Building on a tried and trusted model
By Jane Pearce and Daniel Richards - By seeking to accompany the signing of any Tiea with a joint declaration with the onshore government in question, Jersey aims to obtain wider international recognition for its financial services industry and fund products. For example, in 2008 the German government stated that subject to the outcome of the IMF evaluation – which turned out to be highly positive – it would endeavour to ensure that Jersey should be treated as fairly and favourably as other third countries where EU directives include provisions regarding compliance with the union’s standards and access to its markets.
In the wake of the 2008-09 financial crisis and amid continuing global economic and market turbulence, investors are placing a higher priority on the robustness of a fund jurisdiction’s regulatory framework – and Jersey’s has been endorsed by supranational standard-setters such as the International Monetary Fund, Iosco and the Organization for Economic Cooperation and Development.
In 2009, the IMF reviewed Jersey’s regulatory framework against objective criteria of the Financial Action Task Force and concluded that it was “in the top division” of global finance centres, that its financial sector regulation was “of a high standard” and has “comprehensive and robust” anti-money laundering protections.
Jersey is a founder signatory of the Iosco Multilateral Memorandum of Understanding in relation to inter-regulator co-operation and has entered into bilateral regulatory co-operation agreements with 11 EU member states.
Meanwhile, promoters are seeking long-term certainty in an environment of ongoing change resulting from existing and impending legislation, such as the Dodd-Frank Act and the Foreign Account Tax Compliance Act in the United States and the European Union’s Alternative Investment Fund Managers Directive. Jersey offers (as does Guernsey) the offshore advantage of a tax-neutral platform, vehicle flexibility, and a fund services industry combining cost stability with decades of experience.
Over the past decade, Jersey has demonstrated its credentials in adopting international standards, particularly the efforts to promote global tax transparency led by the OECD. Jersey signed its first OECD model tax information exchange agreement with the US back in 2002 and is currently party to 24 Tiea, including with 10 EU member states. No surprise, therefore, that both Channel Islands were on the OECD ‘white list’ of compliant jurisdictions when it was first drawn up in 2009.
By seeking to accompany the signing of any Tiea with a joint declaration with the onshore government in question, Jersey aims to obtain wider international recognition for its financial services industry and fund products. For example, in 2008 the German government stated that subject to the outcome of the IMF evaluation – which turned out to be highly positive – it would endeavour to ensure that Jersey should be treated as fairly and favourably as other third countries where EU directives include provisions regarding compliance with the union’s standards and access to its markets.
In the meantime the fund sector has been boosted by innovative new legislation expanding the scope of the island’s limited partnership framework through the addition of separate limited partnerships, which have separate legal personality, and incorporated limited partnerships, which go a step further as a body corporate with perpetual succession. These changes create a full range of limited partnership vehicles suitable both as funds and as carried interest vehicles.
The outlook is bright for the future of Jersey’s private equity industry, thanks to international endorsement of the jurisdiction and regulatory convergence that leaves the island well placed to thrive, while our tried and trusted model offers promoters the required combination of stability and cost-effectiveness.
Jane Pearce is a partner and group director of Ogier Fund Services and Daniel Richards is a legal funds partner with Ogier in Jersey
Please click here to download a copy of the Private Equity Wire Special report: Jersey Private Equity Services 2011
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