Global - Setting Up Investment Funds in Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, Ireland and Jersey

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1 Global - Setting Up Investment Funds in, the, the Cayman, Guernsey, Ireland and Jersey In this table we have concentrated on the most common form of vehicle and fund used in each jurisdiction. So for instance, whilst partnerships and unit trusts can be organised with ease in each country, a company is generally the most popular form of vehicle used. Cayman Guernsey Ireland Jersey Regulatory Authority The Monetary Authority ("BMA"). The Financial Services Commission ("FSC"). The Cayman Monetary Authority ("CIMA"). The Guernsey Financial Services Commission ("GFSC"). The Central Bank of Ireland (the "Central Bank"). The Jersey Financial Services Commission ("JFSC"). Type of Vehicle Company (exempted company and segregated accounts company ("SAC")), limited liability company ("LLC"), Unit Trust and Exempted Limited Partnership. Company (BVI Business Company), Segregated Portfolio Company, Unit Trust and Limited Partnership Company (exempted company, segregated portfolio company ("SPC"), limited liability company ("LLC") and limited duration company), Unit Trust and Exempted Companies (Limited Company, Protected Cell Company, Incorporated Cell Company), Unit Trusts and Limited Investment Companies, Units Trusts, Limited Partnerships (QIAIFs/RIAIFs only), Common Contractual Funds, ICAV structure - transparent corporate vehicle that permits investors to check the Companies: Limited Company, Protected Cell Company, Incorporated Cell Company, Unit Trust, Limited Partnership, Incorporated Limited Partnership

2 Page 2 Cayman Guernsey Ireland Jersey Limited Partnership Partnerships box for treatment as a partnership for US tax purposes. and Separate Limited Partnership Type of Fund Open or closed ended. Closed ended funds are unregulated. Open ended funds regulated under the Investment Funds Act ("IFA"): Excluded Funds: Private funds (fewer than 20 investors and not offered to the public) are excluded from regulation. Exempt Funds: funds open only to "qualified participants" that have appointed an investment manager, fund administrator, registrar, auditor and custodian or prime broker (the requisite "Service Providers"), as well as an officer, director or representative in who has authority to access the Open or closed ended. Closed ended funds do not fall under the BVI Security and Investment Business Act, Open or closed ended. Closed ended funds unregulated. Open or closed-ended. Funds can be authorised by the GFSC (by making an application under the relevant fund rules, which differ according to whether the fund is open or closed-ended) ("Authorised Funds") or registered with the GFSC (via an administrator-led "fast track" process) ("Registered Funds"). UCITS Funds - subject to EU legislation - can avail of a European passport to distribute their units across the EU to retail and professional investors. Qualified Investor Alternative Investment Funds ("QIAIF") - a fund that is made available only to professional investors. They are automatically exempt from many of the Central Bank's regulatory requirements, have very few investment restrictions and no borrowing restrictions. QIAIFs can avail of the AIFMD passport to distribute their units across the EU/EEA to professional investors Public Fund: Unclassified Fund - regulated under the Collective Investment Funds (Jersey) Law 1988 ("CIF Law"). Strict requirements as to experience and domicile of manager and other service providers. Certain service providers MUST be based in Jersey. No fast-track approval process. A moderate-high degree of regulation. No limit on the number of offers the fund can make. The extent to which the fund can be offered to retail investors will depend on the

3 Page 3 Cayman Guernsey Ireland Jersey books and records of the fund (a "Resident Rep"), and financial statements prepared in accordance with IFRS/GAPP. Authorised Funds: Funds meeting the criteria for authorisation by the BMA as an institutional, administered, specified jurisdiction or standard fund, having appointed the required Service Providers and issued a prospectus in accordance with the rules set forth by the BMA. only. Retail Fund ("RIAIF") - a fund that is made available to retail investors (subject to local retail requirements) and professional investors (under AIFMD passport). calibre and track-record of the promoter. Expert Fund - regulated under the CIF Law. Strict requirements as to experience and domicile of manager and other service providers. Certain service providers MUST be based in Jersey. Fast track approval process. No investment restrictions. No limit on the number of offers the fund can make. Only available to "Expert Investors". A minimum investment amount of US$100,000 would qualify an investor as an "Expert Investor". There are other classifications available too for

