Collective Investment Funds (Unregulated Funds) (Jersey) Order 2008

Summary

This Order, made under the Collective Investment Funds (Jersey) Law 1988, sets out the conditions under which certain Jersey fund structures are treated as falling outside the statutory definition of a collective investment fund, and so escape the Law's licensing and regulatory regime. It creates two categories of unregulated fund: the unregulated eligible investor fund (Schedule 1) and the unregulated exchange traded fund (Schedule 2), each subject to its own set of structural and operational conditions.

• Structure: The fund must be a Jersey incorporated company, a limited partnership with a Jersey company as general partner, or a unit trust with a Jersey company trustee or manager; its name must not be undesirable or misleading.
• Registered office: Where the fund is a company, its registered office must be provided by a person registered under the Financial Services (Jersey) Law 1998 for relevant fund services business.
• Notice to registrar: Written notice of the fund's establishment, including a declaration that the relevant conditions are met, must be given to the registrar of companies in the approved form; the registrar must acknowledge receipt and make notices available for public inspection.
• Investor restrictions: For eligible investor funds, units may only be subscribed for, purchased or exchanged by an eligible investor (as defined by wealth, professional or functionary criteria), and the investor must sign a declaration confirming receipt and acceptance of the risk warning in Schedule 3 before completion.
• Exchange trading: For funds traded on a stock exchange, no market makers may be appointed (subject to a UK REIT exception), transfers must be restricted so far as reasonably possible to eligible investors, and acquirers must sign the Schedule 3 warning declaration.
• Exchange traded fund conditions: Schedule 2 imposes parallel structure, registered office, registrar notice, exchange listing and offer document warning requirements for unregulated exchange traded funds, referencing the approved exchanges and markets listed in Schedule 4.
• Continued observance: Fund companies must continue to observe the applicable Schedule 1 or Schedule 2 conditions on an ongoing basis; a breach does not disqualify the fund if remedial steps specified by the Commission are taken within the specified period (or 30 days if none is specified), or otherwise within a reasonable time.

The Order has been amended several times since 2008, including updates to the eligible investor and exchange traded fund conditions and to the list of recognised exchanges and markets in Schedule 4, most recently in connection with Brexit related changes taking effect from 31 January 2020.

Key obligations

• A fund company relying on the unregulated eligible investor fund exemption must give written notice of the fund's establishment to the registrar, including a declaration that the Schedule 1 conditions are satisfied, in the registrar's approved form.
• Units in an unregulated eligible investor fund may only be subscribed for, purchased or exchanged by a person who qualifies as an eligible investor under Schedule 1, paragraph 6.
• Before completing a subscription, purchase or exchange, the investor must sign a declaration confirming receipt and understanding of the Schedule 3 warning, and this declaration must be given to a fund company before completion.
• Where the fund's units are exchange traded, the fund company must ensure no market makers are appointed (subject to a limited UK REIT exception) and must restrict transfers so far as reasonably possible to eligible investors.
• A company acting as the fund must have its registered office provided by a person registered under the Financial Services (Jersey) Law 1998 for the relevant fund services business.
• Fund companies must continuously observe the Schedule 1 or Schedule 2 conditions; if the Commission notifies a fund company of steps to remedy a breach, those steps must be taken within the period specified by the Commission or, if none is specified, within 30 days.
• No units may be issued in an unregulated eligible investor fund before this Order (or relevant conditions) come into force, per Schedule 1 paragraph 1(3).

Applies to

unregulated eligible investor funds, unregulated exchange traded funds, fund companies, registered persons providing fund services business (managers, administrators, investment managers, trustees, custodians, depositaries), eligible investors, registrar of companies

Deadlines

• 30 days after notice from the Commission (if no other period specified): Period within which a fund company must take steps specified by the Commission to remedy a breach of the Schedule 1 or Schedule 2 conditions in order to avoid losing the unregulated fund exemption.

Related documents

• This document is made under Collective Investment Funds (Jersey) Law 1988