IN BRIEF: Guernsey Private Investment Funds

On 16 November 2016, the Guernsey Financial Services Commission (“GFSC”) launched its regime for Private Investment Funds (“PIF”) in order to provide new and existing fund managers with an additional regulated but flexible and simple fund product.

The PIF, which was developed in response to market demand, recognises that certain investment funds are characterised by a relationship between management and investors that is closer than that of a typical agent. The PIF dispenses with the formal requirement for information particulars such as a prospectus in recognition of that relationship, thereby significantly reducing the cost and processing time of launching of a fund.

The PIF, which can be either closed or open-ended, should contain no more than 50 legal or natural persons holding an economic interest in the fund. A key strength of the product is that, where an appropriate agent is acting for a wider group of stakeholders such as a discretionary investment manager or a trustee or manager of an occupational pension scheme, that agent may be considered as one investor. While there is a limit imposed on the number of investors in the PIF, no attempt has been made to limit the number of investors to whom the PIF might be marketed – a feature not available under comparable regimes.


Key characteristics

  • A PIF must meet the definition of a collective investment scheme under the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended (the “POI Law”) and be registered with the GFSC under the POI Law.
  • A PIF can take a variety of legal forms, including a company, unit trust, limited partnership or other vehicle or entity approved by the GFSC. Where a PIF is structured as a protected cell company or an incorporated cell company, there cannot be separate investment advisers acting in relation to individual cells.
  • There is a one-business-day turnaround by the GFSC to approve both application for a licence for the manager and registration of the PIF.
  • There is no regulatory requirement to prepare information particulars and no particular disclosure requirements.
  • There is no requirement for a custodian to be appointed if the PIF is closed-ended, and where a custodian is required (for an open-ended PIF) the GFSC will consider the appointment of the administrator as custodian or the appointment of a custodian domiciled outside Guernsey.
  • There is no restriction on the number of potential investors to which the PIF may be promoted. The only restriction is that no more than 50 investors (legal or natural persons) actually subscribe for securities with an ultimate economic interest in the PIF. The GFSC applies a look-through approach when determining the number of investors subscribed, but a key feature of the PIF is that an investment manager acting as agent for a wider group of stakeholders would be considered as one investor. Following the initial year from the date of first subscription, a rolling test is applied whereby in the previous 12 months the PIF can add no more than 30 new ultimate investors, subject to the maximum number of investors being 50 at all times.


The GFSC has implemented the following regulatory protections that form part of the PIF regime:

  • A Guernsey domiciled and licensed administrator must administer the PIF. This can be outsourced, but ultimately the Guernsey administrator remains responsible for administration.
  • A Guernsey domiciled and licensed manager must be responsible for management of the PIF. However, the Conduct of Business Rules that usually apply to an entity licensed under the POI Law will not apply to the manager of a PIF.
  • The manager of the PIF provides, among others, a warranty to the GFSC that it has assessed that the investors are able to sustain any losses incurred on their investment in the PIF at the time they make the investment.
  • If information particulars are prepared, the manager will ultimately be responsible for them.
  • The PIF must be audited by a qualified auditor.
  • The PIF must provide quarterly statistical updates to the GFSC.


What we think

Commenting on this development, Mark Douglas, Moore’s Head of Guernsey Fund Services, said:

Guernsey’s fund sector continues to see significant growth and the introduction of the Private Investment Fund regime demonstrates the dynamic and flexible approach of the Island to move with global market trends and demands. It is a welcome addition to fund options available in Guernsey and we believe it will be well received by both existing and new fund managers.

Expect Moore

Moore Management is a leading specialist provider of global fund administration and management services, and the PIF regime is well suited to our ability to provide tailored solutions to meet our clients’ specific needs. With a well-established and growing presence in Guernsey, we are ideally placed to assist with all of the service requirements in the Island.

If you’d like to find out more about Guernsey Private Investment Funds, the opportunities they present and how we can help, please don’t hesitate to contact our Funds Director Andrew Maiden today:

T: +44 1481 231 868
E: Andrew.Maiden@mooremanagement.com

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