4 Page 4 Cayman Guernsey Ireland Jersey investors that commit less than US$100,000. Jersey Private Fund - Not regulated under the CIF Law, regulated under the Control of Borrowing (Jersey) Order 1958 ("COBO"). Certain service providers MUST be based in Jersey. Fast track approval process. Light regulatory touch. A limit of 50 offers applies. Investors must be "professional" or otherwise make a minimum investment of 250,000 (or currency equivalent). Unregulated Eligible Investor Fund - not

5 Page 5 Cayman Guernsey Ireland Jersey regulated. No requirement for local service providers. No investment restrictions. Notification and registration with the Registry is all that is required. No limit on the number of offers the fund can make. Investors must be "Eligible Investors". A minimum investment amount of US$1,000,000 would qualify an investor as an "Eligible Investor. There are other classifications available too for investors that commit less than US$1,000,000. Licensing/registration requirements Excluded - notification to the BMA of qualification as an 'Private' and 'professional' open ended funds are Non-retail open ended funds registered with CIMA. Retail funds All Guernsey funds falling within the definition of a All open and closed ended vehicles which offer their units/shares to the public are Public and private funds are regulated by the JFSC.

6 Page 6 Cayman Guernsey Ireland Jersey excluded fund. Class A Exempt - Investment Manager must be licensed in or by a recognised foreign regulator; or operating (in or a recognised jurisdiction) with AUM of at least $100 million. Exemption upon filing of certification with the BMA. Class B Exempt -Fund's service providers are in the view of the BMA "fit and proper" to perform the respective functions. Exemption by application to the BMA accompanied by a copy of the Fund's prospectus. Authorised Funds - authorisation on application to the BMA, subject to Service Providers being "fit and proper" in the view of the BMA and approval of the fund's prospectus required to be recognised by the FSC. Filing of prospectus required for (public) funds. 'Private' and 'professional' funds may choose not to issue an offering document or a term sheet, but in such cases would have to provide an explanation as to how the relevant information concerning the fund will be provided to investors. must either be licensed or employ a licensed administrator. Prospectus required on registration/licensing of funds. "collective investment scheme" (Schedule 1 of the Protection of Investors (Bailiwick of Guernsey) Law, 1987 ("POI Law")) must be authorised by or registered with the GFSC. All Guernsey-based functionaries to a Guernsey fund must have an appropriate licence under the POI Law. regulated by the Central Bank. UCITS & RIAIFs - subject to Central Bank review and approval. QIAIFs - Central Bank does not review the documents, fast track authorisation process within 24 hours from the date documents are filed with the Central Bank. AIFM applications (if applicable) - subject to Central Bank review and approval. Unregulated Eligible Investor Funds established under the Collective Investment Funds (Unregulated Funds) (Jersey) Order 2008 are not regulated by the JFSC. All Jersey based functionaries to a fund must have an appropriate registration under the Financial Services (Jersey) Law 1998 ( FSJL ), with the exception of a general partner of a limited partnership that is an unregulated fund, provided it satisfies one of the exemptions under the FSJL. There are also exemptions under the FSJL available for general

7 Page 7 and satisfaction of requirements for authorisation generally and the specific class of authorised fund: Institutional Funds - only open to qualified participants or minimum investment of US$100,000. Resident Rep required. Administered Funds - minimum investment of US$50,000 or listed on a recognised stock exchange. Administrator must be licensed under the IFA. Specified Jurisdiction Funds - by special order recognizing a specific jurisdiction and related set of laws and providing for application of specific fund rules (eg Japan). Standard Funds - no minimum investment or investor qualification test. Cayman Guernsey Ireland Jersey partners, investment advisers and managers of private funds.

