1 Legislative and regulatory framework

1.1 In broad terms, which legislative and regulatory provisions govern alternative investment funds in your jurisdiction?

The principle pieces of legislation governing funds in Jersey is the Collective Investment Funds (Jersey) Law 1988 (CIF Law) for public funds and the Control of Borrowing (Jersey) Order 1958 (COBO) for private funds, and their related Codes of Practice and Guides issued by the Jersey Financial Services Commission (the JFSC). The Financial Services (Jersey) Law 1998 (FSJL) applies to fund service providers.

1.2 Do any special regimes or provisions apply to specific types of alternative investment funds?

Jersey has various funds products each with their own sub-set of rules. For example, the JFSC has published the Jersey Private Fund Guide in relation to Jersey Private Funds, applicable for up to 50 professional investors and where there are fewer than 50 offers made to professional investors; and the Code of Practice for Certified Funds (Fund Codes), which contains a Guide for each of Expert Funds, Listed Funds, and Open-Ended Unclassified Collective Investment Funds Offered to the General Public (OCIF Guide).

Similarly, Recognised Funds, which are the most highly regulated funds available in Jersey for retail investors, are governed by the Collective Investment Funds (Recognized Funds) Rules 2003 (Recognised Funds Rules) in addition to being subject to the CIF Law.

If the fund will be an AIF that is marketing into Europe within the meaning of the EU Directive known as the AIFMD, then it will need to adhere to the relevant provisions of the Jersey AIF Codes. The Jersey AIFMD regime broadly mirrors the requirements of AIFMD, and the limited provisions that would generally apply to a Jersey fund marketing into Europe using national private placement rules relate to disclosure, reporting and asset stripping.

More broadly, depending on the structure of the fund, the Jersey entities making up the structure will be subject to the legislation governing the type of entity used, for example a company will be subject to the Companies (Jersey) Law 1991, and a limited partnership will be subject to the Limited Partnerships (Jersey) Law 1994.

Fund service providers will be subject to the FSJL.

1.3 Do the legislative and regulatory provisions governing alternative investment funds have extra-territorial reach?

Jersey's law and regulation with regards to investment funds generally only applies to Jersey registered entities, wherever the activities are carried on, and also activities carried on by non-Jersey entities 'in or from within' Jersey. There is a specific regime applicable to Jersey service providers who provide their services to non-Jersey funds.

1.4 Are any bilateral, multilateral or supranational instruments in effect in your jurisdiction of relevance to alternative investment funds?

The JFSC has entered into bilateral cooperation agreements with 27 EU Member States (including the UK) to allow Jersey funds to be marketed in those jurisdictions by way of their respective national private placement regimes. The JFSC also entered into a memorandum of understanding with the UK's Financial Conduct Authority in March 2019 to give further certainty to Jersey fund manager in light of Brexit.

1.5 Which bodies are responsible for regulating alternative investment funds in your jurisdiction? What powers do they have?

The JFSC is responsible for regulating alternative investment funds in Jersey. The JFSC has broad powers under COBO and the Control of Borrowing (Jersey) Law 1947 for private funds, and the CIF Law and FSJL for certified funds. The JFSC has a range of powers including civil financial penalties, to make directions and public statements, and breaches of the primary laws noted above can be a criminal offence where the penalty can be a prison term or a fine or both.

1.6 To what extent do the regulators cooperate with their counterparts in other jurisdictions?

The JFSC works closely with its counterparts in other jurisdictions, notably the UK's Financial Conduct Authority with whom it signed a memorandum of understanding in March 2019 giving Jersey fund managers additional certainty around accessing UK capital in light of Brexit. The JFSC is also a founder member of The Group of International Finance Centre Supervisors.

Jersey is a BEPS Associate, a member of the BEPS Inclusive Framework and a signatory to the multilateral instrument that forms part of the BEPS framework.

Jersey has also recently introduced the Taxation (Companies – Economic Substance) (Jersey) Law 2019 (the Economic Substance Law) which introduces new standards for economic substance for Jersey entities as part of an initiative led by the EU Code of Conduct Group (Business Taxation). The Economic Substance Law makes provision for information on Jersey companies to be shared with the tax authorities in other jurisdictions. The Guidance Notes on the Economic Substance Law have been co-written by the authorities in Jersey, Guernsey and the Isle of Man.

