GUERNSEY Law and Practice Contributed by: Matthew Brehaut, Carey Olsen
2.3 Regulatory Environment 2.3.1 Regulatory Regime
of, or to, an affiliate appointed by the QIF to advise, manage or administer the investment activities of the QIF, and who is acquiring an investment in the QIF as part of their remu - neration or an incentive arrangement or by way of co-investment, either directly or indi - rectly, through a personal investment vehicle (such as a trust) for or substantially for that person; or • any employee, director, partner or consultant to or of any person referred to above, or any - one who has fulfilled such a role in respect of any person referred to above, within a period of three years up to the date of application for investment in the QIF (the term “employee” only covers persons who are, or have been, employed in a relevant role and would not extend to clerical, secretarial or administrative roles). Route 1 PIFs Admission is limited to investors able to sustain any losses incurred on their investment at the time they make their investment. Route 2 PIFs Admission is limited to “qualifying private inves - tors”, which are defined as professional inves - tors, experienced investors and knowledgeable employees. The definitions of these categories of investors are essentially the same as for QIFs, as set out above. Route 3 PIFs Admission is limited to investors sharing a fam - ily relationship, or who are eligible employees of the family (such employees must also meet the definition of a “qualifying private investor”).
Investment business in Guernsey is regulated by the GFSC. The principal legislation governing the conduct of investment business (including funds and associated entities) is the POI Law. Each type of collective investment scheme is subject to particular rules issued by the GFSC – for example, in respect of RCIS funds, the Reg - istered Collective Investment Scheme Rules and Guidance, 2020. Only Class A funds, which have been largely superseded by the AIFMD regime, are subject to regulatory limitations on their investments. 2.3.2 Requirements for Non-Local Service Providers The requirement to have a Guernsey-based man - ager applies only to Route 1 PIFs, as described below). However, as indicated in 1.1 State of the Market , the most common fund type is the closed-ended private fund, which is generally structured as a limited partnership or corpo - rate. Consequently, in the context of the limited partnership structure, the Guernsey-based gen - eral partner of these funds is usually the “man - ager” of the fund, which is then advised by a non-Guernsey adviser (generally UK-based). In the corporate structure, the manager is usually non-Guernsey-based (again, generally UK- or US-based). All Guernsey funds must appoint a local des - ignated administrator, which must be licensed by the GFSC. The designated administrator conducts the day-to-day administration of the fund and has certain oversight responsibilities to ensure that the fund is operated in accordance with its constitutional and offering documents and with Guernsey law and regulation.
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