8 Page 8 Cayman Guernsey Ireland Jersey Registry Annual filing and fees required for Exempted and Authorised Funds. Memorandum of association, register of directors and officers and register of members publicly available for funds formed as an exempted company. IFA provides for inspection of register by fund participants at the registered office, except where otherwise provided by Fund's constitution or prospectus. Annual fees but no annual filing. Memorandum and articles of association open to public inspection. Registry has internet based on-line filing system (VIRRGIN) to allow 24 hour filings. Annual filing and fees required. Very limited information publicly available. Annual filing and fees required. Memorandum and Articles of Incorporation open to public for inspection. There is no register of mortgages or charges in Guernsey. Annual filing and fees required. Memorandum and Articles of Association/Instrument of Incorporation open to public for inspection. Companies Registration Office ("CRO") and the Central Bank have an on-line filing system. Annual filing and fees required. The annual filing includes the name and address of members as at 1 January in each year. Memorandum and Articles of Association open to public for inspection and can be viewed online. Limited partnership agreements and trust instruments are not filed with the Registry so are not publicly available. Trusts are not registered at the Registry. The ultimate beneficial ownership of Jersey entities is not a matter of public

9 Page 9 Cayman Guernsey Ireland Jersey record. There is a register of security interest over intangible property in Jersey. Financial statements Excluded Funds - investors can waive the preparation of audited financial statements subject to statutory requirements. Financials not filed with the BMA. Exempted Funds - audited financials filed with the BMA. Authorised Funds - financials are not filed with the BMA. Waiver of audit must be approved by BMA. Audited financial statements to be filed with FSC. No requirement for local auditor sign-off. Audited financial statements to be filed with CIMA and signed off by local auditor. Audited financial statements to be filed with the GFSC within six months of the year-end date and signed off by local auditor. Audited financial statements to be filed with the Central Bank within four months of the year-end date (six months for QIAIFs and RIAIFs). Semi-annual reports must also be filed within two months of half year end date (not applicable to QIAIFs, unless QIAIF is established as a unit trust or common contractual fund. Audited financial statements to be filed with JFSC (save for in respect of a Jersey Private Fund and an unregulated fund). No local auditor sign-off required. Directors No residential qualifications necessary for directors. Minimum of one director; corporate No residential qualifications necessary. Corporate directors No residential qualifications necessary. Corporate directors acceptable. CIMA require a At least one director must be Guernsey resident. May only have At least two directors must be Irish resident. May only appoint individuals as directors. Directors Unclassified Fund - must have two Jersey based directors acceptable to the

10 Page 10 Cayman Guernsey Ireland Jersey directors acceptable. Register of Directors on file with the RoC. acceptable. The FSC requires a minimum of two directors for open ended funds, at least one of which must be an individual in case of "private" and "professional" funds. Where a public fund has only two directors, they must both be individuals. minimum of two directors for registered funds. The Directors Registration and Licensing Law, 2014 (as amended) (the "DRL Law") requires that each director of a mutual fund registered with CIMA is either registered or licensed in accordance with the DRL Law. There is an annual fee to be paid to CIMA. A 'director' is deemed to include a manager of an LLC pursuant to the Limited Liability Companies Law 2016 (as amended). individuals acting as directors. Directors effectively require the pre-approval of the GFSC to be appointed to the Board. require the pre-approval of the Central Bank to be appointed to the Board. JFSC. Expert Fund - must have two Jersey based directors acceptable to the JFSC. Jersey Private Fund - no requirement for Jersey based directors. Unregulated Eligible Investor Fund - no requirement for Jersey based directors. Shareholder meetings Statutory requirement for an annual general meeting unless waived by resolution of the No requirement for annual meetings. No requirement for annual meeting. Funds must convene a general meeting of all shareholders Investment companies must convene a general meeting of all shareholders annually (ICAVs can dispense No requirement for annual meeting if all members agree in writing that an annual general

11 Page 11 Cayman Guernsey Ireland Jersey shareholders. annually. with this requirement). meeting shall be dispensed with. Investment Managers Class A Exempt Funds - manager must be licensed by BMA or subject to authority of recognised regulator (SEC/EU regulators) or have AUM >US$100m. Class B Exempt and Authorised Funds - manager subject to "fit and proper" standard as part of overall review by BMA. Licensing or approval requirements for BVI resident or domiciled managers. No regulation for local investment managers and no licensing requirements for Cayman resident investment managers if the exemption/exclusion under the Securities Investment Business Law (2015 Revision) (as amended) (the "SIBL") applies. Simple annual registration and filing would then be required. All Guernsey funds must have a licensed Guernsey "designated manager" (administrator), but, if appointed, a "principal manager" (investment manager) is not required to be based or licensed in Guernsey. No requirement for the investment manager to be based in Ireland. Investment managers authorised in foreign jurisdictions need the approval of the Central Bank to act as the investment manager of a fund. All Irish domiciled investment managers require authorisation under MiFID to provide investment services. Unclassified Fund - must have manager domiciled in Jersey (unless Jersey domiciled administrator is appointed), which has requisite experience and two Jersey based directors. Any investment manager must be suitably qualified, have relevant experience and any delegation of management functions must have regard to the requirement that management must be carried out in Jersey. Expert Fund - investment manager must be