Jersey signed an agreement with the United States in December 2013 in respect of FATCA reporting. The Jersey Comptroller of Taxes collates the data shared with the US Internal Revenue Service, and the relevant information must be submitted to the Comptroller by 30 June each year.

In January 2016 Jersey passed the Taxation (Implementation) (International Tax Compliance) (Common Reporting Standard) (Jersey) Regulations which implement the OECD's Common Reporting Standard (CRS) in Jersey. CRS forms are required to be submitted to the Jersey tax office and the relevant information is then shared with the participating jurisdictions. Separate agreements also exist for the automatic sharing of tax information with Guernsey and the Isle of Man.

2 Form and structure

2.1 What types of alternative investment funds are typically found in your jurisdiction?

The majority of Jersey alternative investment funds are closed-ended and invest in illiquid assets such as real estate, private equity and debt. However, there are a number of Jersey hedge fund managers and Jersey funds invest in many other asset classes.

2.2 How are these alternative investment funds typically structured?

Investment funds are generally formed as limited partnerships or limited companies, but are also formed as separate limited partnerships (SLPs), incorporated limited partnerships (ILPs), unit trusts, or cell companies (either protected cell companies or incorporated cell companies).

2.3 What are the advantages and disadvantages of these different types of structures?

All Jersey structures allow for a tax neutral fund vehicle from a Jersey tax perspective. As further described below, Jersey limited companies are tax opaque entities and are liable to pay corporation tax at 0%, and Jersey unit trusts, limited partnerships, SLPs and ILPs are treated as tax transparent for Jersey purposes.

These structure also allow for the limitation of investors' liability. Investors in funds formed as Jersey limited companies are liable only up to the value of any unpaid shares that they hold in the company and will not be required to make any contribution to the assets of the company on winding-up beyond the value of any unpaid shares they hold.

Investors in limited partnerships, SLPs or ILPs are liable only up to the amount they have agreed to commit to the capital of the limited partnership, SLP or ILP, provided they do not participate in the management of the limited partnership, SLP or ILP. Various safe harbours setting out activities that investors can undertake without endangering their limited liability are set out in the relevant laws governing these entities.

2.4 What are the most widely used alternative investment funds structures used in your jurisdiction?

As above, investment funds are generally formed as limited companies, limited partnerships, unit trusts, separate limited partnerships (SLPs), incorporated limited partnerships (ILPs) or unit trusts.

2.5 Is there a preferred alternative fund structure for particular investment strategies (ie, hedge fund/private credit/private equity)?

Hedge funds/open-ended funds are generally formed as limited companies, whereas private closed-ended funds, including funds with strategies investing in private equity, credit and real estate tend to be formed as limited partnerships. That said, this is only reflective of a general trend and there are a number of examples of private closed-ended funds being formed as companies and open-ended funds being formed as limited partnerships.

2.6 Are alternative investment funds required to have a local administrator appointed?

Jersey Private Funds are required to appoint a Jersey administrator with the appropriate regulatory licences as its designated service provider (DSP). The DSP will take responsibility for ensuring the fund's compliance with the Jersey Private Fund Guide.

Public funds such as Jersey Expert Funds are required to appoint a duly regulated Jersey administrator, manager or (if the fund is a unit trust) a trustee with at least two Jersey resident directors with appropriate experience together with staff and a physical presence in the island.

Funds subject to the OCIF Guide are required to appoint a Jersey based trustee or custodian and a manager, and the trustee/custodian and manager are required to be independent of each other. If the manager does not have staff and a physical presence in Jersey, then a Jersey administrator must be appointed.

2.7 Are alternative investment funds required to appoint a local custodian to hold assets? If yes, what legal protections are in place to protect the alternative investment fund's assets?

Jersey Expert Funds are required to have arrangements in place to deal with the safe custody of assets. A separate custodian with a physical presence in Jersey is required for open-ended funds (but not closed-ended funds). This requirement is waived where a prime broker with a minimum credit rating of A1/P1 is appointed.

Listed funds and Eligible Investor Funds must make arrangements to deal with safe custody and must appoint a Jersey resident manager or administrator. Open-Ended Eligible Investor Funds must appoint a separate custodian.

Open-Ended Unclassified Collective Investment Funds offered to the general public must have a Jersey based trustee or custodian.

