After an extensive period of collaboration with the Funds industry, the Jersey Financial Services Commission (JFSC) has announced updates to the Jersey Private Fund (JPF) regime.
The changes do not attempt to alter any of the benefits or advantages of the JPF and have been designed with the purpose of keeping the JPF regime as flexible and up to date as possible.
Launched back in 2017, the JPF continues to be a major success story for Jersey, providing a simple, cost effective and quick to market solution for investment funds in the Island. The JPF offers streamlined financial services regulation in the situation where a fund is marketed to a more restricted number of investors (up to 50 potential investors) who either meet certain eligibility criteria as professional investors or make a minimum commitment to the fund of £250,000 (or its currency equivalent).
The amendments to the JPF regime, through the updates to the Jersey Private Fund Guide, are primarily intended to add further clarity and to expand its flexibility.
In summary, the key changes are as follows:
1. Carry and/or co-investment vehicles – the JPF Guide now recognises that co-investment can, in some cases, form part of a fund’s carry/incentive arrangements.
2. Investor eligibility – The categories of “professional investor” have been expanded by the inclusion of “expert consultants” and the replacement of the term “senior employee” with the term “financially sophisticated employee” with the intention of including more members of management and advisory teams. It has also been made clear that investor eligibility is determined at the time of admittance to the JPF and that this remains notwithstanding a change in that status eg by becoming a “departing employee, director, partner or expert consultant”. The changes have also made it easier for transferees on an involuntary transfer (e.g. death or bankruptcy) to meet the qualifying investor requirements.
3. Governing Body – The JFSC have clarified the expectation that there should be at least one or more Jersey resident directors on the governing board of a JPF (often provided by the fund administrator in the island), reflecting what has already been common practice within the Island.
4. JPF Exclusions – there were already certain exemptions from the need for fund regulation in the case of certain family arrangements and these have now been broadened through an extension of the definition of “relative”.
A full copy of the updated and redline version of the JPF Guide is available on the JFSC’s website.
Please feel free to contact JTC Law if you would like to discuss any of the changes or receive a copy of the updates by email.
