AIFM passporting in the Channel Islands (Jersey and Guernsey)

Jersey

Jersey is not within the EEA and is known as a ‘third country’ for the purposes of AIFMD.

As the first ‘third country’ to announce a strategy of implementing an AIFMD ‘opt-in’ regime, Jersey now has the regulatory framework to offer a fully AIFMD compliant solution for fund managers. Furthermore, Jersey is expected to be in the first wave of appointed Non-EEA countries to benefit from the passporting regime. Once that regime has been implemented, Jersey will be in a position to provide full optionality for fund managers to elect to use EU / EEA member states’ private placement regimes or EU / EEA passporting according to the needs and strategies of the funds for which they act.

Guernsey

Guernsey is not within the EEA and is known as a ‘third country’ for the purposes of AIFMD.

In response to AIFMD and to cater for its global client base, Guernsey has adopted a dual regime where there are two parallel regulatory regimes for investment funds: the existing regime remains in place for managers and investors not requiring an AIFMD fund, including those using EU national private placement regimes and those marketing to Non-EU investors; and an opt-in regime which is fully compliant with AIFMD. With regard to marketing in countries of the EU and wider EEA, Guernsey will transition to full passporting as and when that regime is implemented at a European level for third countries.

Jersey

Please refer to the ‘CMS Guide to Private Placement of Funds’ for detail on the Jersey legal and regulatory considerations regarding the selling of securities into Jersey. In brief, a consent will need to be obtained under the Control of Borrowing (Jersey) Order 1958 (“COBO”) unless an exemption to COBO is available (for example, there is an exemption for limited companies and unit trusts (i) which do not have a “relevant connection” with Jersey and (ii) where the offer to invest is not an offer to the public or the offer is valid in the United Kingdom or Guernsey). There are no specific restrictions upon the type of Jersey investor to whom a fund may be marketed, although the Jersey Financial Services Commission would generally take a more cautious approach (and therefore may ask additional questions) when requested to issue a COBO consent in relation to a fund which is targeting retail investors in Jersey.

Additionally, any person conducting marketing or promotional activities in Jersey will need to hold a licence as a fund distributor under the Financial Services (Jersey) Law 1998 or benefit from an exemption to that law (such as the ‘overseas persons’ exemption where the fund falls into certain regulatory classifications).

Guernsey

As Guernsey does not form part of the EEA, AIFMD does not apply to the selling of securities in funds, wherever based, into Guernsey.

Please refer to the ‘CMS Guide to Private Placement of Funds’ for detail on the Guernsey legal and regulatory considerations regarding the selling of securities into Guernsey. In brief, under Guernsey law the “promotion” of fund interests is a restricted activity which requires a licence from the Guernsey Financial Services Commission (“GFSC”), pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 1987 (as amended) (“POI Law”). However, there are certain exemptions, including: (i) if the promotion is being aimed at those holding a licence under Guernsey’s regulatory laws (including the POI Law), (ii) certain exempt non Guernsey schemes can be freely promoted and (iii) the “passive” rather than “active” promotion by an “Overseas Person” of fund interests in or from within the Bailiwick of Guernsey. 

There are no specific restrictions upon the type of Guernsey investor to whom a fund may be marketed, although the GFSC would generally take a more cautious approach (and therefore may ask additional questions) when requested to issue a licence to a promoter in relation to a fund which is targeting retail investors in Guernsey.

Jersey 

Both EEA AIFMs and Non EEA AIFMs may commence pre marketing AIFs which are not yet established (or established but have not obtained all regulatory consents required in the AIF's home jurisdiction) to potential investors in Jersey. However, any pre-marketing activities which are carried out while the AIFM is physically in Jersey should be kept to a minimum such that the activities fall outside the scope of the Financial Services (Jersey) Law 1998, as amended (unless the AIFM can rely upon the 'overseas persons' exemption detailed in the CMS Guide to Private Placement of Funds).

Any document provided to potential investors within the context of the pre marketing activity should not enable such investors to commit to acquiring units or shares of the pre marketed AIF, and should contain appropriate wording clearly stating that the document does not constitute an offer to invest.

Guernsey

Both EEA AIFMs and Non EEA AIFMs may commence pre marketing AIFs which are not yet established (or established but have not obtained all regulatory consents required in the AIF's home jurisdiction) to potential investors in Guernsey. However, any pre-marketing activities which are carried out while the AIFM is physically in Guernsey should be kept to a minimum such that the activities fall outside the scope of the POI Law, as amended (unless the AIFM can rely upon the exemptions detailed in the CMS Guide to Private Placement of Funds).

Any document provided to potential investors within the context of the pre marketing activity should not enable such investors to commit to acquiring units or shares of the pre marketed AIF, and should contain appropriate wording clearly stating that the document does not constitute an offer to invest.
 

Jersey and Guernsey

The statutory fees will depend upon the individual circumstances involved, including the regime selected.