funds

Who is caught

Jersey funds are regulated principally under the Collective Investment Funds (Jersey) Law 1988 and, for alternative investment funds, the Alternative Investment Funds (Jersey) Regulations 2012. Persons who service funds are separately caught as fund services business or AIF services business under the Financial Services (Jersey) Law 1998. What brings a person within scope is carrying on the relevant fund or fund-service activity in or from within Jersey.

Funds and functionaries

• Collective investment funds: The 1988 Law governs recognized funds, unclassified funds and certified funds, together with their functionaries (managers, trustees, custodians, administrators and general partners).
• Alternative investment funds: The 2012 Regulations create a certification regime for AIFs and the relevant AIF entity (company, trustee, general partner or LLC manager), together with their AIFMs, principal persons, key persons and service providers.
• Fund services business: The 1998 Law brings fund services business and AIF services business within the registration regime; the Financial Services (Financial Service Business) (Jersey) Order 2009 lists the registrable classes (manager, administrator, registrar, investment manager, investment adviser, distributor, trustee, custodian, depositary and AIF manager).
• Capital-raising and fund interests: The Control of Borrowing (Jersey) Order 1958 requires Commission consent for establishing or operating Jersey unit trust schemes and for offers of units of non-Jersey unit trust schemes circulated in Jersey.

Sources: Alternative Investment Funds (Jersey) Regulations 2012 · Alternative Investment Funds (Jersey) Order 2013 · Collective Investment Funds (Jersey) Law 1988 · Control of Borrowing (Jersey) Order 1958 · Financial Services (Jersey) Law 1998 · Financial Services (Financial Service Business) (Jersey) Order 2009

Key duties

The core duty is to hold the correct authorisation before carrying on fund or fund-service activity, followed by continuing notification, disclosure, prospectus, accounting and conduct obligations.

Authorisation

• Permits and certificates: Under the 1988 Law, functionaries of recognized funds must hold a permit before acting, and unclassified funds must hold a certificate before operating.
• AIF certificate: Under the 2012 Regulations, an AIF entity must hold a JFSC certificate before the AIF carries on business, applying in the prescribed manner.
• Registration: Under the 1998 Law, persons carrying on fund services business or AIF services business must register with the JFSC before doing so.
• Service-provider approval: Under the Alternative Investment Funds (Jersey) Order 2013, a service provider must be approved by the Commission before carrying out any prescribed depositary or AIFM service, unless deemed approval applies.

Notifications and display

• Change notifications: Permit holders, certificate holders and registered persons must notify the Commission of changes in principal persons, key persons (compliance, money laundering compliance and money laundering reporting officers) and shareholding or control.
• Display: Holders must display their permit, certificate or registration and any conditions attached to it.
• Codes of practice: Holders and registered persons must comply with applicable codes of practice issued by the Commission.

Prospectuses

• Certified funds: Under the Collective Investment Funds (Certified Funds - Prospectuses) (Jersey) Order 2012, certificate holders must prepare a compliant English-language prospectus, revise it on new issues or significant changes, give a copy to the Commission and any trustee or custodian, and make it available to investors.
• Unclassified funds: Under the Collective Investment Funds (Unclassified Funds) (Prospectuses) (Jersey) Order 1995, a compliant prospectus must be prepared, the Commission's consent obtained, and a copy sent to the Commission and the trustee or custodian before units are marketed, with revision on significant change.
• Recognized funds: Under the Collective Investment Funds (Recognized Funds) (Rules) (Jersey) Order 2003, managers must prepare, publish and keep accurate a prospectus and produce annual and half-yearly reports.

Accounts, audit and records

• Fund services business filings: Under the Financial Services (Fund Services Business (Accounts, Audits and Reports)) (Jersey) Order 2007, registered persons must obtain approval of accounting periods, keep accounting records for at least 10 years, use a Commission-approved auditor, and provide financial statements to the Commission within 4 months of the accounting period end (extendable to up to 8 months in special circumstances), with a declaration and auditor's report.
• Recognized fund functionaries: Under the Collective Investment Funds (Recognized Funds) (Permit Conditions for Functionaries) (Jersey) Order 1988, relevant holders must maintain financial resources, prepare and submit annual, quarterly and monthly financial statements, appoint qualified auditors, keep prescribed records and hold client money on trust.
• Compensation scheme: Under the Collective Investment Funds (Recognized Funds) (Compensation for Investors) (Jersey) Regulations 1988, functionaries must co-operate with the Viscount, keep records, furnish audited fee-income statements when required and pay compensation levies by the specified date.

Sources: Alternative Investment Funds (Jersey) Regulations 2012 · Alternative Investment Funds (Jersey) Order 2013 · Collective Investment Funds (Jersey) Law 1988 · Collective Investment Funds (Certified Funds – Prospectuses) (Jersey) Order 2012 · Collective Investment Funds (Recognized Funds) (Permit Conditions for Functionaries) (Jersey) Order 1988 · Collective Investment Funds (Recognized Funds) (Rules) (Jersey) Order 2003 · Collective Investment Funds (Unclassified Funds) (Prospectuses) (Jersey) Order 1995 · Financial Services (Jersey) Law 1998 · Financial Services (Fund Services Business (Accounts, Audits and Reports)) (Jersey) Order 2007

Exemptions and carve-outs

The instruments provide a number of carve-outs from the permit, certificate and registration regimes, and exclude certain structures from the definition of a collective investment fund altogether.

Excluded from the fund definition

• Securitisation vehicles: The Collective Investment Funds (Restriction of Scope) (Jersey) Order 2000 excludes special purpose securitisation and asset-repackaging schemes, provided the prescribed bold-type warning appears in the offer document.
• Unregulated funds: The Collective Investment Funds (Unregulated Funds) (Jersey) Order 2008 treats unregulated eligible investor funds and unregulated exchange traded funds as outside the fund definition where the structural, registered-office, registrar-notice and investor conditions are met.