A Jersey custodian to an investment fund is likely to be subject to the FSJL and Code of Practice for Fund Services Business. For example, under the FSJL where a registered person is responsible for client assets he or she is required to arrange for proper protection by way of segregation and identification of the assets or otherwise in accordance with the responsibilities he or she has accepted. The Fund Services Business Code of Practice requires that Jersey custodians, trustees or depositaries appointed to act for investment funds maintain paid up share capital and non-distributable reserves and a minimum net asset position of not less than £250,000 to £500,000 depending on the type of fund which they are acting for and the type of fund services business that is being transacted.

2.8 Is it possible for an alternative investment fund to redomicile to your jurisdiction? If yes, what considerations are required and what are the steps involved?

Yes, the Companies (Jersey) Law 1991 allows for companies to migrate to Jersey. It would be necessary to consider how the fund would be regulated in Jersey, and whether it would be a private fund or a public fund, and the relevant applications would accordingly need to be prepared and submitted to the JFSC. If the fund is not structured as a company, then another means of transfer/re-domiciliation would need to be considered.

3 Authorisation

3.1 Must alternative investment funds be authorised or licensed in your jurisdiction?

Every alternative investment fund launched in Jersey will need to apply to the JFSC for a consent under COBO, if a private fund, or a certificate under the CIF Law (if there will be more than 50 investors or more than 50 offers to potential investors).

3.2 If so, what criteria must be satisfied to obtain authorisation? Do any restrictions apply in this regard?

Jersey Private Funds must appoint a Jersey regulated DSP who will be responsible for ensuing ongoing compliance with the terms of the JPF Guide.

Public funds must produce an offering document that complies with the content requirements set out in the Collective Investment Funds (Certified Prospectuses) (Jersey) Order 2012 (CFPO).

Public funds such as Jersey Expert Funds are required to have at least two Jersey resident directors with appropriate experience appointed to the fund's board if the fund is a corporate fund. If the fund is formed as a limited partnership or a unit trust, Jersey resident directors with appropriate experience must be appointed to the board of the general partner or trustee (as applicable).

The majority of the board of a Jersey Listed Fund must be made up of independent directors, including at least two Jersey resident directors.

Funds formed as Jersey Private Funds or Unregulated Eligible Investor Funds are not strictly required to appoint Jersey resident directors.

Funds subject to the OCIF Guide are required to appoint a Jersey based trustee or custodian and a manager, and the trustee/custodian and manager are required to be independent of each other. If the manager does not have staff and a physical presence in Jersey, then a Jersey administrator must be appointed.

3.3 What is the process for obtaining authorisation of alternative investment funds and how long does this usually take?

The process varies depending on whether the fund is private or public. For Jersey Private Funds an online application form is submitted by the DSP, and the COBO Consent is usually issued within 48 hours.

For public funds, the application forms, a structure chart, and offering document is submitted to the JFSC by Jersey counsel and the certificate is typically issued within three working days (for expert funds).

4 Management and advisory relationships

4.1 How are alternative investment fund managers and advisers typically structured in your jurisdiction?

Managers and advisers are generally formed as limited companies resident in Jersey, the UK or other jurisdictions. Manager and adviser entities are also often formed as LLPs.

4.2 What are the advantages and disadvantages of these different types of structures?

Both companies and LLPs offer limited liability. LLPs offer a degree of flexibility because the partners are free to draft a bespoke partnership agreement without regard to the requirements of the company law.

That said, Jersey has a modern companies law which is based on English company law, but offers a certain amount of extra flexibility, for example dividends can be paid so long as a company is solvent i.e it will continue to be able to pay its debts as they fall due, and such dividends are not required to be paid solely out of a company's profits.

4.3 Must alternative investment fund managers be authorised or licensed in your jurisdiction?

Managers or advisers that are based in Jersey are likely to be subject to the FSJL, which is the primary piece of legislation governing financial services in Jersey. In particular a person acting as a manager or adviser of an alternative investment fund is likely to be carrying on fund services business or investment business for the purposes of the FSJL, and so would be required to apply for a licence and be regulated by the JFSC. There are various exemptions which would allow a Jersey entity to provide services to a private fund without having to become regulated.

