Thu, Nov 27, 2014

Changes to Jersey's Managed Accounts Regime

The States of Jersey has issued new legislation in relation to the hedge fund sector in Jersey. This is a positive move which may encourage further growth in this area and also simplify arrangements for hedge fund managers already operating in the island.

Previously, hedge fund managers established in Jersey, who operated managed accounts and also managed funds, were required to be regulated in respect of both investment business and funds services business.  This resulted in hedge fund businesses having to operate in accordance with two different but similar regulatory regimes, leading to confusion and increased costs for many firms.

The Financial Services (Investment Business (Qualifying Segregated Managed Accounts – Exemption)) (Jersey) Order 2014 now allows hedge fund managers to be regulated solely under Jersey’s funds regime (and not the investment business regime), provided the relevant managed accounts meet the definition of ‘qualifying segregated managed accounts’.

This requires:

  • the minimum amount committed for investment in the managed account to be at least US$ 1 million;

  • the account to be in the name of a single investor who has received and signed a prescribed investment warning;

  • the account to be managed in accordance with one or more hedge-fund strategies currently employed by the manager;

  • the manager to be the only manager of the managed account, and therefore excluded from having ownership or custody over the managed account assets.

If all requirements are met, hedge fund managers can be granted an exemption from ‘investment business’ regulation from the Jersey Financial Services Commission.  Once granted, the exemption imposes minimal reporting requirements and requires payment of an annual fee.

How can we help?

Kinetic Partners can assist with tax structuring advice as well as assistance with application for authorization and implementation of compliance arrangements for any hedge fund manager wishing to establish in Jersey.

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