The Jersey Private Fund Guide outlines that Jersey Private Funds (JPFs) do not require a mandatory audit, which makes it a cost differentiator when compared to the Private Fund rules in other jurisdictions. It is potentially most advantageous to feeder fund and co-investment structures.

Changing landscape

At the end of 2019 and in the early part of 2020 there was a wave of offshore jurisdictions re-launching their private fund regimes as part of a package of measures, including new economic substance rules, to appease the EU Code of Conduct and to keep the jurisdictions off the non-cooperative list. The Cayman Islands enacted the Private Funds Law 2020 on 7 February 2020 and BVI introduced the Securities and Investment Business (Amendment) Act, 2019, which came into effect on 31 December 2019.

Both these regimes require the filing of audited financial statements with their respective regulator within six months of the year end.

Whilst the JPF as a fund product is capable of competing with other similar products in offshore jurisdictions, there are some particulars which see it stand out to provide a cost-effective solution for vehicles established to invest in master funds, which themselves meet the criteria of a fund on the basis they are pooling capital and risk spreading.

What makes the JPF a cost-effective proposition when selecting a Private Fund regime?
One of the key characteristics of the JPF is that there is no requirement for an audit. Whilst there is typically an expectation and desire from investors to audit funds, it is common that feeder vehicles or co-investment structures are used for onward investment into master funds. Since the financial statements of the master fund will typically be audited, investors will likely consider any requirement and cost for an additional audit of their own vehicle to be unnecessary.

This characteristic of the JPF makes it an appealing, cost-effective option for use as a feeder fund since it avoids the mandatory cost of an audit and the associated time invested into the audit process. This is a noteworthy difference when compared to the new Cayman and BVI regimes*, whereby audits are mandatory.

*Exemptions apply in certain circumstances in BVI as determined by the FSC

Further requirements on the JPF
In 2017 Jersey introduced the JPF to replace its “COBO only”, “Private” and “Very Private” fund regimes, as it simplified the product range and sought to offer an optimal solution to suit the needs of institutional investors. The JPF is now a leading product in the Jersey funds range.

The establishment of the JPF has also provided some much-needed criteria regarding what is, and perhaps more importantly, what is not a Fund.

A JPF is designed to be flexible and can take the form of a unit trust, a company (including protected cell and incorporated cell companies) or a partnership (including a limited partnership, a limited liability partnership, a separate limited partnership or an incorporated limited partnership) subject to certain criteria being met. These vehicles can be Jersey registered or established in other jurisdictions.

The broad criteria and key features of a JPF are described below:

  • A JPF can have a maximum of 50 investors and must have more than one investor;
  • A JPF must invest in more than one asset and therefore undertake “Risk Spreading”;
  • It can be an open-ended or closed-ended fund;
  • It is common that there is at least one Jersey resident director (trustee, or general partner) appointed, but there is no requirement under the JPF regime to have Jersey resident controllers (this would be subject to applicable tax advice on the structure to ensure that the structure meet the substance requirements);
  • A JPF must appoint a Jersey regulated administrator as Designated Service Provider (a “DSP”) to ensure that the JPF criteria are met and applicable legislation (such as Anti-Money Laundering) is complied with;
  • There is no requirement to produce an offering document, although this can be done providing the offering document complies within the parameters set out in the JPF Guide (the Guide);
  • There is no restriction on investments or borrowing other than investments complying with the Jersey good business practice policy;
  • There is no requirement for audited accounts;
  • Retail investors are not permitted and the JPF cannot be listed on any stock exchange;
  • A JPF can only be offered to Professional or Eligible Investors (as defined), and
  • A JPF must have consent issued under the Control of Borrowing (Jersey) Order 1958 (“COBO”).

Is it possible to migrate existing offshore structures?

Jersey has also recently passed legislation which allows for the efficient migration of Limited Partnerships to Jersey. With the majority of offshore Private Funds being limited partnerships, this important legislation gives Managers and their Advisors the ability to migrate the limited partnership to Jersey. Avoiding the time and cost of an annual audit may well provide some Managers and investors with the motivation to migrate.


The Private Fund regime is well established, having been in place since 2017. The attraction of the Jersey Private Fund proposition as a product is further enhanced with its potential to outperform other Private Funds on cost basis.

The JPF proposition is further proof that the island continues to provide regulatory certainty as a top choice for Fund domiciliation, as well as distinguishing itself as one of the leading international finance centres that contains a high-quality finance sector which offers genuine economic substance.

Let’s talk… How can Sanne help?

Globally resilient, locally brilliant – we offer the flexibility and personality of a local business with the scope and opportunities of a dynamic global organisation.

For more information on how we can support your Private Funds across private equity, real assets and private debt strategies, please contact:

Ashley Vardon
Head of Jersey Private Equity
t. +44 1534 702184

Philip Turpin
Head of Jersey Real Assets
t. +44 1534 710213