Jersey: Channel Islands Funds Quarterly Legal And Regulatory Update Q3 2018: 1 July - 30 September 2018

Last Updated: 8 October 2018
Article by Niamh Lalor, Bryon Rees, Tim Clipstone, Craig Cordle, Emily Haithwaite, Sophie Reguengo, Gabrielle Saul and Oliver Quarmby

Most Read Contributor in Jersey, August 2019

1 Jersey Developments

1.1 Limited Liability Companies arrive in Jersey

On 11 September 2018, the Draft Limited Liability Companies (Jersey) Law (the LLC Law) was adopted by the States of Jersey paving the way for limited liability companies (LLCs) to be established in Jersey. The LLC Law will now go before the UK Privy Council for final review and approval. Regulations to bring the new law into force are currently being progressed by the States.

The LLC Law largely mirrors the Delaware model. LLCs offer the limited liability protection of a company and the flexibility and privacy of a partnership in one vehicle. They have become increasingly popular vehicles globally and particularly in the US. We expect to see a reflection of this trend in Jersey following the implementation of the LLC Law.

Please find a link to our briefing here.

1.2 A new law for Jersey Limited Liability Partnerships

The Limited Liability Partnerships (Jersey) Law 2017 (LLP Law), which replaces the Limited Liability Partnerships (Jersey) Law 1997 (1997 Law), came into force in its entirety on 1 August 2018, together with the following Regulations relating to limited liability partnerships (LLPs):

  1. The Limited Liability Partnerships (Amendment of Law) (Jersey) Regulations 2018 provides for transitional arrangements to the new LLP Law for all LLPs that exist under the old framework; and
  2. The Limited Liability Partnerships (Dissolution and Winding Up) (Jersey) Regulations sets out the circumstances in which an LLP may be dissolved and the procedures that should be followed to wind up an LLP in both solvent and insolvent situations.

Importantly, LLPs established under the 1997 Law are required to appoint a secretary and notify the Registry of the name and address of the secretary within six months of the new LLP Law coming into force. Please find a link to our briefing here.

1.3 Updates to the Jersey Private Fund Guide following JFSC launch of an online application tool

On 2 August 2018, the JFSC announced the launch of an online application tool for Jersey Private Funds (JPFs). All applications, notifications and annual returns in respect of JPFs must (as of 1 September 2018) be made online and will no longer be accepted in paper format. The purpose of the online authorisation tool is to speed up application turnaround times and improve efficiencies. The JFSC has also made a number of other amendments to the Jersey Private Fund Guide (the JPF Guide). The changes of particular significance are that a JPF cannot be more than one vehicle and applicants must now clearly state the date upon which Annual Returns are due by.

1.4 Enhancements to Jersey's Sound Business Practice Policy

On 2 August 2018, the JFSC amended the Sounds Business Practice Policy (SBPP) to clarify that any sale or facilitation of sale of citizenship / citizenship by investment (which includes the administration associated with citizenship and/or arranging for citizenship), is a sensitive activity falling within Table 2 of the SBPP. Table 2 sets out activities that are not within the regulatory oversight of the JFSC but are considered to likely pose a potential reputational risk to Jersey and will therefore be carefully considered by the JFSC when forming an opinion on whether to issue consent under the Control of Borrowing (Jersey) Order 1958 for entities engaging in such activities.

1.5 Overhaul of Jersey's double taxation agreement with the UK government

On 3 August 2018, the Minister for External Relations ratified a new double taxation agreement (DTA) with the UK government. The new DTA eliminates double taxation with respect to taxes on income and on capital gains. It replaced the existing 1953 agreement and aligns itself with the OECD model DTA convention standard.

1.6 New Guidance Notes from the JFSC

The JFSC has issued a comprehensive guidance note in relation to professional indemnity insurance (PII) which covers PII cover, PII policy limitation and the policies and procedures relating to PII. As a result policies and procedures manuals for regulated entities may require updating.

On 12 July 2018, the JFSC issued a guidance note on the application process for issuers of initial coin offerings (ICOs). This is welcome guidance for industry and confirms Jersey's pragmatic approach to ICO activity. Please find a link to our briefing here.

The JFSC has issued a guidance note on integrity, honesty and competence in respect of conduct by regulated entities and individuals. This was in response to the recommendation of the Royal Court in the judgment of Francis v JFSC [2017]JRC203A that the JFSC "issue and publish a guidance note making it clear that a finding of lack of integrity is not the same as a finding of dishonesty and expanding on what it does mean" so that subjects of regulatory action are clear of their standing.

