Michelle Watson Bunn
Managing Associate | Legal
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There are now three routes to establishing a Private Investment Fund (PIF) in Guernsey. This summary sets out the key features of the new requirements under The Private Investment Fund Rules and Guidance 2021.
Route 1 - Licensed Manager PIF
Route 2 - Qualifying Private Investor PIF
Route 3 - Family Relationship PIF
The Guernsey Financial Services Commission (the Commission) noted in a consultation paper that the current framework works well for certain providers and clients, and should continue to be available. Therefore, the option to register a PIF in exactly the same way as one does today will remain under the proposed regime. There will be no change to the applicable rules at the time of application and a PIF must appoint a licensee as manager to manage the scheme. For a PIF structured as a typical GP/LP arrangement, the licensed manager would usually be the GP. For a PIF structured as a corporate vehicle, a separate manager will still be required under Route One.
All currently registered PIFs will continue to be registered under the proposed regime as they will meet the requirements under 'Route One'. If a currently registered PIF seeks to change the basis of its registration, to use either the new 'Route Two' or 'Route Three', then this will be treated as a new PIF application with a corresponding application fee being payable.
Similarly, if an existing PIF seeks to change registration to the Registered Collective Investment Schemes Rules 2018, then it is proposed that a new application must be made which will incorporate a relevant form and fee.
Recognising the strong support for a PIF model without an attached POI licensed manager, the Commission suggested an alternative route to registration is proposed with the following elements:
Subject to the above, the PIF Rules as currently in place would apply. At the time of application the POI licensed fund administrator would be required to provide confirmations equivalent to those currently provided by a fund administrator in respect of any QIF application.
Taking into account the view that the PIF should be a truly private structure, the Commission proposed that a third route to registration as a PIF should be offered. This would firmly place the PIF as a private wealth structure, as opposed to a private wealth product. Using this route, there would be a family relationship between investors and no capital raising from investors outside this relationship.
It is proposed that the following restrictions would apply:
There would be no requirement to appoint a POI licensed fund manager. At the time of application the POI licensed fund administrator would be required to provide confirmations that effective procedures are in place to ensure restriction to only eligible family-related investors.
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