JERSEY Law and Practice Contributed by: Paul Burton and David Allen, Maples Group
2. Private Equity Developments 2.1 Impact of Legal Developments on Funds and Transactions Anti-Money Laundering (AML) Supervisory Regime In mid-2023, the practical effect of the changes made to Jersey’s AML supervisory regime (known as the Schedule 2 regime) was felt by local corporate service providers. Although significant to Jersey’s own efforts and contribution to the global combatting of financial crime, M&A market participants transacting in Jersey or utilising Jersey acquisition vehicles for cross-bor - der transactions will not have been impacted by the changes to the Schedule 2 regime. The main differ - ence in the new regime is the shift in primary responsi - bility for AML regulatory compliance away from Jersey corporate service providers to Jersey vehicles directly involved in certain types of financial services activi - ties, leading to their appointment of Jersey Financial Services Commission (JFSC)-regulated AML service providers. Jersey Funds Regimes for Private Equity Funds The Jersey Private Fund (JPF) regime continues to be Jersey’s most popular product for private equity funds (and in other sectors also). The JPF regime is streamlined and flexible, with a 48-hour online authorisation procedure, and is subject to a light regulatory touch but without compromising investor protection. JPFs are aimed at professional investors, high net worth investors and investors com - mitting at least GBP250,000 (or equivalent). As private equity funds are typically closed-ended, the attraction of JPFs in terms of speed of establishment, together with appropriate and proportionate regulation suited to the sophisticated investor base, continues to position Jersey favourably for fund establishment by both existing and new sponsors. The majority of new Jersey fund structures tend to be JPFs.
3. Regulatory Framework 3.1 Primary Regulators and Regulatory Issues Private Equity Fund Regulation The principal legislation governing the regulation of most private equity funds in Jersey is the Control of Borrowing (Jersey) Order 1958, with the Jersey Private Funds Guide (a guidance note prepared by the JFSC) also being a key regulatory document. Any widely held structures are likely to be regulated pursuant to the Collective Investment Funds (Jersey) Law 1988. Funds that are marketed in Europe are also likely to be subject to the Alternative Investment Funds (Jer - sey) Regulations 2012 (the “AIF Regulations”) and the associated code of practice for alternative investment funds and AIF services business (the “AIF Code”). In addition, all funds are subject to the requirements of Jersey’s AML supervisions regime, which applies AML rules to all financial services businesses in Jer - sey. Jersey-based service providers for funds are sub - ject to regulation under the Financial Services (Jersey) Law 1998 (the “FS Law”) unless an exemption applies. Providers of fund services must be registered and reg - ulated by the JFSC, pursuant to the FS Law. AML/KYC Relevant sanctions and the usual AML/KYC rules apply to private equity transactions; there are no Jer - sey-specific restrictions. The alignment of Jersey’s AML regulatory regime with current Financial Action Task Force standards and recommendations has not had any impact on private equity transactions in Jer - sey or the use of Jersey-registered acquisition vehi - cles. National security regulation in Jersey is very similar to that in the UK. Financial investors are screened by local authorities in accordance with international standards. There is no particular focus on sovereign wealth fund (SWF) investors, although many SWFs are, in the ordinary course, subject to robust checks either as principal deal counterparties (including as co-investors) or as fund investors/limited partners.
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