Guernsey Private Investment Funds

09 June 2021

Guernsey’s Private Investment Funds (PIF) have been in existence since 2016, offering a fast and cost-effective route to market for managers of private funds.

In April 2021, the Guernsey Financial Services Commission (GFSC) published The Private Investment Fund Rules and Guidance 2021 to enhance the PIF regime, which looks to widen the appeal of Guernsey as a jurisdiction of choice.

What’s the difference between the Private Investment Fund and the Authorised Fund?

A key benefit of the PIF is the speed of registration, offering a same-day turnaround which is part of the appeal of this attractive, efficient and flexible model.

The registration turnaround time is significantly quicker than the traditional Authorised Fund process, which takes several weeks to have a fund or fund manager approved. The PIF is also faster than Guernsey’s Registered Fund regime, which has a three-day approval process.

What are the new options for a Guernsey Private Investment Fund?

  • Route One: Route One PIFs can be open or closed-ended collective investment schemes limited to 50 people (legal or natural), and only 30 new investors in the preceding 12 month period. All existing PIFs will continue under this regime.
  • Route Two: Launched in April 2021, Route Two does not require the appointment of a GFSC licensed manager, but does require a designated administrator.

For Route Two, the PIF will be required to meet criteria aimed at protecting vulnerable investors by meeting criteria under the Qualifying Investor Fund (QIF) regime.

The initial investment must be not less than US$100,000, and must not represent more than 25% of the investors’ investable assets.

All investors within the fund must meet the definition of a Qualifying Private Investor (QPI).

The designated administrator must make a declaration to the GFSC that there are effective procedures in place to ensure restriction of the scheme to QPIs.

  • Route Three: Route Three was also introduced in April 2021 and opens up the PIF regime to family structures and eligible employees of the family in question.

As with Route Two, the designated administrator would make a declaration to the GFSC that there are effective procedures in place to ensure that all investors fulfil the family requirements.

Which route will be most appropriate for fund promoters?

We anticipate that Route Two and Route Three will be of interest to a number of promoters by reducing both formation and ongoing costs of the PIF, whilst continuing to adhere to the appropriate level of regulation.

Although it is likely that Route Two will become the preferred PIF route, as it will likely reduce costs, Route Three will enable new structures to be created within family groups.

If you are a fund promoter looking for guidance on the recent rule changes in respect of Private Investment Funds in Guernsey or would like more information on any other aspect of fund administration or how we help fund managers, please contact us.

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