Jersey Funds Law Series: Jersey Private Funds – Key Features

KEY TAKEAWAYS

• A JPF is a private fund product which is lightly regulated

• A JPF can be established in various forms

• A JPF requires a designated services provider in Jersey

The hugely popular Jersey Private Fund ("JPF") has been a global success story for Jersey since its launch in 2017 following the publication of the Jersey Private Fund Guide (the "JPF Guide") by the Jersey Financial Services Commission (the "JFSC").

This simplified Jersey private fund product was established on the basis of a light-touch regulatory regime, with emphasis placed on the regulated Jersey fund administrator (the "designated service provider" or "DSP") to assess the suitability and track record of a fund promoter and to keep the JFSC notified of any changes to the fund over its lifespan. Jersey has a wealth of regulated administrators with experience in all asset classes able to provide the support and services of the DSP role.

Key features of a JPF

• A JPF benefits from a fast track approval process (24 hours from the submission of a fully completed JPF application and the requisite application fee).

• JPFs are very cost effective to establish with very little ongoing regulatory requirements.

• Under the Collective Investment Funds (Jersey Private Fund) (Jersey) Order 2025 (the "JPF Order") which came into effect on 6 August 2025, any offer for subscription, sale or exchange of units of a JPF must be addressed exclusively to a "restricted group of investors" to ensure that the offer does not in any way constitute an "offer to the public" within the meaning of Article 3 of the Collective Investment Funds (Jersey) Law 1988, as amended (the "CIF Law").

• Under the JPF Order, there is no limit on the number of offers for investment and/or investors in a JPF. But if an existing JPF authorised prior to 6 August 2025 wishes to rely on the JPF Order, it must hold a relevant consent dated on or after 6 August 2025. An existing JPF can apply to the JFSC for an updated relevant consent at any time, however, until such time as that relevant consent is reissued, that JPF's relevant consent will continue to have the conditions on the number of offers or investors and will remain subject to the "restricted circle of persons" test under the CIF Law.

• Each investor must be a "professional" or an "eligible" investor (as such terms are defined in the JPF Guide) and/or make a minimum investment of £250,000 (or an equivalent amount in another currency) and acknowledge certain prescribed investment warnings and disclosure statement.

• A JPF may be open or closed ended with no investment or borrowing restrictions.

• A JPF can be established in the form of a company, (including a protected cell company, an incorporated cell company or any cell thereof, or a limited liability company), a partnership (including a limited partnership, limited liability partnership, separate limited partnership, or incorporated limited partnership) or a unit trust; or where established overseas, in the equivalent forms available in the relevant overseas jurisdiction.

• A JPF may seek a technical listing with no active trading, or where units, shares or interests have been privately placed with select investors ie no public offering. In these circumstances, a JPF will only be eligible for a "technical listing" with the prior approval of the JFSC.

• There is no requirement for a JPF to have an offer document unless it is specifically required by another statutory requirement or applicable law. If a JPF has an offer document, that document must contain all material information required by investors and their professional advisers for the purposes of making an investment in the JPF.

• While the establishment of any types of Jersey private funds which existed prior to the introduction of the JPF Guide (including a very private fund ("VPF"), a private placement fund ("PPF") or a CoBO only fund) is no longer permitted, existing VPFs, PPFs and CoBO only funds which have been issued with a relevant consent prior to the introduction of the JPF Guide may continue in operation until the end of their natural life or, alternatively, they (through their duly appointed DSP) may apply to the JFSC to convert into a JPF by completing and submitting a JPF Form with the prescribed application fee.

• An existing collective investment fund ("CIF") (including, for example, an expert fund, an eligible investor fund or a listed fund) may convert into a JPF, provided it meets all the eligibility criteria in the JPF Guide and confirmation is provided that the CIF has not been 'offered to the public', by going through the process of revoking its CIF certificate under the CIF Law, paying the prescribed application fee and seeking the written confirmation from its investors including an acknowledgement and acceptance in writing of the prescribed investment warning and disclosure statement.

• There is no requirement to appoint Jersey directors (albeit the JFSC does expect at least one or more resident Jersey directors to be appointed) or to audit the JPF from a Jersey perspective, although these may be necessary where the JPF is marketing into Europe for the purposes of the Alternative Investment Fund Managers Directive (the "AIFMD").

• Each JPF must appoint a DSP which is an existing Jersey full substance entity and there may be no change to the DSP without the prior approval of the JFSC.

• The promoter of a JPF will not need the prior approval of the JFSC.

• Jersey service providers to a JPF may rely upon the Financial Services (Investment Business) (Restricted Investment Business - Exemption)) (Jersey) Order 2001 and/or the Financial Services (Trust Company Business) (Exemption No.5) (Jersey) Order 2001 (together the "PIRS Orders") in order to avoid the requirement to be licensed to provide services to a JPF.

• A JPF that is to be marketed into the European Union or European Economic Area may do so through National Private Placement Regimes ("NPPRs"). The JPF will require the issue of an AIF certificate by the JFSC, and will need to comply with the Code of Practice for Alternative Investment Funds and AIF Services Business (the "AIF Codes").

• A Jersey-based AIFM of a JPF (unless it qualifies as a "sub-threshold" AIFM) will need to be licensed by the JFSC pursuant to the Financial Services (Jersey) Law 1998 as a provider of AIF Services Business and must comply with relevant sections of the AIF Codes.

• Where the AIFM of the JPF is "sub-threshold", only minimal requirements of the AIF Codes will apply. To qualify as a subthreshold AIFM, the manager must manage leveraged assets valued at less than €100 million or manage unleveraged and closed-ended assets valued at less than €500 million.

• Where a 'resident company' (a company tax resident in Jersey) or a 'resident partnership' (a partnership with the place of effective management in Jersey), for example, a general partner of a JPF partnership or a self-managed corporate JPF, will be conducting 'fund management business', it will be required to comply with the requirements of the Taxation (Companies - Economic Substance) (Jersey) Law 2019, as amended or Taxation (Partnerships - Economic Substance) (Jersey) Law 2021, as amended (as applicable).

• A JPF will need to register in Jersey with the JFSC under the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008 in respect of carrying on certain Schedule 2 activities as a fund, as specified in the Proceeds of Crime (Jersey) Law 1999.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.