Guidance Note: Natural Persons undertaking the activity of acting as a Director under the Financial Services (Jersey) Law 1998

Summary

This is JFSC guidance interpreting when a natural person acting as a company director, outside a regulated trust company business, must register under the Financial Services (Jersey) Law 1998 (FS(J)L). It explains the four threshold tests that together determine whether directorship services amount to registrable trust company business, discusses key undefined terms such as 'by way of business' and 'holding out', and summarises available exemptions and a lighter touch registration regime for single class directorship business.

• Threshold tests: Registration is only required if a person is caught by all four tests: Article 2(1) (by way of business), Article 2(3) (trust company business/fiduciary services), Article 2(4)(b) (acting as director) and Article 7 (carrying on unauthorised business in or from Jersey).
• By way of business indicators: Factors such as receiving fees, number of directorships held, time commitment, level of income, business relationships generating appointments, non-financial benefits, claiming business expenses, and offering more than one type of service all point toward being 'by way of business'.
• Private capacity carve outs: Directorships of private companies where the director owns 50% or more beneficially, or of companies owned by family members, are generally not regarded as 'by way of business'.
• Holding out: A person can be treated as carrying on financial service business if they hold themselves out as available to act as director, even without formal advertising, e.g. by being equipped to act or making it known they will act.
• Jersey nexus: Article 7's 'in or from within Jersey' is interpreted by the JFSC as capturing Jersey resident directors regardless of where board meetings are physically held, while non resident directors attending Jersey board meetings are not intended to be captured.
• Exemptions: The Director exemption in the Financial Services (Trust Company Business (Exemptions)) (Jersey) Order 2000 and the overseas exemption in the Exemptions No. 2 Order can exclude certain directorship arrangements from registration, subject to conditions described in the Guidance Note.
• Single class registration (light touch regime): Individuals registering solely to act as directors may benefit from reduced Professional Indemnity Insurance cover (minimum £1 million where held personally), possible waiver of audit/financial statement requirements, a condition prohibiting sole control of customer assets, and competence standards equivalent to a Category A Trust Company Business Employee.

The guidance is interpretive rather than legally binding on its own, reflecting the JFSC's view (supported by UK Counsel) on undefined statutory terms, and directs individuals who remain uncertain to discuss their circumstances directly with the JFSC.

Key obligations

• A natural person who meets all four threshold tests under Articles 2(1), 2(3), 2(4)(b) and 7 of the FS(J)L when acting as a director must register under the FS(J)L before carrying on that activity.
• A registered individual relying on the single class of trust company business (director) regime must complete an annual Information Update Questionnaire, including a declaration confirming ongoing compliance with regulatory requirements.
• Where a director personally meets Professional Indemnity Insurance needs (rather than through the company), minimum cover of £1 million must be maintained.
• A registered individual director must not control customer assets in a sole capacity if a condition to that effect is attached to their registration.
• A registered individual director must meet the qualification and experience standards applicable to a Category A Trust Company Business Employee under the Codes of Practice for Trust Company Business.

Applies to

natural persons acting as directors, trust company business, Category A Trust Company Business Employees

Deadlines

• annually: Individuals registered under the single class of trust company business (director) regime must complete an Information Update Questionnaire each year, including a declaration of ongoing compliance.
• 17 February 2011: Date on which the amendment to the connected persons exemption (addition of 'and' at the end of paragraph (a)) came into force.