed

No

    • Local Directors / Partners / Trustees required

No

  1. Fund functionaries required

    • Custodian

      • Custodian required

No

      • Local custodian required

No

      • Eligible custodian

A licensed Financial institution

Licensed Trustee services provider licensed

Any other person as the authority may approve

    • Fund manager / Investment Adviser

      • Fund manager required

No

      • Local fund manager required

No

      • Fund manager requires to be licensed

No

      • Eligible fund manager

A Licensed fund manager

    • Fund administrator

      • Fund administrator required

Yes

      • Local fund administrator required

No

    • External auditor

      • External auditor required

No

      • Local external auditor required

No

      • Eligible external auditor

There is no obligation under the Jersey Unregulated Fund Guide to appoint an auditor or audit its financial statements.

  1. Asset Requirements

    • Restriction on type of asset class invested

None

    • Asset diversification requirements

None

    • Limitation on size of the fund or total assets under management

None

  1. Local physical office required

No

  1. Prospectus / Offering Memorandum required to be filed

Yes

  1. Eligible for listing

Yes

  1. License fees

    • License application fee

USD 2,235

    • Annual license fee

USD 2,235

  1. Estimated license processing duration

3 months

Ongoing Obligations

Requirements Description
Monthly obligations
None
Quarterly obligations
None
Annual obligations
Maintain such accounting records and financial statements available for examination by the Registrar or any person authorized under his hand at its principal place of business or registered office in Jersey;
Other obligations

Notify Minister within a reasonable period of any of the following changes:

Changes in any Key Functionary in the Fund.

Change in the registered office address

Change of its agent in Jersey

Change in name or address of-

  • each director of the fund, if the fund is a company
  • each trustee of the fund, if the fund is a trust
  • each general partner of the fund, if the fund is a limited partnership.

Appointment, resignation or removal of a Director or officer

Tax Obligations and Other Exemptions
Requirements Description
Business Tax
Unregulated Funds are exempt from business tax.
Withholding Tax
No withholding tax is payable on dividends and/or interest payable.
Value Added Tax (VAT)
VAT is not applicable to Unregulated Funds in their entirety.
Stamp duty Act
Unregulated Funds are exempt from payment of stamp duty Tax
Trades Tax Act
Unregulated Funds are exempted
Immovable Property Transfer Restriction Act
Unregulated Funds are exempted
Immigration Decree
Unregulated Funds are exempted
Exchange Control Act
The provisions of the Exchange Control Act do not apply to Unregulated Funds.
Foreign Earnings Act
The Foreign Earnings Act is not applicable to Unregulated Funds in its entirety.

Benefits of a Jersey Unregulated Fund:

  • can be established as a Jersey company (including a protected cell company, an incorporated cell company or any cell thereof), limited partnership (LP), limited liability partnership (LLP), separate limited partnership (SLP), incorporated limited partnership (ILP), or unit trust
  • can also be established as virtually any non-Jersey structure so long as a COBO consent is required
  • is not required to appoint any Jersey-resident directors (or Jersey-resident GP or trustee directors, as appropriate)
  • Not required to appoint an auditor and has no limit on the number of investors, investment or borrowing restrictions and no need for Jersey service-providers