On 23 July 2018, the JFSC published its 2018 themed feedback paper on revised Registry requirements for beneficial owners and controllers of corporate entities. Through a programme of on-site examinations the JFSC has highlighted key areas of improvement for compliance with the Registry requirements by Trust and Corporate Service Providers (TCSPs):

  1. Ensure that board minutes record deliberations and resultant actions in sufficient detail to demonstrate board oversight;
  2. Ensure that it is evident that the risk-based approach incorporating the three-tier test has been appropriately documented within policies and procedures;
  3. Provide practical guidance to staff in applying the three-tier test to identify beneficial owners and controllers in varying scenarios;
  4. Ensure that the evaluation or outcome of the three-tier test is formally documented to demonstrate that the firm has appropriate record-keeping arrangements and documented rationale for disclosing information to the Registry;
  5. Revise the terms and conditions of their service contracts to oblige administered registered companies or partnerships to inform the firm of changes in their beneficial owners or controllers or changes to their details; and
  6. Where submissions of information to the Registry are made via the Application Program Interface (API) system, the JFSC would expect that management would sign off any transmission of information and that independent sample checks are carried out to prevent instances of misspellings and omissions of relevant information.

1.7 Q4 industry update

On 15 August 2018, the JFSC issued an industry update announcing details of its supervisory examination themes for the final quarter of 2018. These are as follows:

  1. Outsourcing arrangements – the JFSC issued a new 'Outsourcing Policy and Guidance Note' which came into effect on 1 June 2017 for all new outsourcing arrangements. A review and assessment of the extent to which registered persons have understood the new requirements and adopted the applicable deadlines when it comes to outsourced activities will be undertaken. Please find a link to our briefing here.
  2. Property managers – the JFSC intends to examine whether, in providing property related services, any of those services fall within the scope of activities that require registration under the Proceeds of Crime (Jersey) Law 1999.

2 Guernsey Developments

2.1 Prospectus Rules and Registered Collective Investment Scheme Rules

On 6 July 2018, following a period of consultation, the Guernsey Financial Services Commission (the GFSC) issued the Prospectus Rules 2018 (the Prospectus Rules) and the Registered Collective Investment Scheme Rules (the RCIS Rules, and together with the Prospectus Rules, the Rules).

The Rules will each become effective from 6 October 2018.

The GFSC has stated that implementation of the Rules may be achieved through the earlier of:

  1. a registered investment scheme initiating an annual review at an appropriate time to identify the changes required to comply with enhanced disclosures; or
  2. any change of circumstances requiring filing to the GFSC of a notification to investors, supplement or revised prospectus.

The Rules make it clear that the Prospectus Rules do not apply to Private Investment Funds.  Further the GFSC has ensured that the Rules make it clear that revisions to a prospectus in a closed-ended fund may be in the form of a notification to investors, thereby providing sufficient disclosures to investors and the GFCS without incurring exceptional costs.

Please find a link to our briefing on the Rules here.

2.2 Guernsey Green Funds

As anticipated in our last update, the GFSC has now published the Guernsey Green Fund Rules (the Green Fund Rules).  The Green Fund Rules were published on 9 July 2018 and create a new designation for Guernsey registered or authorised schemes that have the objective of seeking a return for investors whilst mitigating environmental damages and that comply with certain defined carbon mitigation standards.

Once a declaration is provided that a scheme's objectives encompasses mitigating environmental damage and confirms that its investment criteria complies with the green criteria in the Green Fund Rules.  Upon meeting such requirements, a scheme receives a Guernsey Green Fund designation from the GFSC and may use the Guernsey Green Fund logo to advertise its compliance with the Green Fund Rules.

Please find a link to our briefing on Guernsey Green Funds here.

2.3 Insurance Manager and Intermediary Approved Asset Regulations

Following the closing of the consultation on potential amendments to the Insurance Mangers and Insurance Intermediaries (Approves Assets) Regulations, 2002 (the 2002 Regulations), the GFSC published its feedback paper and amending regulations on 10 July 2018.

Respondents agreed with the GFSC's rationale for the proposed amendments, being to remove an inconsistency in the 2002 Regulations that weakened the capital available to licensees by allowing controllers, associates or associated parties to capitalise a licensee and then potentially have that funding loaned back to them.