Relief from permit or registration

• Permit exemptions: The Collective Investment Funds (Permits) (Exemptions) (Jersey) Order 1994 exempts UK-authorised and EU insurers, Jersey insurance permit holders, certain friendly societies, and non-Jersey companies without an established place of business in Jersey.
• AIF exemptions: The Alternative Investment Funds (Jersey) Order 2013 exempts specified AIFs from the AIF Regulations, relieves certain AIFs from holding a Regulation 7 certificate, and exempts an AIFM from the approval requirement in defined cross-border circumstances.
• Non-Jersey fund companies: The Financial Services (Collective Investment Funds) (Exemptions) (Jersey) Order 2007 exempts qualifying non-Jersey unit-issuing companies from Article 7(1) registration under the 1998 Law, while specified articles continue to apply.
• Qualifying segregated managed accounts: The Financial Services (Investment Business (Qualifying Segregated Managed Accounts - Exemption)) (Jersey) Order 2014 exempts QSMA operators from most of the 1998 Law where the Schedule conditions are met, subject to notification, fees and quarterly reporting.
• Restricted investment business: The Financial Services (Investment Business (Restricted Investment Business - Exemption)) (Jersey) Order 2001 exempts functionaries of professional investor regulated schemes from Article 7 registration where investors meet the subscription or professional-investor tests and sign the prescribed warning.

Prospectus and audit relief

• Eligible investor funds: The 2012 certified-funds prospectus Order exempts a Jersey eligible investor fund from the prospectus requirement provided the prescribed investment warning is given.
• Audit disapplication: The Companies (Exemptions) (Jersey) Order 2014 allows a certified fund company to disapply the statutory audit requirement for a financial period where no units were issued beyond persons connected with its establishment or promotion, following the prescribed resolution and filing procedure.

Sources: Alternative Investment Funds (Jersey) Order 2013 · Collective Investment Funds (Certified Funds – Prospectuses) (Jersey) Order 2012 · Collective Investment Funds (Permits) (Exemptions) (Jersey) Order 1994 · Collective Investment Funds (Restriction of Scope) (Jersey) Order 2000 · Collective Investment Funds (Unregulated Funds) (Jersey) Order 2008 · Companies (Exemptions) (Jersey) Order 2014 · Financial Services (Collective Investment Funds) (Exemptions) (Jersey) Order 2007 · Financial Services (Investment Business (Qualifying Segregated Managed Accounts – Exemption)) (Jersey) Order 2014 · Financial Services (Investment Business (Restricted Investment Business – Exemption)) (Jersey) Order 2001

Enforcement and penalties

Enforcement runs across several instruments, which the summaries attribute separately. The civil financial penalty regime sits in the Financial Services Commission (Jersey) Law 1998, while criminal offences and intervention powers sit in the sector Laws and Orders.

• Civil financial penalties: Articles 21A to 21G of the Financial Services Commission (Jersey) Law 1998 allow the Commission to impose civil financial penalties on registered persons, principal persons and key persons for specified contraventions, with late-payment surcharge, appeal and enforcement provisions.
• Offences under the 1988 Law: The Collective Investment Funds (Jersey) Law 1988 makes it an offence to make misleading statements or engage in misleading practices in relation to a fund, to obstruct investigations, and to aid and abet breaches, carrying penalties.
• Offences under the 1998 Law: The Financial Services (Jersey) Law 1998 creates market-abuse offences (insider dealing, market manipulation and provision of misleading information) and offences of supplying false information or obstructing the Commission.
• Accounts Order offences: Under the Financial Services (Fund Services Business (Accounts, Audits and Reports)) (Jersey) Order 2007, breach of most substantive obligations (accounting-period approval, record keeping, auditor appointment, provision of financial statements and false declarations) is a criminal offence punishable by a fine.
• Appointment of a manager: The Collective Investment Funds (Appointment of Manager) (Jersey) Order 2008 (under Article 34A of the 1988 Law) and the Financial Services (Appointment of Manager) (Jersey) Order 2008 (under Article 12 of the 1998 Law) set out the prescribed circumstances in which the Commission may apply to the Royal Court to appoint a manager over a fund person's or registered person's affairs.
• Directions and public statements: The 1988 Law, the 1998 Law and the 2012 Regulations give the Commission powers to require information, issue directions, conduct investigations, enter and search premises, exercise intervention powers and issue public statements about holders.
• Civil liability: The prospectus Orders for certified and unclassified funds impose compensation liability on those responsible for untrue or misleading prospectuses, subject to statutory defences; and the Collective Investment Funds (Recognized Funds) (Actions for Damages) (Jersey) Regulations 2008 define the specified provisions giving rise to damages claims against recognized-fund functionaries under Article 35.

Sources: Alternative Investment Funds (Jersey) Regulations 2012 · Collective Investment Funds (Jersey) Law 1988 · Collective Investment Funds (Appointment of Manager) (Jersey) Order 2008 · Collective Investment Funds (Certified Funds – Prospectuses) (Jersey) Order 2012 · Collective Investment Funds (Recognized Funds) (Actions for Damages) (Jersey) Regulations 2008 · Collective Investment Funds (Unclassified Funds) (Prospectuses) (Jersey) Order 1995 · Financial Services (Jersey) Law 1998 · Financial Services (Appointment of Manager) (Jersey) Order 2008 · Financial Services (Fund Services Business (Accounts, Audits and Reports)) (Jersey) Order 2007 · Financial Services Commission (Jersey) Law 1998