Qualifying Investor Funds (QIF) Guidance Note

Summary

This guidance note from the Guernsey Financial Services Commission (GFSC) explains how Qualifying Investor Funds (QIFs) operate under the Protection of Investors (Bailiwick of Guernsey) Law, 2020. It sets out who qualifies as a Qualified Investor, the due diligence Guernsey licensed service providers must perform on fund promoters and investment managers, and the information required for the Commission to authorise a QIF.

• Qualified Investor categories: Only Professional Investors, Experienced Investors and/or Knowledgeable Employees (as defined) may invest in a QIF; funds must have measures ensuring access is restricted to these categories.
• Investor declarations: Declarations or disclaimers should confirm the investor's Qualified Investor status, acknowledge the QIF structure, confirm the investor read the offering document, and acknowledge special risk of loss.
• Promoter and manager due diligence: Guernsey licensed service providers must certify to the Commission that they performed sufficient due diligence to be satisfied that promoters and investment managers (and their controllers, directors, senior managers) are fit and proper, covering integrity, solvency and competence, with findings documented.
• Ongoing monitoring: Due diligence on promoters/investment managers must be updated regularly, and service providers must consult Commission staff when uncertain about the materiality of issues they become aware of.
• Fund structure rules: Open-ended QIFs must comply with the applicable Class A, Class B or Class Q collective investment scheme rules; closed-ended QIFs must comply with the Authorised Closed-Ended Investment Schemes Rules 2021.
• Authorisation application package: Applications require a signed Form QIF (2019) with due diligence declarations, completed APA/APB/APQ/APC forms and OPQs, payment of the application fee, final scheme documents, a lawyer's or manager's certificate as applicable, and licensing under the POI Law for those carrying on restricted activities.
• Modification requests: Requests to modify the applicable scheme rules must be made in writing to the Authorisations and Innovation Division at least three working days before the formal authorisation application is submitted.

The Commission reviews licensees' due diligence and declarations as part of post-facto monitoring; defective or misleading declarations can lead to enforcement action and exclusion from the QIF self-certification programme. Once all required elements are received, the Commission aims to issue authorisation within three working days, though licensing of a new Guernsey management company will typically take longer.

Key obligations

• Funds approved as Qualifying Investor Funds must have measures in place to ensure they are only available to investors meeting the Qualified Investor definitions.
• Guernsey licensed service providers must certify to the Commission that they have performed sufficient due diligence to be satisfied that the promoter and/or investment manager are fit and proper, and must document their findings and conclusions.
• Licensees must update their due diligence on promoters, investment managers and associated parties on a regular basis.
• Licensees must consult Commission staff when they become aware of issues regarding a promoter/investment manager whose materiality or impact is uncertain, at the time they become aware of the issue.
• Requests for modification of the relevant fund rules must be made in writing to the Authorisations and Innovation Division at least three working days before the formal authorisation application is submitted.
• Applications for authorisation must include a signed Form QIF (2019), completed APA/APB/APQ/APC forms and OPQs, payment of the applicable fee, final scheme documents, and a lawyer's or manager's certificate as required by fund class.
• Persons intending to carry on a restricted activity in connection with the fund must be licensed under the POI Law, including any Guernsey incorporated management company, before authorisation or consent for the fund can be issued.

Applies to

Qualifying Investor Funds, Guernsey licensed service providers, fund promoters, investment managers, designated managers/administrators, fund controllers, directors and senior managers

Deadlines

• at least three working days in advance of submission of the formal application: Deadline for requesting modifications to the relevant collective investment scheme rules.
• within three working days of receipt/resolution of all required application items: Timeframe within which the Commission will issue the necessary authorisation under the POI Law.