Aiming to become the European ‘jurisdiction of choice’ for the hedge fund sector, Jersey plans to launch a new Unregulated Funds Regime early next year. Funds that fall within the new regime, which includes two categories - the Unregulated Eligible Investor Category (UEIC) and the Unregulated Exchange Traded Category (UETC), will not be approved or authorised by the Island’s financial regulator, the Jersey Financial Services Commission (JFSC).
According to Jersey Finance, the JFSC’s promotional arm, the new regime will offer hedge fund promoters ‘simplicity, certainty and speed’ and a structure ‘to suit both commercial and tax requirements’.
Since it introduced an Expert Funds regime in 2004, Jersey’s alternative investment funds sector has boomed. In the first three years since its inception, more than 300 Expert Funds have been established in the island with alternative investment funds (private equity funds and hedge funds) now making up half the total value (£210 billion) of all investment funds domiciled in Jersey. However, it remains well short of the Cayman Islands, the world’s leading hedge fund domicile with more than 8,000 registered hedge funds.
One advantage of Jersey’s new Unregulated Regime over the Cayman Islands’ mutual funds regime is that funds will not require a local audit.
Key features of the new regime include:
Unregulated Eligible Investor Fund:
- minimum investment criteria of US $1 million, or a need to be a sophisticated investor
- applies to open - and closed-end funds and can be structured using companies, unit trusts and limited partnerships
- no requirement for Jersey-domiciled administrator, directors or custodian
- no audit requirement
- open-ended vehicles are permitted to list but only on certain exchanges that allow transfer restrictions
Unregulated Exchange Traded Fund Category:
- choice of structures using companies, unit trusts and limited partnerships
- no requirement for Jersey domiciled administrator, directors or custodian
- no audit requirement
- applies to closed-end funds only
- choice of exchanges on which a listing may be made
For more information, see the Jersey Finance website.
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