Middle East Report

By Sunil Gopalan – GFM's inaugural Global Fund Leadership Round Table has provided a fascinating insight into the challenges and opportunities facing Jersey, which over the past decade has reinvented itself as a centre for the structuring, domicile, servicing and even investment management of alternative funds on behalf of promoters and sophisticated investors the world over.

A years-long programme of renewal has given Jersey a close to comprehensive spectrum of fund structures and regulatory regimes ranging from closely-supervised products authorised for marketing to retail customers to so-called unregulated funds and other vehicles designed to avoid saddling institutions, family offices and other sophisticated investors with burdensome requirements inappropriate to their needs.

One of the most fascinating debates at the Jersey Round Table was about whether, in this drive to meet all market needs, the island has found itself with a matrix of fund choices that can be difficult to fathom for potential clients. Could starting over to rewrite Jersey’s fund legislation from scratch rather than piecemeal reform produce a clearer and more coherent offering? Possibly, but that’s a great deal easier said than done.

Our Round Table participants represent a cross-section of Jersey’s fund and investment services sector: Jersey Finance inward investment manager Giles Adu, VerrasLaw founding partner Jonathan Bale, Ernst & Young managing partner Andrew Dann, Rathbone Investment Management International managing director Jonathan Giles, Jersey Financial Services Commission deputy director for securities Michael Jones, Mekad chief executive Mehul Kotedia and Minerva head of corporate and fund services Gavin Wilkins.

In wide-ranging discussions over more than three hours at St. Helier’s Royal Yacht Hotel, the panel examined issues including the impact of the global economic turbulence on Jersey’s position and prospects as an international fund jurisdiction. Today offshore centres are under pressure to ensure that their regulatory practices meet international standards and to meet the tax concerns of onshore countries, while continuing to deliver expert services at a competitive price.

For Jersey, at the heart of Europe yet formally outside the boundaries of the European Union, relations with Brussels – where the Channel Islands recently opened a joint office – and influential member states such as France as well as the UK are critical.

A key challenge over the coming years is to adapt to EU rules and legislation such as the Alternative Investment Fund Managers Directive, which ultimately will require compliance from any firm seeking to attract capital from sophisticated investors within the union. Another is to resolve the questions that continue to surround the acceptability of its zero-10 corporate tax regime.

The Round Table also took in issues such as competition among offshore and onshore jurisdictions to attract alternative fund managers, their families and businesses, as well as Jersey’s potential as a gateway for investment to – and from – emerging markets, and the intersection of the fund sector with the island’s private client trust industry. We believe this compelling and insightful discussion offers an important contribution to the ongoing debate about how Jersey should face its future.

Sunil Gopalan, publisher, GFM

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