4.4 If so, what criteria must be satisfied to obtain authorisation? Do any restrictions apply in this regard?

If no exemption to the requirements of the FSJL is available, a fund manager will be required to apply to be licenced and regulated by the JFSC under the FSJL and be subject to the Code of Practice for Fund Services Business (FSB Codes). Under the JFSC's Licencing Policy the JFSC must be satisfied that the applicant is a fit and proper person to carry on the relevant activity, and there are detailed requirements set out in the FSB Codes. However, if the manager/adviser appoints a Jersey administrator (to act as its 'manager of a managed entity' or MoME), then the manager will only be subject to the core principles of the FSB Codes rather than the detailed requirements. The core principles include conducting business with integrity, having due regard for the interests of the fund, demonstrate adequate risk management systems, demonstrate adequate financial resources and insurance, deal with the JFSC in an open and co-operative manner, and not make statements that are misleading, false or deceptive.

4.5 What is the process for obtaining authorisation and how long does this usually take?

To make an application to carry on fund services business the applicant will be required to complete an application form which will need to be submitted to the JFSC along with the applicant's latest audited accounts and a business plan giving details of, for example, the rationale of the business, its business risk assessment, AML/CFT policies, financial resources available to the applicant, and details of directors and key persons.

The applicant's directors and ultimate beneficial owners with a 10 per cent interest or more (known as 'principal persons') will be required to complete and submit electronic personal questionnaires to the JFSC and be approved by the JFSC.

The JFSC aims to process applications to be licenced for fund services business within 30 days of receiving the application where the 'principal persons' have not previously been approved by the JFSC, and 10 working days if they have previously been approved.

4.6 What other requirements or restrictions apply to alternative investment fund managers and advisers in your jurisdiction?

The Expert Fund Guide requires that the fund's investment manager/adviser must meet certain criteria, for example that it is established in an OECD member state or a state with which the JFSC has a memorandum of understanding, that it is regulated (or not required to be regulated in its home state) and that there are no disciplinary actions being taken against it.

The manager of Open-Ended Unclassified Collective Investment Funds must meet the criteria set out in the JFSC's Promoter Policy, which sets out certain guidelines on what the JFSC will expect to see based on factors such as the manager's experience and track record, reputation and financial resources.

4.7 Can an alternative investment fund manager impose restrictions on the issue, redemption or transfer of interests in the funds under management?

Investors in Jersey funds (and transferees of fund interests) must meet the relevant criteria, for example investors in expert funds must fall within the definition of 'expert investor'. An expert fund must also appoint a Jersey custodian (or in the case of a hedge fund a prime broker with a credit rating of A1/P1 or long term equivalent) if the fund will allow for redemptions at the option of the investors. Otherwise restrictions on the issue, redemption and transfer of fund interests would be a matter for the constitutive documents for the fund.

In relation to redemptions, Open-Ended Unclassified Collective Investment Funds may only suspend redemptions in exceptional circumstances, having regard to the interests of investors, and the manager must immediately notify the JFSC of any suspension and during the period of suspension a notice must be published at least monthly in a newspaper where details of the pricing of the units are normally published.

4.8 Are there any requirements regarding the ownership of alternative investment fund managers? If so, please provide details.

Yes. If a manager is licenced by the JFSC for fund services business, then the JFSC will need to approve the directors and 10 per cent or more ultimate beneficial owners under the 'personal questionnaire' process and as part of the licence application. The JFSC's prior consent will also be required for a change in control of the manager. Broadly, any incoming or outgoing director or person with a 10 per cent interest or more in the manager will need the prior consent of the JFSC to the proposed change in control.

4.9 Can alternative investment fund managers delegate to third-party investment managers or investment advisers? If yes, please provide details of any specific requirements.

Yes. If the manager is licenced for fund services business, then the delegation may fall within the scope of the JFSC's Outsourcing Policy and Guidance Notes (Outsourcing Policy). The Outsourcing Policy broadly requires the manager to ensure that any party it outsources to is fit and proper; put in place a written agreement; monitor the performance of the activity; ensure that the outsourcing can be terminated; notify the JFSC of the intention to outsource and any changes to the outsourcing; and ensure that the JFSC can carry out its regulatory function.

In addition, if the Jersey manager is an AIFM under the AIFMD and it is outsourcing certain roles, then it will be necessary to ensure that it maintains contractual responsibility for risk and portfolio management and does not become a letterbox entity.

4.10 Can alternative investment fund manager provide investment management services to clients other than alternative investment funds? If yes, do any additional requirements apply?

