The Guernsey Financial Services Commission (“the GFSC”) has this week published a consultation paper containing proposals which would allow different investor categories to take advantage of an appropriately regulated fund structure.
Author James Christie
The proposals would effectively introduce new paths to registering a Private Investment Fund (“a PIF”) alongside the current approach, expanding the fund regime.
The PIF regime was introduced in November 2016 and has been a favoured route used by new and existing fund promoters to launch flexible structures catering to private investors. The consultation paper invites comments on three complementary approaches to PIF registration, with two new routes being introduced removing the requirement for manager involvement:
An alternative for qualifying investors only, with qualifying investors clearly defined;
The first proposed path would enable the creation of a PIF without an attached Protection of Investors Law (PoI) licensed manager. Qualifying investor criteria would be applied to protect potentially more vulnerable investors. Upon application, the PoI licensed fund administrator would provide confirmations equivalent to those currently required in respect of any QIF application, and
A “truly private structure” for family relationships only, reflecting Guernsey’s position as a jurisdiction of choice for family office structuring.
The second proposed path, becoming the third path to registration, would place the PIF as a tailored private wealth structure, where there would be a family relationship between investors and no capital raising from investors outside this relationship. Once again, the requirement to appoint a PoI licensed fund manager would be removed and, upon application, the PoI licensed fund administrator would confirm that effective procedures relating to eligibility of family-related investors are in place.
The proposed revisions will create the most comprehensive and flexible suite of options of any private fund regime.
James Christie, senior client relationship manager at Oak Fund Services, said: “The proposal to enhance the PIF fund regime is a welcome development to the funds space in Guernsey. Following the introduction of the PIF in 2016 we have seen high levels of interest and uptake by fund managers and I am confident the proposed new rules will make the Guernsey PIF even more attractive to new and existing promoters.”
The proposal to introduce the new rules is open for consultation until the end of January 2021.