Guernsey Launches Private Investment Fund Regime
by Jason Gorringe, Lowtax.net, London
17 November, 2016
Guernsey has launched a Private Investment Fund (PIF) regime, which is intended to provide fund managers with greater flexibility and simplicity.
The PIF regime was developed by Guernsey's financial services regulator, the Guernsey Financial Services Commission, in consultation with the island's funds industry.
The PIF regime is said to recognize that certain investment funds are characterized by a relationship between management and investors that is closer than that of a typical agent. It dispenses with the formal requirement for information particulars – such as a prospectus – in recognition of that relationship, significantly reducing the cost and processing time of launching of a fund.
A PIF, which can be either closed- or open-ended, should contain no more than 50 legal or natural persons holding an economic interest in the fund. A key feature of the product is that where an appropriate agent is acting for a wider group of stakeholders, such as a discretionary investment manager or a trustee or manager of an occupational pension scheme, that agent may be considered as one investor. While there is a limit imposed on the number of investors in the PIF, no attempt has been made to limit the number of investors to whom the PIF might be marketed – a feature not available under comparable regimes.
The PIF is predicated on a close relationship between investors and the licensed manager, who will be responsible for providing warranties on the ability of the investors to assume loss. Under the new regime, both the PIF and its manager benefit from an application process that can be completed in one business day. The two processes may be completed in tandem by the Guernsey Financial Services Commission, ensuring a short regulatory timescale.
The development of the PIF regime follows closely on the heels of the launch of Guernsey's Manager Led Product (MLP), a regime designed in light of the Alternative Investment Fund Managers Directive (AIFMD), which places the regulatory burden on the manager and not the fund.
Chairman of the Guernsey Investment Fund Association, Andrew Whittaker, said: "The PIF is a fantastic addition to the Guernsey funds suite, which alongside the MLP allows a quick regulatory turnaround. It ensures fund managers have a choice of products to meet theirs and their investor's needs in the ever-changing global landscape. This product should prove particularly attractive to sub-threshold managers under the AIFMD."
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