funds

Who is caught

Jersey's fund regime sits across several statutes and orders. Collective investment funds are governed by the Collective Investment Funds (Jersey) Law 1988, alternative investment funds by the Alternative Investment Funds (Jersey) Regulations 2012 and their 2013 Order, and the persons who service funds are caught by the Financial Services (Jersey) Law 1998. The Jersey Financial Services Commission (JFSC) supervises all of these regimes.

Fund vehicles

• Collective investment funds: Certified funds, recognized funds and unclassified funds established under the Collective Investment Funds (Jersey) Law 1988, plus Jersey eligible investor funds.
• Unregulated funds: Unregulated eligible investor funds and unregulated exchange traded funds structured under the Collective Investment Funds (Unregulated Funds) (Jersey) Order 2008, which fall outside the statutory definition of a collective investment fund if their conditions are met.
• Alternative investment funds: AIFs within the Alternative Investment Funds (Jersey) Regulations 2012 and the 2013 Order.

Service providers caught

• Fund services business: Under the Financial Services (Financial Service Business) (Jersey) Order 2009, classes U to ZK cover managers, administrators, registrars, investment managers, investment advisers, distributors, subscription/redemption/purchase/repurchase agents, trustees, custodians, depositaries and partnership members; class ZL covers acting as manager of an AIF.
• CIF functionaries: Managers, trustees, custodians and depositaries acting in relation to funds under the Collective Investment Funds (Jersey) Law 1988, and certificate/permit holders (fund persons) under that Law.
• AIF service providers: AIFMs, depositaries, custodians and trustees providing prescribed depositary or AIFM services under the 2013 Order.

What brings a person within scope is carrying on a registrable fund activity in or from Jersey without an applicable exemption, or acting as functionary or certificate/permit holder in relation to a Jersey fund. Under the Financial Services (Jersey) Law 1998, no person may carry on financial service business (including fund services business and AIF services business) without registration.

Sources: Alternative Investment Funds (Jersey) Order 2013 · Collective Investment Funds (Certified Funds – Prospectuses) (Jersey) Order 2012 · Collective Investment Funds (Unclassified Funds) (Prospectuses) (Jersey) Order 1995 · Collective Investment Funds (Unregulated Funds) (Jersey) Order 2008 · Financial Services (Jersey) Law 1998 · Financial Services (Financial Service Business) (Jersey) Order 2009 · Financial Services Commission (Jersey) Law 1998

Key duties

Registration and permits

• Register as fund services business: Persons carrying on any activity in the Schedule to the Financial Services (Financial Service Business) (Jersey) Order 2009 must register with the JFSC in the corresponding class before carrying it on, under the Financial Services (Jersey) Law 1998.
• CIF permits/certificates: The Collective Investment Funds (Jersey) Law 1988 operates a permit and certificate regime for fund business (references in related orders point to Article 5 permit and Article 8/8B certificate requirements).
• Control of Borrowing consents: Under the Control of Borrowing (Jersey) Order 1958, JFSC consent is generally required to establish or operate Jersey unit trusts, limited partnerships with limited partners, LLPs and LLCs, to issue shares and securities, and to circulate offers of units of a non-Jersey unit trust scheme in Jersey, subject to stated exemptions.

Prospectus obligations

• Certified funds: Under the Collective Investment Funds (Certified Funds - Prospectuses) (Jersey) Order 2012, the certificate holder must prepare an English-language prospectus containing the Schedule 1 information plus latest reports and audited accounts, give a copy to the Commission and any trustee/custodian/depositary before marketing, offer free copies to purchasers, and revise the prospectus on new issues or significant changes.
• Unclassified funds: Under the Collective Investment Funds (Unclassified Funds) (Prospectuses) (Jersey) Order 1995, the manager or directors must prepare a compliant prospectus, obtain Commission consent, send copies to the Commission and trustee/custodian, offer copies to purchasers, keep it available for public inspection, and revise it on significant change.

