Green Investment Funds in Jersey

Case Studies
Foresight Group
Ludgate Environmental Fund Limited
GP Bullhound
Dominion Corporate Group

Why Jersey for Investment Funds?

Jersey is long established as a primary centre for the establishment of offshore funds and has been at the forefront of international developments which have attracted international sponsors, promoters, fund managers, advisors and investors.

One of the key features of Jersey’s fund industry is the flexibility and range of structures and corresponding regulatory and commercial approaches that can be used for funds. Funds can range from being rigorously regulated funds targeting retail investors, to unregulated funds that target the highly sophisticated investors.

Jersey domiciled investment funds may be structured as companies, limited partnerships or unit trusts. They may be open- or closed-ended. Jersey has added to its range of corporate structures by introducing protected cell company and incorporated cell company legislation. A number of enhancements to Jersey’s existing company law have further developed the flexibility for funds structured as companies. Jersey offers a location for investment funds which does not impose its own tax burden on an investment fund, or its investors: the investments that are made by a Jersey investment fund are neither subject to stamp duty or capital gains tax in Jersey and income tax in relation to investments outside of Jersey will not have to be paid.

The regulation of service providers to funds in Jersey, as “funds services business” is governed under the Financial Services (Jersey) Law 1998. Once an entity is registered for a class of funds service business it no longer needs to apply for authorisation in relation to each new fund for which it provides that class of services. This regime has also provided significant advantages for the provision of Jersey fund services to non-Jersey domiciled funds, which means that non-Jersey domiciled funds are subject only to a notification procedure in relation to their service providers and no longer need to seek fund by fund regulation.

Expert Funds

An expert category of funds which was introduced in Jersey in early 2004 has significantly enhanced Jersey’s attractiveness as a jurisdiction for the establishment of funds aimed at institutional and high net worth investors. Expert Funds can be established within a matter of days on the basis of a self certification approach, without the requirement for any formal regulatory review of the fund or its promoter. The regime was enhanced in November 2006 by extending some of the principal criteria and allowing secondary market activity in certain circumstances. 

An Expert Fund is subject to a very light degree of regulation. In particular (i) the promoter of an Expert Fund is not subject to any regulatory review or approval and (ii) an Expert Fund is not required to adopt any prescribed investment restrictions or risk diversification strategy. An Expert Fund may be listed on a stock exchange which permits restrictions on transfers of interests. This is to ensure that no one other than an Expert Investor can participate in the fund. 

The application process for an Expert Fund is simple and quick. An application form setting out the key features of an Expert Fund, including a confirmation from the Investment Manager/Adviser that it complies with certain regulatory requirements, must be countersigned by the Administrator. Then submitted along with documentary evidence as to the Investment Manager/Adviser’s regulation to the Jersey Financial Services Commission (JFSC), together with an application fee, structure chart and the draft Offer Document. The JFSC checks that the application forms have been appropriately completed, but do not carry out any regulatory review of an Expert Fund. The requisite consents to the establishment of the fund will be issued within 72 hours.

Listed Fund Guide

Introduced by the Jersey Financial Services Commission in 2007, the Listed Fund Guide provides a fast track process for the establishment of corporate closed-ended funds which are listed on recognised stock exchanges or markets. The introduction of the guide signals Jersey’s commitment to provide fund promoters with more choice and greater flexibility.

The authorisation process enables funds, like the Ludgate Environmental Fund, to be established within a matter of days on the basis of a self certification approach without the requirement for any formal regulatory review of the fund or its promoter. The streamlined authorisation procedure enables a speedy approval of funds which are to be listed on European and other leading stock exchanges and markets, including the Channel Islands Stock Exchange and AIM. Although still only available to companies it is proposed that the Listed Fund regime be extended at a future date to Jersey limited partnerships and unit trusts.

The investment manager of a listed fund must be established in an OECD state or in a jurisdiction with which the JFSC has entered into a memorandum of understanding or otherwise be approved by the JFSC. Listed funds must have at least 2 Jersey resident directors and a Jersey based monitoring functionary to ensure compliance with the Listed Fund Guide. There is no minimum subscription and listed funds are available to any investor category (expert or otherwise).