Jersey Simplifies Hedge Fund Regulation
by Jason Gorringe, Lowtax.net, London
18 December, 2014
Jersey has enacted measures to simplify the regulation of hedge fund managers and encourage the establishment of hedge fund management businesses in Jersey.
The new law, which was passed in November, introduces a new exemption in Jersey's Financial Services legislation. The change enables Jersey-registered hedge fund managers to be regulated solely under Jersey's funds regulations and not also under its investment business regulations, provided the managed accounts meet certain criteria to be "qualifying segregated managed accounts."
In order to benefit from the exemption, a managed account must be able to meet a certain number of criteria relating to the level of its initial subscription, the strategies it follows, how the assets are held in custody, and the name the managed account is held in. The manager will also have to meet a number of reporting responsibilities.
The move enables hedge fund managers to take advantage of Jersey's zero percent corporate income tax rate without incurring the disadvantages of a further "investment business" registration.
Geoff Cook, CEO, Jersey Finance, said: "Jersey has a healthy and growing hedge fund sector, and this change in legislation is expected to encourage further growth by simplifying the framework for managed accounts whilst retaining an appropriate level of regulation."
"In particular, it is anticipated that the exemption will boost Jersey's appeal as a centre for facilitating the incubation and hosting of start-up and smaller hedge fund businesses. In addition, the change is expected to prove popular with those Jersey managers who are seeing a rise in managed account business where there is potential to provide investment services to European clients without the need for Alternative Investment Fund Managers Directive (AIFMD) compliance."
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