The amending regulations, referred to as the Insurance Managers and Insurance Intermediaries (Approved Assets) (Amendment) Regulations, 2018, will come into force on 10 October 2018 following a three month transition period.

2.4 Outsourcing Guidance Note for Licensed Insurers

Further to the last update, on 12 July 2018 the GFSC issued a guidance note for licensed insurers on outsourcing.  The aim of the guidance is to clarify the expectations of the GFSC with respect to the outsourcing of material activities by licensees under the Insurance Business (Bailiwick of Guernsey) Law, 2002.

2.5 Global Financial Innovation Network

The GFSC has, in collaboration with eleven financial regulators and related organisations, recently announced the establishment of the Global Financial Innovation Network (the GFIN).

The network will seek to provide a more efficient way for innovative firms to interact with regulators worldwide, helping them navigate between countries as they look to scale new ideas and technologies.  It will also create a new framework for co-operation between financial services regulators on innovation related topics.

GFIN also launches a consultation on the role GFIN should play in delivering its objectives, including the tools it will use.

2.6 GFSC announces senior staff changes

Following the appointment of Dr Andy Sloan, as Deputy Chief Executive, Strategy at Guernsey Finance, the GFSC has made some alterations to its senior management structure.

Senior staff responsibilities have been re-allocated as follows:

  1. Emma Bailey is now Director of the Authorisations and Innovation Division
  2. Katherine Jane is now Director of Risk and Financial Stability
  3. Gillian Browning is now Director of the Investment, Fiduciary and Pension Division

2.7 Second quarter investment statistics 2018

The total value of funds business in Guernsey is at a five year high following a rise in net asset value in second quarter of 2018.

The net asset value of total funds increased by £13 billion to £276.2 billion, which is the highest since the end of June 2013. Private equity business was a significant contributor to this increase, with a near £7 billion on the first quarter of 2018 to £112.7 billion, accounting for more than half of the overall increase.

Guernsey-domiciled closed-ended funds experienced a quarterly increase of £0.4 billion and an annual rise of £1 billion. Open-ended funds also increased by £1.4 billion over the quarter to £43.2 billion.

Non-Guernsey schemes grew by 22.9% (£11.9 billion) to £64.7 billion, an increase of £4.9 billion since 30 June 2017, which is the highest they have been since September 2014.

3 Developments in the Channel Islands

3.1 UK government to make public registers of beneficial ownership in Overseas Territories

On 26 August 2018, the UK House of Commons published an updated beneficial ownership briefing looking at the development of beneficial ownership registers in the UK, its Overseas Territories and its Crown Dependencies (being Jersey, Guernsey and the Isle of Man). The UK government are looking to include a new clause in the Sanctions and Anti-Money Laundering Bill 20- which will in effect compel Overseas Territories to make public the register of the beneficial ownership of companies in their jurisdiction by the end of 2020, but this requirement will not be extended to the Crown Dependencies.

3.2 Consultations on the introduction of substance requirements in Jersey and Guernsey

The Jersey and Guernsey consultations on the introduction of legislation for companies tax resident in Jersey or Guernsey and conducting specific income-generating activities (being banking, insurance, fund management, financing and leasing, headquarters, shipping, holding company activities and intellectual property) closed on 31 August 2018.  Such companies will be required to demonstrate that they have sufficient substance in Jersey or Guernsey, as applicable, as required by the EU's Code of Conduct Group on Business Taxation in line with the OECD's base erosion and profit shifting (BEPS) Action 5.

Draft legislation and industry guidance notes are expected by the end of October with an effective implementation date of 1 January 2019 in both jurisdictions. Do let us know if you have any questions regarding the current position.

3.3 Brexit

The Government of Jersey's Brexit planning has been developed based on a 'no deal' or 'hard Brexit' scenario. A summary of the Government of Jersey's initial position in relation to the UK government's series of technical notices on Brexit are available on the States of Jersey website.

The States of Guernsey has formed a Brexit group to assess the impact of Brexit on the Bailiwick and to prepare for a range of outcomes, including a 'no-deal' Brexit, the maintenance of the status quo under any implementation period and the possibility of a new partnership between the EU and the UK. The latest news and information issued by the Brexit group can be found on a microsite for the group by following this link: Brexit and Guernsey.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions