Jersey has been an internationally recognised domicile for funds for a number of years, but when the Ucits directive encouraged retail business to move to
This strategy has been a great success. According to a recent survey, Jersey is now regarded by law firms as the top jurisdiction for private equity and property funds, and for hedge funds it is now second only to the
The focus on funds geared to institutions and sophisticated investors led to the launch of the Expert Funds Guide in February 2004, following extensive consultations between the industry, local authorities and regulators. The introduction of a light touch regulatory approach and an approval process that can take as little as three days have made Jersey a credible domicile for hedge funds and an alternative to the Caribbean jurisdictions that have dominated the industry in recent years.
Of course, there’s plenty of competition for the growing amount of hedge fund business, especially in the European market. Guernsey and
introduction of the Qualified Investor Fund and Professional Investor Fund regimes respectively.
But
One of the factors driving this growth is an increased emphasis on corporate governance, for funds in general and hedge funds in particular. At the same time, over the past year or so the UK Inland Revenue
has made a number of high-profile challenges to offshore funds, notably on the issue of where management control is being exercised.
The issue is what substance exists behind the structures put in place in offshore jurisdictions. The fund may be domiciled there but often, the Revenue argues, actual management is being carried out from the
This opportunity for fund managers to create substantial activities in Jersey that can stand up to scrutiny by outside tax authorities is being taken a step forward by the initiative to encourage hedge fund managers to themselves relocate to the island.
The island is particularly well placed because in addition to the human resources and infrastructure of a top-class financial centre, Jersey also offers a physical environment and quality of life that rival jurisdictions struggle to match – all within easy reach of the City of
By David Pirouet
David Pirouet, Partner,
PricewaterhouseCoopers