Accounts, audit and reporting

• Accounting periods: Under the Financial Services (Fund Services Business (Accounts, Audits and Reports)) (Jersey) Order 2007, a registered person must obtain Commission approval of its first accounting period (maximum 18 months) and subsequent periods, and cannot change an approved period without approval.
• Record keeping: Accounting records must be kept, securely stored, backed up and retained for at least 10 years.
• Auditor appointment: A registered person must not engage an auditor unless approved by the Commission; a terminated auditor must notify the Commission within 7 days of relevant circumstances.
• Annual filing deadline: Financial statements must be provided to the Commission within 4 months after the accounting period end (extendable to up to 8 months in agreed special circumstances), with the declaration and auditor's report.

Notifications and fees

• Change notifications: Registered persons under the Financial Services (Jersey) Law 1998 must notify the Commission of changes in principal persons, key persons, shareholdings or LLC interests, display their registration certificate and conditions, and comply with applicable Codes of Practice.
• Beneficial ownership: Under the Financial Services (Disclosure and Provision of Information) (Jersey) Order and Regulations 2020, entities must provide beneficial owner, significant person and nominated person information and an annual confirmation statement; entities administered by a fund services business (other than class O) pay an additional 175 pounds with the confirmation statement.
• Limited partnership charge: Under the Limited Partnerships (Annual Additional Charge) (Jersey) Regulations 2012, limited partnerships administered by a fund services business or trust company business pay an annual additional charge of 175 pounds (145 pounds otherwise).

Sources: Collective Investment Funds (Certified Funds – Prospectuses) (Jersey) Order 2012 · Collective Investment Funds (Unclassified Funds) (Prospectuses) (Jersey) Order 1995 · Control of Borrowing (Jersey) Order 1958 · Financial Services (Disclosure and Provision of Information) (Jersey) Regulations 2020 · Financial Services (Jersey) Law 1998 · Financial Services (Financial Service Business) (Jersey) Order 2009 · Financial Services (Fund Services Business (Accounts, Audits and Reports)) (Jersey) Order 2007 · Limited Partnerships (Annual Additional Charge) (Jersey) Regulations 2012

Exemptions and carve-outs

The fund regime is heavily structured around exemptions from registration or from particular requirements. Many carve out entities already regulated elsewhere, funds serving only sophisticated investors, or non-Jersey vehicles with no established Jersey presence.

Fund vehicle exemptions

• AIF exemptions: Under the Alternative Investment Funds (Jersey) Order 2013, AIFs holding a Recognized Funds certificate, or an Article 8B certificate with Commission permission to market in the UK/EU/EEA, are exempt from the AIF Regulations; certificate relief and an AIFM approval exemption apply where the marketing/management jurisdiction does not require compliance with the UK AIFM Regulations or Directive 2011/61/EU.
• Unregulated funds: The Collective Investment Funds (Unregulated Funds) (Jersey) Order 2008 treats qualifying unregulated eligible investor funds and unregulated exchange traded funds as outside the CIF licensing regime, subject to structure, registered office, registrar notice, investor eligibility and warning conditions.
• Permit exemptions: The Collective Investment Funds (Permits) (Exemptions) (Jersey) Order 1994 exempts specified persons (UK/EU-authorized insurers, Jersey insurance permit holders, friendly societies, and non-Jersey companies with no established place of business in Jersey) from the Article 5(1) permit requirement.
• Eligible investor prospectus carve-out: Under the 2012 Certified Funds Prospectuses Order, a Jersey eligible investor fund is exempt from the prospectus requirement if it gives the prescribed investment warning.
• Company law relief: The Companies (Exemptions) (Jersey) Order 2014 disapplies certain Companies (Jersey) Law 1991 provisions to pre-existing fund companies and lets certain closed certified funds disapply the statutory audit requirement by resolution delivered to the registrar within 21 days.

Service provider exemptions

• Non-Jersey fund companies: The Financial Services (Collective Investment Funds) (Exemptions) (Jersey) Order 2007 exempts qualifying non-Jersey companies issuing units from Article 7(1) registration, while keeping specified conduct and enforcement Articles in force.
• QSMA operators: The Financial Services (Investment Business (Qualifying Segregated Managed Accounts - Exemption)) (Jersey) Order 2014 exempts operators of qualifying segregated managed accounts meeting the Schedule conditions from most of the Law, subject to notification, fees, fair treatment and quarterly reporting.
• Special purpose schemes: The Financial Services (Investment Business (Special Purpose Investment Business - Exemption)) (Jersey) Order 2001 exempts functionaries of special purpose (securitisation-type) regulated schemes serving only qualified professional investors, keeping specified Articles in force.
• Professional investor and restricted funds: The Financial Services (Trust Company Business (Exemptions No. 5)) (Jersey) Order 2001 exempts functionaries of professional investor regulated schemes and restricted funds from trust company business registration, subject to specified Articles continuing to apply.
• Deemed AIF approval: Under the 2013 Order, approval to carry on prescribed AIF services is deemed given to certain already registered or permitted trustees, custodians, depositaries, fund managers and AIF services businesses.

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 (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 (Special Purpose Investment Business – Exemption)) (Jersey) Order 2001 · Financial Services (Trust Company Business (Exemptions No. 5)) (Jersey) Order 2001

Enforcement and penalties

Enforcement runs through the Financial Services (Jersey) Law 1998, the Financial Services Commission (Jersey) Law 1998 and their subordinate orders, combined with fund-specific criminal offences and civil liability regimes.

Civil financial penalties

• Statutory basis: The Financial Services Commission (Jersey) Law 1998 (Articles 21A to 21G) allows the Commission to impose civil financial penalties on registered persons, principal persons and key persons for specified contraventions, with notification, surcharge and appeal provisions.
• Penalty bands: The Financial Services Commission (Financial Penalties) (Jersey) Order 2015 sets maximum levels: Band 1 (up to the lower of 4% of average annual turnover or 100,000 pounds for a firm; 10,000 pounds for an individual), Band 2 (6% or 4,000,000 pounds; 200,000 pounds), Band 2A (7% or 4,000,000 pounds; 300,000 pounds) and Band 3 (8% of turnover; 400,000 pounds for an individual).

Criminal offences

• Unregistered business and false information: Under the Financial Services (Jersey) Law 1998, carrying on financial service business without registration and supplying false information or obstructing the Commission are offences; the Law also creates market abuse offences.
• Fund accounts breaches: 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 statements, false declarations) is a criminal offence punishable by a fine.

Intervention and investor remedies

• Appointment of a manager: The Collective Investment Funds (Appointment of Manager) (Jersey) Order 2008 and the Financial Services (Appointment of Manager) (Jersey) Order 2008 let the Commission apply to the Royal Court to appoint a manager over a fund person's or registered person's affairs in prescribed circumstances (such as inadequate management, unregistered business, or need to preserve assets).
• Commission powers generally: The Financial Services (Jersey) Law 1998 gives the Commission powers to issue directions and injunctions, make public statements, exercise powers of intervention and require information.
• Prospectus compensation: Under the 2012 and 1995 prospectus orders, certificate holders, managers, directors and others responsible for a prospectus are liable to compensate purchasers who suffer loss from untrue or misleading statements or required omissions, subject to statutory defences.
• Damages and investor compensation: The Collective Investment Funds (Recognized Funds) (Actions for Damages) (Jersey) Regulations 2008 designate provisions giving rise to civil damages claims against certain functionaries, and the Recognized Funds (Compensation for Investors) (Jersey) Regulations 1988 establish a Viscount-administered compensation scheme on functionary default, with limits up to 48,000 pounds per investor and a 5,000,000 pounds annual cap.

Sources: 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 (Recognized Funds) (Compensation for Investors) (Jersey) Regulations 1988 · 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 · Financial Services Commission (Financial Penalties) (Jersey) Order 2015