The funds will be targeted at sophisticated investors including high net worth individuals and institutional investors.
The JFSC is said to be examining an investor’s minimum net worth for eligibility, thought to be a minimum of US$1m excluding the value of an investor’s main residence.
“As the Unregulated Funds Regime is aimed at the most sophisticated of investors, we’re expecting it to be particularly attractive to the hedge fund industry, but also a useful tool for the private equity and real estate sectors,” says Nigel Weston, partner at
“The new regime will offer promoters an alternative, to compete with other jurisdictions like those in the Caribbean. Its appeal will be based on simplicity, speed of delivery and certainty. It will offer European institutions a local time zone, a European location and the familiarity factor,” he says.
The new Unregulated Funds Regime includes an Unregulated Eligible Investor Category (UEIC) and an Unregulated Exchange Traded Category (UETC). Funds in these categories will not be approved or authorised by the JFSC.
According to Richard Thomas, chairman of the
The key features of the Unregulated Eligible Investor Fund are a minimum investment criteria of US$1m or a need to be a sophisticated investor; it applies to open and closed-ended funds and can be structured using companies, unit trusts and limited partnerships; there are no requirements for a Jersey-domiciled administrator, directors or custodian; there is no audit requirement; and open-ended vehicles are permitted to list but only on certain exchanges that allow transfer restrictions.
The key features of the Unregulated Exchange Traded Fund category are a choice of structures using companies, unit trusts and limited partnerships; no requirement for Jersey-domiciled administrators, directors or custodian; no audit requirements, it applies to closed funds only; and there is a choice of exchanges on which a listing may be made.
Mike Jeffrey, corporate partner at
While many private equity structures are closed-end so that the exchange-traded option might be available, the listed fixed-capital structures which have used the Euronext market would not be likely to follow this route. This is because the fast-track approach to listing on Euronext is available in Jersey as a result of the acceptance by the exchange of the regulatory regimes applied by the JFSC.
“Historically, the majority of schemes have not been listed in this area, although for pension trustees and insurance groups, the listing of such investments would assist in moving them from the unlisted to listed portions of the portfolio and so make easier the accommodation of a higher asset allocation to this market sector,” comments a Jersey-based funds lawyer.
Jersey’s existing regulated funds including the Expert Fund Regime, introduced by the JFSC in 2004 and the Listed Fund Guide, launched in 2007, have streamlined the authorisation process for regulated alternative investment funds and led to a surge of new business in the alternative funds sector.
The value of the funds industry in Jersey recently reached a new record high of £210bn and funds in the alternative investment fund sector accounted for more than half of that total.
“It’s useful to have different levels of regulation for different vehicles. It seems that a one-size-fits-all regulatory regime is not always suitable. If the success of the unregulated funds in the second phase proves as popular and successful as the expert phase then it will be a popular product,” says Chris Matthews, audit director at
Jersey professionals share a strong camaraderie to bring as much business to the island covering a number of professional disciplines, and the marketing machines are already up to speed on this latest fund offering.
“Although the new funds will not be required to use a Jersey administrator, we are expecting promoters to choose Jersey service providers, because of the high level of experience, expertise and professionalism offered by the island’s fund administration industry, as well as the various advantages of doing business in Jersey itself,” says Weston.