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Triple Boost For Jersey's Funds Sector

by Carla Johnson, Investors Offshore, London

01 February 2007

Jersey’s funds industry has already received an early New Year boost as a result of three developments announced this month. These measures are the recognition by the Dutch Financial Markets Authority, the eagerly awaited introduction of the Listed Fund Guide and a change to Jersey’s Income Tax Law.

The decision by the Dutch Financial Markets Authority (AFM) to add Jersey to the short list of jurisdictions whose regulation is considered sufficient to allow a light touch by the Dutch regulator enables Jersey funds to be listed on the Euronext exchange without the need for a licence in the Netherlands.

The first such fund listed was Yatra Capital Limited, an Indian property fund. Yatra, which aims to create value for investors through the ownership, development and operation of high-quality property on Indian commercial and retail markets, raised GBP100 million through a placement. Jersey legal adviser to the fund was Carey Olsen.

The second development was the introduction of the Listed Fund Guide by the Jersey Financial Services Commission on 8th January 2007 following final consultation with the Industry.

The Guide ensures that closed ended investment funds that are listed on European and other leading stock exchanges including the London, New York, Dublin, Channel Islands Stock Exchanges, the Alternative Investment Market and Euronext, can be subject to a streamlined 72-hour approval process. The regime is available to private equity, property and other alternative investment funds, such as hedge funds and funds of hedge funds.

And, as a result of a third development this month, Jersey is likely to be a more attractive domicile for certain fund and investment structures, including UK REITs. The States of Jersey has approved an amendment to the Island’s Income Tax Law which ensures that Jersey companies are treated as non-resident for tax purposes if certain conditions are fulfilled. This move will be attractive to certain UK structures which require a UK tax resident company which is not considered to be resident for tax purposes in another jurisdiction.

Graeme McArthur, representing the Jersey Funds Association, described the developments as important in making the jurisdiction an even more attractive option for fund promoters seeking the appropriate location for their alternative investment vehicles.

He added: “Jersey’s legal and fund professionals can compete even more effectively as a result of these measures. The Income Tax amendment will enable Jersey’s funds industry to compete directly with jurisdictions such as the Cayman, which in the past has invariably been the chosen domicile when a structure requires a non-UK incorporated but UK tax resident company.

“The launch of the light touch, fast track regulatory regime for listed closed ended funds will help the Island to acquire more alternative funds business, taking advantage of the current upswing in permanent capital vehicles for private equity and hedge fund managers.

“Finally, there is considerable interest from private equity funds and other alternative investment vehicles in listing on Euronext, so the timing of the AFM’s recognition of Jersey is ideal in such a buoyant market.”

Jersey’s Funds Industry is continuing its record breaking rise with the most recent figures for the third quarter of 2006 indicating that the Net Asset Value of funds under administration now stands at GBP169.8 billion, with close to half that total figure within specialist funds such as Private Equity, Property and Hedge Funds.

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