12 Page 12 Cayman Guernsey Ireland Jersey of good standing, have relevant experience, no convictions, solvent, regulated in home jurisdiction (or otherwise approved by the JFSC) and be OECD domiciled or domiciled in a country with an memorandum of understanding with Jersey. Very Private Fund - no requirements in respect of managers or promoters. Unregulated Eligible Investor Fund - no requirements in respect of managers. Investment restrictions None. None. None. None (save that investments carrying a spread of risk are usually UCITS - listed transferable securities and money market instruments, deposits, Unclassified Funds - no investment or borrowing restrictions.

13 Page 13 Cayman Guernsey Ireland Jersey required for the vehicle to be considered to be a fund). funds and FDIs as set out in the UCITS Regulations. QIAIF ICAVs/Unit Trusts - none QIAIF Investment Companies - must diversify - ie hold two to three investments RIAIF - investment restrictions as set out in the AIF Rulebook apply Expert Fund - full details of the investment strategy and borrowing limits must be clearly disclosed in the offering document. Otherwise there are no investment or borrowing restrictions. If the fund is permitted to borrow money in excess of 200% of its net asset value, full details of the manner in which the risk posed by such borrowing will be managed must be disclosed to the JFSC and in the offering document. Jersey Private Fund & Unregulated Funds - no investment or borrowing

14 Page 14 Cayman Guernsey Ireland Jersey restrictions. Bye laws/constitutional documents Memorandum of association and bye-laws for companies. Amended by resolution of voting shareholders, provided that changes adverse to rights of non-voting shares require approval by such classes. Partnership agreement for exempted limited partnerships. May be amended in accordance with its terms. Certificate of Formation and LLC Agreement for LLCs. LLC Agreement may be amended in accordance with its terms. Trust deed for unit trusts. May be amended in accordance with its terms. Memorandum and articles of association. May be amended by a resolution of directors or by a resolution of voting shareholders. Memorandum and articles of association for companies other than LLCs. May be amended by shareholders only. LLC agreement for LLCs. May be amended in accordance with its terms. Partnership agreement for exempted limited partnerships. May be amended in accordance with its terms. Trust deed for unit trusts. May be amended in accordance with its terms. Memorandum and articles of incorporation for companies. May be amended by shareholders only. Partnership agreement for limited partnerships. May be amended in accordance with its terms. Trust deed for unit trusts. May be amended in accordance with its terms. Instrument of Incorporation for ICAVs - if the amendment materially prejudices shareholders shareholder consent is required to amend - otherwise Manager and Depositary/Custodian can amend. Memorandum and Articles of Association for investment companies - may be amended by shareholders only. Trust Deed for unit trusts - unitholder consent is required to amend, if the amendment materially prejudices unit holders - otherwise Manager and Trustee can amend. Memorandum and Articles of Association for fund companies - may be amended by shareholders only. Trust Instrument for unit trusts - investor consent is required to amend, if the amendment materially prejudices unit holders - otherwise Manager and Trustee can amend. Limited partnership agreement for limited partnerships - may be amended by all the partners. Transfer of shares Unrestricted save as Unrestricted Unrestricted save as Unrestricted save Unrestricted, save as Unrestricted save

15 Page 15 Cayman Guernsey Ireland Jersey provided in the constitutional documents. *Funds will generally have exemption from provisions of exchange control act. save as provided in the constitutional documents. provided in the constitutional documents. as provided in the constitutional documents. provided for in the constitutional documents. as provided in the constitutional documents and provided the investor meets the relevant investor criteria for the fund in question. Currency Multi-currency funds permitted. Multi-currency funds permitted. Multi-currency funds permitted. Multi-currency funds permitted. Multi-currency funds permitted. Multi-currency funds permitted. Administrator No requirement for a local administrator. Administered Funds are required to appoint a fund administrator licensed under the IFA. No requirement for local administrator. BVI domiciled administrators licensed under Securities and Investment Business Act, No requirement for local administrator. Cayman domiciled administrators licensed under Mutual Funds Law (2015 Revision) (as amended). Must have a licensed Guernsey administrator, and the registered office of the fund must be in Guernsey. Must be based in Ireland. The registered office of the fund must be in Jersey. Unclassified Fund - must have Jersey based administrator or manager. Expert Fund and Jersey Private Fund - must have Jersey based administrator or manager (or in the case of a unit trust, trustee) regulated by the JFSC. Unregulated Eligible Investor

