A new fund structure for Jersey has been devised by Jersey-based law firm Crill Canavan and fund administrator Herald Fund Services.
The Standard Form Expert Fund, the first fund of which has been approved by the Jersey Financial Services Commission, aims to cut the time and cost involved in setting up funds domiciled in Jersey by about 70 per cent.
The new structure makes use of Jersey’s Incorporated Cell Company legislation and works in a similar way to an umbrella fund.
Individual investment funds are established as separate incorporated cells and an investment manager is appointed to each fund. Different investment managers can be appointed to each of the separate cells within the ICC.
“The key advantage of standard documentation is that it has the potential to reduce the cost and time involved in setting up a Jersey regulated or unregulated fund by approximately 70 per cent when compared to more orthodox or bespoke fund structures,” says Adrian Odell, head of funds at Crill Canavan. “This provides an incentive to investment managers to incur the initial cost of fund formation and take new investment strategies to market, and reduces the upfront risk associated with establishing a fund and assessing investor appetite. By offering a standard form product, Jersey can compete with and beat any offshore jurisdiction with reference to the full bouquet of factors considered in choosing a fund domicile.”
The funds themselves may have differing aims and strategies and operational terms, which cannot be standardised. However, standard documentation copes with this by placing the variable elements of the funds into an appendix, enabling each fund to retain its individuality.
“The beauty of this new fund structure is that it maintains the regulatory oversight which clients are looking for in the current market but at the same time makes it extremely cost-effective,“ says Mike Capraro, managing firector of Herald Fund Services. “Perhaps the primary detractor to the Jersey funds market has been the costs associated with establishing funds here which can be higher than other jurisdictions. By working with Crill Canavan, we’ve found a solution that has attracted a positive response from London fund lawyers and is already bringing new energy to the marketplace.”