Yes, although the regulatory status of the services will need to be considered carefully as to whether any additional licences or exemptions will need to be procured or used.

For example, hedge fund managers may provide fund services business to their funds and be licenced for fund services business accordingly. Whereas in relation to services provided to managed accounts (i.e. non-funds), they may be carrying out investment business, which requires an additional and more onerous investment business licence, but they may be exempt from the requirement to procure an investment business licence under the Financial Services (Investment Business (Qualifying Segregated Managed Accounts – Exemption)) (Jersey) Order 2014.

5 Marketing

5.1 Is the marketing of alternative investment funds subject to authorisation in your jurisdiction?

A Jersey certified fund would be required to issue a prospectus that complies with the content requirements of the CFPO and that would be approved by the JFSC.

A Jersey Private Fund is not required to have an offering document, but may do so as long as it contains all the information that investors and their advisers would reasonably require and would expect to find for the purpose of making an informed judgement about the merits of purchasing units in the fund and the nature and levels of risks accepted by making such a purchase. Any offer document that relates to a Jersey Private Fund does not need to be submitted to or approved by the JFSC.

Where a Jersey fund is to be marketed into Europe the fund may need to obtain an AIF certificate under the Alternative Investment Funds (Jersey) Regulations and comply with Jersey's AIF Codes, which broadly mirror the requirements of AIFMD in terms of disclosure, reporting and asset-stripping.

Non-Jersey funds may circulate offers in Jersey but a consent from the JFSC under COBO may be required.

5.2 If so, what criteria must be satisfied to obtain authorisation? Do any restrictions apply in this regard?

A Jersey certified fund must submit an application to the JFSC enclosing the prospectus confirming that it complies with the content requirements of the CFPO, and if relevant the Jersey AIF Codes and applicable sections of the Fund Codes.

5.3 What is the process for obtaining authorisation and how long does this usually take?

Applications for approval of a certified fund, which would include the submission of a CFPO-compliant prospectus, can be approved by the JFSC within three working days.

5.4 To whom can alternative investment funds be marketed?

Jersey domiciled investment funds can be marketed to the appropriate category of investor, i.e. an expert fund can be marketed to 'expert investors' and JPFs can be marketed to 'professional investors' or 'eligible investors' (subject, in the case of JPFs, to no more than 50 offers to invest being made). Jersey Listed funds can be marketed to professional or experienced investors or investors who have taken appropriate professional advice.

5.5 What are the content criteria that marketing materials for alternative investment funds must satisfy?

Offering document content requirements for Jersey public funds are set out in the CFPO and relevant sections of the Fund Codes, and if relevant the Jersey AIF Codes.

Whether or not the requirement to produce a prospectus applies in respect of the various types of funds is set out in the relevant legislation and/or regulation governing the relevant fund product. Broadly Expert Funds, Unclassified Collective Investment Funds, Listed Funds and Eligible Investor Funds are required to produce CFPO compliant prospectuses that also comply with the Fund Codes. There is no requirement for JPFs to produce any form of marketing document, but if an offering document is produced it must not be misleading and must contain all of the information on the fund an investor would reasonably expect to see.

The CFPO sets out the content requirements for Jersey funds required to issue prospectuses (such as expert funds). Broadly these include details of matters such as the identity of the key stakeholders, valuation methodology, fund strategy, conflicts of interest, how fund assets will be held and various statutory statements. Where a prospectus is required additional content requirements may be set out in the relevant sections of the Fund Codes. Additional information may also need to be included to ensure compliance with the AIF Codes (where the fund will be an AIF marketing into Europe). Aside from prospectuses, the FSB Codes and Fund Codes also contain requirements around advertising.

5.6 What other requirements or restrictions apply to marketing materials for alternative investment funds?

Each of the Fund Codes and FSB Codes provide that a fund/registered person must not make statements that are misleading, false or deceptive, and the Codes contain requirements in relation to advertisements that relate to funds.

5.7 Can alternative fund managers from other jurisdictions market alternative investment funds in your jurisdiction without authorisation?

Subject to certain exemptions, non-Jersey domiciled funds circulating offers in Jersey are required to obtain a COBO Consent from the JFSC. Certain investor warnings may also need to be included in any marketing material distributed to Jersey investors.

5.8 Is the appointment of local marketing entities required in your jurisdiction?

There is no requirement under Jersey law for local marketing entities to be appointed.