16 Page 16 Cayman Guernsey Ireland Jersey Fund - no local service provider required. All administrators based in Jersey must be registered with the JFSC. Custodian Exempt and Authorised Funds are generally required to appoint a custodian or prime broker, but an exemption may be sought from the BMA. BVI open-ended funds are required to appoint a custodian, but an exemption from having to do so can be sought from the FSC. No custodian requirements. All open-ended funds must have a Guernsey-based custodian (save for a limited exception for prime brokers). Closed-ended funds may apply to the GFSC for the administrator to hold assets in place of a custodian, or to have a non-guernsey custodian. Must be based in Ireland. Unclassified Fund - must have a Jersey based custodian. Expert Fund - must have adequate safe custody or prime brokerage arrangements in place, but no requirement for these to be carried out by an independent Jersey custodian, other than for an open-ended Expert Fund. An open-ended Expert Fund is required to appoint a Jersey custodian or, if it is

17 Page 17 Cayman Guernsey Ireland Jersey a hedge fund, may appoint a prime broker that is part of a group with a credit rating of A1/P1 or better (which need not be based in Jersey). Jersey Private Fund & Unregulated Eligible Investor Fund - no requirement for a Jersey custodian. Investment Adviser No investment adviser requirements. Licensing or approval requirements for BVI resident or domiciled investment advisers. No regulation for local investment advisers and no licencing requirements for Cayman resident investment advisers if the SIBL exemption/exclusion applies. Simple annual registration and filing would then be required. No requirement for Guernsey-based investment adviser. No requirement for the investment adviser to be based in Ireland. Investment advisers authorised in foreign jurisdictions do not need the approval of the Central Bank to act as the investment advisers of an Irish fund provided they do not have discretion over a fund's assets and solely provide advice. No requirement for Jersey based investment adviser.

18 Page 18 Cayman Guernsey Ireland Jersey Set Up Time 24 hours. Indicative timing for BMA authorisation/exemption: Class A Exempt Funds - effective upon filing of certification. Class B Exempt Funds - two-three business days from filing of application (with a ten-day deadline for deemed approval). Authorised Funds: authorisation generally granted within five business days of filing final prospectus. 24 hours. Recognition of private and professional funds usually approved within a week. Start to finish indicative timing: two-four weeks for private and professional funds 24 hours. Start to finish indicative timing for CIMA registration: four-twelve weeks for Licensed Mutual Funds two-four weeks for Administered Funds, Mutual Funds, Registered Mutual Funds and Exempt Mutual Funds Same day incorporations possible. Start to finish indicative timing: four-twelve weeks for Authorised Funds four-six weeks for Registered Funds Ten - twelve weeks for a RIAIF/UCITS Fund. 24 hours for QIAIFs from the date documents are filed with the Central Bank. Start to finish indicative timing for QIAIFs: Six - eight weeks - QIAIFs if appointing authorised/third party AIFMs or availing of an exemption to AIFMD ten - twelve weeks - QIAIFs if self-managed and fully AIFMD compliant Same day incorporations possible. Start to finish indicative timing: four-twelve weeks for Public Funds two-four weeks for Private Funds and Unregulated Eligible Investor Funds. Taxation No income, capital gains or corporation tax and government undertaking that no such taxation, if introduced, will be levied on the income or property of the fund before The Fund and any investors who are not persons resident in the BVI are exempt from all forms of taxation in the BVI. No income, capital gains or corporation tax and government undertaking that no such taxation, if introduced, will be levied on the income or property of the fund for a maximum of 30 years for companies (although Most Guernsey funds apply for tax-exempt status (for an annual fee). Otherwise, companies are taxable in Guernsey at the rate of 0% (unless the Irish Funds are tax-exempt vehicles and can leverage off extensive network of double taxation treaties. No taxes in the nature of income tax, corporation tax, capital gains tax nor inheritance tax are payable by Limited Companies in Jersey (unless the company is a utilities company or a financial services

