Jersey Private Fund Regime Updates: Faster, Flexible, and Inclusive

Jersey Private Fund Guide: What’s New?

Carry and Co-Investment Vehicles

The new guidance recognises that co-investment can, in some cases, form part of a fund’s carry or incentive arrangements.

Investor Eligibility

• General: Investor eligibility is now clarified, ensuring that eligibility criteria are satisfied upon admission and remain valid even if there’s a change in status (e.g., a departing employee, director, partner, or expert consultant).
• Transfers: In involuntary interest transfer cases, such as death or bankruptcy, the transferee must meet the investor eligibility requirements, albeit not necessarily through the same criteria as the transferor.
• Service Providers: The ‘professional investor’ category has been broadened, replacing ‘senior employee’ with ‘financially sophisticated employee’ and including ‘expert consultant’ for greater inclusivity and flexibility.

Governing Body

The JFSC now expects at least one Jersey resident director to be appointed to a JPF board or its governing body. The 2024 JPF annual compliance return will collect data on board compositions, including how many Jersey or non-Jersey resident directors and how many of those directors are employees of the Jersey-based designated service provider (DSP) on the board.

Non-JPF Arrangements

Guidelines for arrangements not classified as JPFs, including family and incentive arrangements like carry and co-investment vehicles, have also been updated. The definitions for employees and family connections now encompass trusts established for individuals meeting the expanded definition of ‘family connection.’

Additional Key Changes

• Money Laundering and Outsourcing: References to the Money Laundering (Jersey) Order 2008 and the JFSC’s Outsourcing Policy have been included.
• DSP Regulation: From July 2024, regulated persons registered solely for investment business under the Financial Services (Jersey) Law 1998 will no longer be able to apply as the DSP for a ‘very private’ JPF (with 15 or fewer offers/investors).

Benefits of Using a Jersey Private Fund

The JPF regime offers fund promoters a cost-effective, fast-track (48-hour) regulatory approval process for private funds, allowing up to 50 eligible investors to participate. This streamlined approach has made Jersey an increasingly attractive domicile for private capital funds and JPFs remain a very popular solution for our fund clients.

The benefits of using a JPF include:

• Reputation: Jersey’s robust legal and regulatory framework and commitment to high standards of compliance add a layer of trust and security for investors. This has been recently recognised in the Jersey MONEYVAL Mutal Evaluation report[1] which confirms that Jersey’s effectiveness in preventing financial crime is among the highest level found around the world.
• Appropriate regulation: The JPF regime has been designed for professional or other eligible investors and is light touch from a regulatory perspective with checks and balances built in to ensure investor protection.
• Efficiency: The 48-hour fast-track regulatory approval process significantly reduces time-to-market for funds.
• Cost-Effectiveness: Lower setup and operational costs make JPFs a financially attractive option.
• Flexibility: The regime accommodates a variety of investment structures, including carry and co-investment vehicles.
• Investor inclusivity: Broad and clarified investor eligibility criteria enhance the attractiveness for a wider range of investors.

The enhancements to the JPF regime further solidify Jersey’s position as a leading jurisdiction for private funds, providing an optimal blend of efficiency, flexibility, and regulatory integrity.

Belasko are a next-generation fund administrator and in Jersey, our expert team provide full-scope, tailored fund administration services across all types of Jersey fund vehicles. We offer a stable tech-enabled solution, built on robust processes and procedures, that allows our clients to focus on enhancing performance and long-term growth. Further detail of the comprehensive changes can be found in the consolidated redline version of the updated guide.

Get in touch if you’d like to discuss how we can support you with your fund administration in Jersey:

Scott Nelson, Client Services Director ([email protected])

[1] https://www.jerseyfinance.je/news/updated-jersey-private-fund-guide/

[1] https://www.jerseyfsc.org/industry/international-co-operation/international-assessments/moneyval/2024-moneyval-evaluation/