5.9 Is it possible to market alternative investment funds to retail investors in your jurisdiction? If so, are there specific requirements?

Recognised Funds, Unclassified Collective Investment Funds and Listed Funds can be marketed to retail investors subject to certain requirements, for example, in relation to Listed Funds that the investors have taken appropriate professional advice. Regulated managers can invest on behalf of retail investors in Expert Funds and JPFs if they are satisfied that the investment is suitable for the underlying investor and that the underlying investor is able to bear the economic consequences of investment in the fund, including the possibility of the loss of their entire investment.

6 Investment process

6.1 Do any investment or borrowing restrictions apply to the portfolios of alternative investment funds?

Recognised Funds and Unclassified Collective Investment Funds have prescriptive criteria for the types of assets that may be held by the fund and in what proportion different asset classes must be held, as set out in the Collective Investment Funds (Recognised Funds) (Rules) (Jersey) Order 2003 (Recognised Funds Order) and the OCIF Guide respectively.

Recognised Funds and Unclassified Collective Investment Funds are subject to the rules on borrowing which are set out in the Recognised Funds Order and the OCIF Guide respectively.

There are no statutory restrictions on the ability of an Expert Fund to borrow, but the fund's approach to borrowing and gearing must be set out in the offer document, and if the fund can borrow more than 200 per cent of the net asset value of the fund, then full details of how the risk posed by such borrowing is to be managed is to be disclosed to the JFSC in the application and the JFSC can undertake additional scrutiny. There are no investments or borrowing restrictions in the JPF Guide. However, regard must be had to the JFSC's Sound Business Practice Policy if the assets may impact the reputation of the Island, for example if they relate to weapons, the extraction of minerals or natural resources or crypto currency.

6.2 Are there any specific legal or regulatory requirements regarding investments in particular assets?

As noted above Recognised Funds and Unclassified Collective Investment Funds have criteria in respect of the types of investment they can hold and what proportion of their investments must be in different asset classes. As also noted above, regard should be had to the JFSC's Sound Business Practice Policy.

7 Reporting, governance and risk management

7.1 What key disclosure requirements apply to alternative investment funds in your jurisdiction?

The amount of information made public on Jersey funds is limited. Companies incorporated in Jersey will appear on the Jersey Registry, which is searchable online. The company's constitutional documents are made available for public inspection, including the memorandum and articles on payment of a fee. Special resolutions passed by the company must also be filed and will be made available for inspection as will the company's annual return, which shows a company's legal (but not beneficial) owners. As well as corporate funds, a general partner of a limited partnership and a trustee of a unit trust will also generally be formed as a limited company.

A search of the Jersey registry will also show any limited partnerships established in Jersey. There is no need for the Limited Partnership Agreement to be filed and no requirement to file a return detailing who the partners in the limited partnership are.

The name and address of Jersey certified funds and Jersey regulated service providers are also shown on the JFSC's website (whether formed as a company, limited partnership or otherwise).

7.2 What key reporting requirements apply to alternative investment funds in your jurisdiction?

Both Recognised Funds and Unclassified Collective Investment Funds have set reporting requirements which are set out in the Recognised Fund Order and the OCIF Guide respectively.

If the fund is to be marketed into Europe it will also be subject to the AIF Codes. The AIF Codes contain reporting requirements that broadly mirror the requirements under AIFMD known as Annex IV reporting. Reporting may also be required in respect of FATCS and CRS.

7.3 What key governance requirements apply to alternative investment funds in your jurisdiction?

There is no requirement under the Jersey Private Fund Guide for a Jersey private fund to have Jersey resident directors, although it would be common, and rather governance is required by way of the DSP.

Public funds (such as expert funds) are required to have at least two Jersey resident directors. Fund services providers are generally required to have at least two Jersey resident directors, and where client money is handled a 'span of control' of at least three directors.

7.4 What key risk management requirements apply to alternative investment funds in your jurisdiction?

A core principle of each of the Fund Codes and FSB Codes is that a fund/registered person must organise its affairs effectively for the proper performance of its activities and be able to demonstrate the existence of adequate risk management systems. Requirements of the Fund Codes relate to corporate governance, internal systems and controls, continuing professional development, compliance staff, complaints, record keeping, financial statements and valuations.

