FSB Licensing of LLPs

Summary

This JFSC guidance note explains how the Commission applies its Fund Services Business (FSB) licensing policy to applicants structured as limited liability partnerships (LLPs), whether Jersey law governed or foreign law governed. It sets out eligibility, governance and disclosure requirements for LLPs seeking FSB registration in the manager, general partner, investment manager or investment adviser classes, and lists the standard licence conditions that will attach to a successful LLP applicant. A note at the top flags that the underlying 1997 LLP Law has since been replaced by the 2017 LLP Law and that this policy will need to be updated, so readers should treat the detail as historic guidance pending revision.

• Corporate partners: Where a partner in the LLP is a company, its directors must be natural persons, and corporate shareholders in that company are subject to Principal Person review where applicable.
• Managing Partners: A partner who participates in management (a Managing Partner) must be either a natural person or a Jersey incorporated company with at least two Jersey resident directors.
• Regulatory span of control: The standard four eyes / six eyes approach applies; the span of control must consist exclusively of natural persons who are Managing Partners or their directors, at least two of whom are Jersey resident.
• Application form: The FSB Application Form must be signed by two Jersey resident persons forming part of the regulatory span of control.
• Business Plan content: The Business Plan must explain how Jersey based span of control persons will exercise effective oversight; foreign law LLPs must additionally confirm there is no legal impediment to compliance with Jersey obligations and disclose any material concerns.
• Designated Partner (Jersey law LLPs): At least one Designated Partner must be domiciled (if a natural person) or incorporated (if a company) in Jersey.
• Partner register (foreign law LLPs): A register of partners must be maintained at the Jersey registered office address of a Managing Partner, and the JFSC must be notified of which Managing Partner holds it and of any subsequent changes in advance.
• Offering document disclosures: Fund offering documents must disclose the LLP's status and regulatory status, include prescribed JFSC liability disclaimer statements, and identify partners, and directors of corporate partners.
• Governing law / jurisdiction: Client fund service contracts may not exclude the jurisdiction of the Courts of Jersey.
• Name and ongoing notification: The JFSC will assess whether the LLP's name is misleading, and registered persons must notify the JFSC of material changes to information provided during licensing.
• MoME arrangements: Where a Manager of a Managed Entity (MoME) is appointed, the Registered Person must notify the JFSC at least 28 days before changing its MoME, appoint a compliance officer, MLRO and MLCO (which the MoME may resource), permit JFSC inspections, and adhere to the Code of Practice's advertising, record keeping and notification requirements.

The guidance also addresses related scenarios in companion documents covering limited partnerships and separate/incorporated limited partnerships that have an LLP as general partner, and discusses (at a high level) when a foreign law governed LLP's management activity in or from Jersey may trigger a licensing requirement under Article 7 of the Financial Services (Jersey) Law 1998.

Key obligations

• Where a partner in the LLP Applicant is a company, its directors must be natural persons
• A Managing Partner must be a natural person or a Jersey incorporated company with at least two Jersey resident directors
• The regulatory span of control must consist exclusively of natural persons who are Managing Partners or directors of Managing Partners, at least two of whom must be Jersey resident
• The FSB Application Form must be signed by two Jersey resident persons forming part of the regulatory span of control
• The Business Plan must describe how Jersey based oversight will be exercised, and foreign law LLP applicants must confirm no legal impediment to compliance with Jersey obligations and disclose material concerns
• Jersey law LLP Applicants must have at least one Designated Partner domiciled or incorporated in Jersey
• Foreign law governed LLPs must maintain a register of partners at the Jersey registered office of a Managing Partner and notify the JFSC of that address and any changes in advance
• Fund offering documentation must disclose the Registered Person's LLP status, regulatory status, prescribed JFSC disclaimer statements, and identity/jurisdiction of partners and directors of corporate partners
• Contracts under which the Registered Person provides FSB services must not exclude the jurisdiction of the Courts of Jersey
• Registered Persons must notify the JFSC of material changes to information provided as part of the licensing process
• A Registered Person using a MoME must notify the JFSC at least 28 days before changing its MoME
• A Registered Person subject to MoME/ME conditions must appoint a compliance officer, MLRO and MLCO, permit JFSC inspections, and adhere to Code of Practice advertising and record keeping requirements
• A Registered Person may not act for new or further funds without prior written JFSC consent where the managed entity/Core Principles condition applies

Applies to

Limited Liability Partnerships (Jersey law and foreign law governed), Fund Services Business licence applicants and Registered Persons, Limited Partnerships with an LLP as general partner, Separate Limited Partnerships / Incorporated Limited Partnerships with an LLP as general partner, Managers of a Managed Entity (MoME)

Deadlines

• at least 28 days prior to the change taking effect: Notification to the JFSC of an intended change of MoME
• in advance: Notification to the JFSC of any change in the identity of the Managing Partner holding the partner register for a foreign law governed LLP