Considering registering an investment fund? Can’t find a suitable jurisdiction? Why not train your sights on the Island of Guernsey? Thanks to a flexible & pragmatic approach adopted by the GFSC, the island's number one financial regulator, there’s been a significant influx of investment capital to the island in recent years. Establishing a hedge, private equity or property fund on the Island of Guernsey is a pretty straightforward process, requiring investors to apply minimum effort.
Potential investors find Guernsey particularly attractive for establishing hedge funds. The legislative framework regulating hedge fund operations can be found in the GFSC’s guidance, which is divided into four key sections. So, let’s take a closer look at them.
Custodianship
Institutional investors seeking to set up an investment fund on the Island of Guernsey are no longer required to keep their assets with Guernsey-based licensed custodians. It’d also be good news to them that master brokers are no longer formally charged with supervising managers of their funds. The same approach is applied to retail funds established by less experienced investors; however, they must still appoint custodians holding Guernsey-issued licenses to oversee their funds’ managers. Should investors wish to appoint a custodian from another jurisdiction, they can do so by filing a corresponding request with the GSFC. However, they’ll need to make sure that custodians’ comply with the requirements of relevant oversight bodies.
Separation of Funds’ Assets
Master brokers aren’t required to physically separate funds’ assets from their own funds while establishing an investment fund on the Island of Guernsey (providing all associated risks have been explained in a brochure). As far as other categories of investors are concerned, physical separation of funds’ surplus assets from master brokers’ own assets may be required.
Determination of Net Assets’ Value
To get around the problem with determining the value of their net assets, hedge funds are allowed to make use of subscriptions (and in some cases redemptions) based on the provisional value of their assets. It is understood that the final quantity of shares will be established later on, while intermediate redemption amounts will be paid on a per-case basis once the value of net assets has been determined. It’s worth pointing out that this approach doesn’t require a complete risk assessment. An identical approach can be applied to registering investment funds on the Island of Guernsey, providing a fixed percentage of the projected value of net assets is set for provisional payments.
Rules for Clients
Subscriptions may be possible based on the projected value of net assets, providing the regulator is OK with the valuation procedure’s reliability. It should be kept in mind that the use of funds’ subscription money is usually disallowed unless the final quantity of shareshas been determined.
Creating Hedge Funds on the Island of Guernsey
And that wraps up our short review. Should you require more information about the establishment of investment funds on the Island of Guernsey, please, do not hesitate to contact IQ Decision UK. Our experts are going to be happy to advise you on the setting up of hedge funds on the Island of Guernsey or any other matters related to this process.
