Guernsey Introduces Streamlined Qualified Investor Fund Regime

by Jason Gorringe, Tax-News.com, London

09 February 2005

The Guernsey Financial Services Commission has announced the introduction with immediate effect of a new streamlined approval process for both open and closed ended funds aimed at Qualified Investors.

The changes have been introduced as a result of consultation with the financial services industry in the latter half of 2004 and according to the GFSC, the new rules have received widespread support.

Under the streamlined application process, the Commission will undertake to grant fund approval within 3 working days provided that an appropriately licensed Guernsey applicant has certified that: the fund will be restricted to professional, experienced and knowledgeable investors; the applicant has conducted due diligence on the promoter and associated parties and has found them to be fit and proper; and the applicant is satisfied as to the fund's economic rationale and the disclosure of any risks associated with the investment vehicle.

Commenting on the new regime, Peter Neville, Director General of the GFSC, observed: "This new arrangement, brought into being in only six months, demonstrates the benefit of effective co-operation with the industry. That, taken together with the impressive investment fund statistics released today, underscores the commitment we all have to the continuing strength and vitality of the investment fund sector in Guernsey".

However, Peter Franks, a partner at accounting firm Ernst & Young, has cautioned that the new QI rules will require a disciplined response from the industry to ensure the continued growth and success of the fund sector.

“The challenge now goes out to licensed Guernsey applicants and the industry to perform their due diligence in a timely manner to ensure that we do not have a transfer of time between the pre and post-regulatory application,” commented Mr Franks.

Nonetheless, Mr Franks noted that the new rules bring Guernsey into line with many other offshore jurisdictions with similar fast-track regulations, and are “extremely welcomed” by the island’s funds industry.

“There may be initial concerns that there has been a shift in the performance of the due diligence from the regulator to the industry, but we have seen the success of similar initiatives in other jurisdictions over the past year in encouraging new business in the increasing level playing field of offshore fund locations,” he noted.

Recommended