19 Page 19 Cayman Guernsey Ireland Jersey typically it will be 20 years) and 50 years for unit trusts, LLCs and exempted limited partnerships. company derives income from certain Guernsey sources). company with a place of business in Jersey). Non-resident members' liability to Jersey income tax is limited to Jersey-source income but excluding, by longstanding concession, bank deposit interest. Jersey source income includes profits from a trade carried on in the island. However, the law excludes the non-resident partner from tax on profits derived from international activities, being business activities carried on outside the island. No stamp duty. Segregated Portfolio/ Protected Cell Provided for under the Segregated Account Provided for under the BVI Permitted under the Companies Law Yes - Companies (Guernsey) Law, Yes - the creation of umbrella funds, with Yes - the Companies (Jersey)

20 Page 20 Cayman Guernsey Ireland Jersey Companies Companies Act Business Companies Act and SPC Regulations. (2016 Revision) (as amended) permits creation of Incorporated Cell Companies and Protected Cell Companies. segregated liability between each of its sub-funds automatically provided for under Irish law. Law 1991 (as amended) permits creation of Incorporated Cell Companies and Protected Cell Companies Name reservation Available for a period of three months (which can be renewed) at no cost. Available with on line access for registered agent. No charge for ten-day reservations. 90 day reservations for a fee of US$100 if the name contains the word "fund". Available for a weekly fee of US$49 or monthly fee of US$74. Can be reserved for up to three months - 25 fee. Can be reserved for up to twenty-five days - 25 fee. A name must be reserved in anticipation of the incorporation of a company or a limited partnership, but not a trust. The Registrar may refuse to register the name where in the Registrar's opinion the name is misleading or otherwise undesirable. The name of a limited company, must end with the word 'Limited', 'Ltd', 'avec responsabilite limitee', 'a.r.l.', 'public limited

21 Page 21 Cayman Guernsey Ireland Jersey company' or 'PLC'. The name of an incorporated cell company, must end with the words 'Incorporated Cell company' or 'ICC' and an incorporated cell company must assign a distinctive name to each of its cells that distinguishes the cell from another cell of the company and which ends with the words 'Incorporated Cell' or 'IC'. The name of a Limited Partnership shall end with the words "Limited Partnership" in full or either of the abbreviations "L.P." and "LP". If an Incorporated Limited Partnership the name shall end

22 Page 22 Cayman Guernsey Ireland Jersey with "Incorporated Limited Partnership" in full or either of the abbreviations "I.L.P." and "ILP" and if a Separate Limited Partnership, the name shall end with the words "Separate Limited Partnership" in full or either of the abbreviations "S.L.P." and "SLP". The surname or corporate name of a limited partner shall not appear in the name of a limited partnership unless it is also the surname or corporate name of one of the general partners or the limited partnership has been carried on under that name before the admission of that

23 Page 23 Cayman Guernsey Ireland Jersey partner as a limited partner. Updated: 31 May 2017 For further information please refer to your usual contact or: - Jonathan Betts, Partner jonathan.betts@walkersglobal.com Paul Waldron, Associate paul.waldron@walkersglobal.com Cayman - Ingrid Pierce, Partner ingrid.pierce@walkersglobal.com Dubai - Daniel Wood, Partner daniel.wood@walkersglobal.com Guernsey - Matt Sanders, Group Partner matt.sanders@walkersglobal.com +44 (0) Hong Kong - Denise Wong, Partner denise.wong@walkersglobal.com Ireland - Paul Farrell, Partner paul.farrell@walkersglobal.com Jersey - Jonathan Heaney, Partner jonathan.heaney@walkersglobal.com +44 (0) London - Hughie Wong, Partner hughie.wong@walkersglobal.com +44 (0) Singapore - Tom Granger, Partner Thomas.Granger@walkersglobal.com The information contained in this memorandum is necessarily brief and general in nature and does not constitute legal or taxation advice. Appropriate legal or other professional advice should be sought for any specific matter. Walkers works in exclusive association with Taylors in, a full service commercial law firm providing advice on all aspects of law.