The total value of collective investment funds
administered on the island has grown rapidly,
rising by almost GBP150bn over the nine years
to 2008. Not surprisingly, the total dropped sharply
in 2009, but has recovered well in 2010. The Net
Asset Value of funds under administration increased
by GBP14.4bn (8.6%) from GBP166.2bn to GBP180.5bn
during the first three months of the year, and
the total number of funds increased by 26 from
1,294 to 1,320. The value of funds under investment
management increased by GBP1.3bn (6.8%) compared
to the previous quarter from GBP19.7bn to GBP21bn.
The
island has seen a series of enhancements to its
funds regime during the last six years:
-
In February, 2004, Jersey introduced 'expert'
investor fund legislation. This gives qualifying
fund managers freedom to offer funds to licensed
investors without previously clearing them with
the FSC, provided they stick to the guidelines.
The new regime has proved popular, and by the
end of 2008, more than 400 expert funds had
been approved.
-
In June 2004 the island also launched a Non-Domiciled
Fund Guide, introducing a streamlined authorisation
process for persons wishing to become functionaries
(for example, an administrator, custodian, distributor)
of Non-Domiciled Funds that are: materially
equivalent to Jersey Expert Funds; equivalent
to Jersey Recognized Funds; or compliant with
the latest EU UCITS Directive.
-
In October 2006, the FSC announced plans to
extend the Expert Fund regime to closed-ended
investment funds listed on European and other
leading stock exchanges including the Channel
Islands Stock Exchange.
-
In 2008, Jersey introduced an Unregulated Funds
Regime designed to provide promoters and other
fund introducers with the simplicity, certainty
and speed they seek when setting up certain
types of specialist fund. A key feature is that
there is no need to seek regulatory approval
when establishing the fund. The Unregulated
Funds Regime includes an Unregulated Eligible
Investor Category (UEIC) and an Unregulated
Exchange Traded Category (UETC). Funds in these
categories do not need to be approved or authorised
by the Island’s financial regulator, the
Jersey Financial Services Commission (JFSC).
-
In September 2009, Jersey’s Economic Development
Department asked members of Jersey’s business
community for their views on draft legislation
which would introduce to the Island limited
partnerships with legal personality. Since the
introduction to Jersey of limited partnerships
in 1994, they have proved increasingly popular,
particularly as investment vehicles.
Jersey's
swift adoption of International Financial Reporting
Standards (IFRS) makes it better placed to meet
the changing needs of the European investment
fund industry, according to a survey by Ernst
and Young. Senior Manager at the firm's Asset
Management Group, Richard Le Tissier, observes
that there is little evidence that IFRS is being
adopted by European nations, putting the Channel
Islands in a leading position to meet the future
needs of the industry.
The
G20 has called for the setting up of one single
set of high-quality global accounting standards
to aid global financial stability, but the survey
found that just a fifth of fund managers and administrators
who currently have the option to apply IFRS do
so exclusively. Of those that have converted to
IFRS, 48% reported that it had significantly improved
the quality of their financial reporting.
Jersey
investment funds pay a zero rate of income tax
on their profits; there are no capital gains,
capital transfer, gift, wealth or inheritance
taxes or any death or estate duties. Stamp duties
do not apply to share or unit trust transactions.
Fund management companies however are subject
to 10% taxation on their profits if they trade
through a 'permanent establishment' in Jersey.
Dividends are paid out of taxed income, but the
10% tax is available as a credit against Jersey
income tax. Shareholders in a Jersey company who
are not resident on the island will not be subject
to taxation in respect of income or gains resulting
from their shareholdings.
Many
funds are organized through limited partnerships,
which are tax transparent, with income accruing
directly to the partners. Resident partners will
be subject to income tax on their receipts (20%)
but non-resident partners will not have a tax
liability.
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