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Guernsey's Private Investment Fund regime to change

Chris Hamblin, Editor, London, 11 December 2020

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The Guernsey Financial Services Commission aims to revise the rules that underpin Guernsey's successful Private Investment Fund regime, expanding it with two supplemental models which, it hopes, will no longer require managers to be involved.

By revising its rules, the regulator wants to create the most comprehensive and flexible suite of options of any private fund regime in the world.

The PIF has been a popular addition to the Guernsey funds regime since it was introduced in November 2016. It helps fund promoters to offer simple and flexible products to private investors easily. There are now 65 PIFs in operation.

The GFSC promulgated a discussion paper on the subject during the summer. It has now published a consultative paper that invites comments about its plans for three complementary approaches to PIF registration.

Alongside the current PIF model, two new routes are to be introduced with the aim of removing the "manager requirement":

  • an alternative for qualifying investors only, with the phrase "qualifying investors" clearly defined; and
  • a “truly private structure” for family relationships only.  

This is the third strategic enhancement to Guernsey’s investment funds sector announced this year, with faster track manager and LP migration regimes introduced in the summer, and with the proposed introduction of the LLC regime announced in the first quarter.

With a PIF, the fund manager makes declarations in respect of prospective investors’ ability to sustain losses, the maximum number of investors, and the completeness and accuracy of the application.

The GFSC is also consultating interersted parties about changes it would like to make to its "non-Guernsey scheme regime." The idea here is to remove the need for firms to seek prior regulatory approval to administer non-Guernsey schemes and instead to set up a de facto notification regime whereby firms only have to report things in their annual returns. Comments must be in by the end of January in both cases.

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