Honey, I shrunk the regime

Jersey Finance recently announced the launch of an Unregulated Funds Regime that will no longer require regulatory approval for establishing a fund in the jurisdiction, among other features designed to attract alternative asset vehicles.

The regime is set for introduction in early 2008, and will include an Unregulated Eligible Investor Category (UEIC) and an Unregulated Exchange Traded Category (UETC). Funds in either category will not need the approval or authorization of the island's financial regulator, the Jersey Financial Services Commission (JFSC).

Key features of those funds in the UEIC category include a minimum investment criteria of $1 million or the need to be a sophisticated investor. UEIC funds can be both open and closed ended funds and can be structured using companies, unit trusts and limited partnerships. There is no requirement for a Jersey domiciled administrator, directors or custodians, no audit requirement, and open-ended vehicles are permitted to list but only on certain exchanges that allow transfer restrictions.

Funds in the UETC category have a choice of structures using companies, unit trusts and limited partnerships, with no requirement for an audit or a Jersey domiciled administrator, directors or custodian. However, this category is for closed funds only, though it does offer a choice of exchanges on which a listing may be made.

The chairman of the Jersey Funds Association, Richard Thomas, who announced the features of this new regime at Jersey's Third Annual Funds Debate told Tax-News.com: “We have been taking note of the regulatory changes that have been introduced in other jurisdictions and following extensive consultation with the JFSC are now ready with a new element which has been missing from the Jersey product range in the form of unregulated funds.” Consultations with the JFSC are set to continue until the regime is formally introduced.

Geoff Cook, the chief executive of Jersey Finance Limited, added: “Fund promoters of high net worth, sophisticated investors and institutions will have greater flexibility when choosing Jersey and will be able to structure their funds to suit both commercial and tax requirements.”