There are prescriptive criteria that govern Recognised Funds and Unclassified Collective Investment Funds as noted above.

The JFSC has published a Sound Business Practice Policy (SBPP) where certain activities will be scrutinised more closely with a view to protecting the reputation of the Island, it covers investment in industries such as mining or drilling for natural resources and cryptocurrency.

8 Tax

8.1 How are alternative investment funds treated for tax purposes in your jurisdiction?

Jersey companies are tax opaque for the purposes of Jersey law and are generally taxed at a rate of 0 per cent. Jersey companies are required to submit tax returns to the Jersey tax office.

Jersey unit trusts, limited liability partnerships, limited partnerships, SLPs and ILPs are all tax transparent for Jersey law purposes.

8.2 How are alternative investment fund managers and advisers treated for tax purposes in your jurisdiction?

As noted above, Jersey companies are generally taxed at 0 per cent.

Jersey LLPs are tax transparent entities for Jersey law purposes.

Jersey fund managers structured as companies may fall within the scope of the Economic Substance Law. If so, they may be required to demonstrate that they are directed and managed in Jersey, have an adequate number of employees, expenditure and physical assets in Jersey (potentially provided by its administrator), and its core income generating activities (known as CIGA) is carried out in Jersey.

8.3 How are alternative investment fund investors treated for tax purposes in your jurisdiction?

As noted above, Jersey companies are generally taxed at 0 per cent.

Jersey LLPs, Jersey limited partnerships, SLPs and ILPs are all tax transparent entities for Jersey law purposes.

8.4 What effect do international laws such as the US Foreign Account Tax Compliance Act and international standards such as the Common Reporting Standard have in your jurisdiction?

The States of Jersey and the US Government have entered into an agreement whereby the Jersey tax office will provide the Internal Revenue Service with any information required to ensure compliance with FATCA. As part of the agreement the 30 per cent withholding tax and account closure requirements of FATCA will not apply in Jersey.

As noted above, FATCA and CRS forms are required to be submitted to the Jersey tax office and the relevant information is then shared with the participating jurisdictions. Separate agreements also exist for the automatic sharing of tax information with Guernsey and the Isle of Man.

8.5 What preferred tax strategies are typically adopted in the alternative investment fund context?

Given the simplicity of the Jersey tax regime (companies taxed at 0 per cent and limited partnerships/unit trusts being tax transparent) there is no need for complex tax strategies to be adopted with regard to Jersey tax.

9 Trends and predictions

9.1 How would you describe the alternative investment fund landscape and prevailing trends in your

Despite the challenges posed by Brexit and the introduction of the new economic substance regime, the Jersey funds industry is buoyant. Jersey Private Funds in particular have been a huge success and 250 JPFs had been registered as at June 2019 since the regime was introduced in April 2017. Private equity and real estate funds (which have traditionally been popular asset classes for Jersey funds) continue to dominate the Jersey market with a significant number of new venture capital funds also being launched.

9.2 Are any new legal or regulatory developments anticipated which will impact on alternative investment funds or alternative investment fund managers in your jurisdiction?

Jersey is in the process of introducing a new limited liability company (LLC) entity. LLCs, which are most commonly associated with the United States, share a number of characteristics with limited partnerships and are often described as a 'hybrid' between a company and partnership. The Jersey LLC is expected to closely mirror LLCs as they exist in the US and offer its members limited liability combined with the flexibility of being able to draft an LLC agreement to set the terms of their relationship. Like LLCs in the US it is expected that it will be possible to create series within the Jersey LLC, each with its own separate legal personality.

Given the popularity of the LLC in fund structures in the US, the LLC is expected to play a significant role in the Jersey funds industry once it is launched.

9.3 Do you envisage any particular industry strategy of attracting particular interest in the next 12 months?

Whilst Jersey continues to have a close working relationship with the City of London, there are renewed efforts to encourage US fund managers and advisors to launch their funds in Jersey. In additional to the introduction of the LLC, Jersey Finance, the industry body tasked with promoting Jersey's financial services industry, has recently launched its New York office.

10 Tips and traps

10.1 What are your top tips for the smooth establishment and management of an alternative investment fund in your jurisdiction, and what specific challenges would you note?

Knowing as early as possible where the fund will be marketed is important, to ensure that sufficient time is available seeking local law advice, complying with national private placement rules and making the relevant filings with the JFSC.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.