Approval of the Collective Investment Funds (Permits) (Exemptions) (Jersey) Order 200- and the Financial Services (Collective Investment Funds) (Exemptions) (Jersey) Order 200- (the “Orders”).

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A decision made (16/02/2007) regarding: Approval of the Collective Investment Funds (Permits) (Exemptions) (Jersey) Order 200- and the Financial Services (Collective Investment Funds) (Exemptions) (Jersey) Order 200- (the “Orders”).

Subject:	Approval of the Collective Investment Funds (Permits) (Exemptions) (Jersey) Order 200- and the Financial Services (Collective Investment Funds) (Exemptions) (Jersey) Order 200- (the “Orders”)
Decision Reference:	MD-E-2007-0050		Exempt clause(s):
Type of Report: (oral or written)	Neither		Person Giving Report (if oral):
Telephone or e-mail Meeting?			Report File ref:
Written report – Title	Collective Investment Funds: exemptions for non-Jersey companies
Written report – Author (name and job title)	Paul de Gruchy, Director, Finance Industry Development
Decision(s): The Minister approved the Orders and instructed the Director, Finance Industry Development, to notify the States Greffe, the Departmental liaison officer, the Commission and the law draftsman before forwarding the Orders to the Greffe for archiving.
Reason(s) for decision: The changes proposed will support an important sector of the finance industry without exposing the Island to reputational risk. The proposed changes have been agreed with the Jersey Financial Services Commission and Jersey Finance Limited.
Action required: Minister to sign, date and seal the Orders and the Director, Finance Industry Development to notify the States Greffe, the Departmental liaison officer, the Commission and the law draftsman before forwarding the Orders to the Greffe for archiving.
Signature: Senator P.F.C.Ozouf (Minister)		Date of Decision: 16 February 2007

Approval of the Collective Investment Funds (Permits) (Exemptions) (Jersey) Order 200- and the Financial Services (Collective Investment Funds) (Exemptions) (Jersey) Order 200- (the “Orders”).

MINISTER FOR ECONOMIC DEVELOPMENT

COLLECTIVE INVESTMENT FUNDS:

EXEMPTIONS FOR NON-JERSEY COMPANIES

1 THE ISSUE

1.1 The two Orders annexed to this report will effect a minor change to the Collective Investment Funds (Jersey) Law (“CIF”) and the Financial Services (Jersey) Law (“FS(J)L”). This change will provide that where a non-Jersey fund company holds board meetings in Jersey or has a manager, director or administrator that is ordinarily resident in Jersey, the company will not be required to hold a permit under either of those laws.

1.2 The Orders are fully supported by the Jersey Financial Services Commission and the finance industry.

1.3 It is recommended that the Minister sign, seal and date the Orders with a view to the Orders coming into effect seven days after they are made.

2. BACKGROUND

2.1 Currently, it is not clear when a non-Jersey fund company is required to hold a permit under the Collective Investment Funds (Jersey) Law. Clearly, if the company has no connection with Jersey, it does not need a permit. However, it is unclear whether having a Jersey resident director, or holding board meetings in Jersey, is sufficient to bring the company under the ambit of the law. As a result, many have taken a cautious approach and recommended that a non-Jersey fund company that has such a connection with Jersey ought to apply to hold a permit under that law.

2.2 This is a cumbersome and costly process. There is no reputational risk to the Island in these circumstances, provided the fund company does not have an established place of business in Jersey and does not hold itself out as being connected with Jersey.

2.3 There are, however, significant potential benefits if the change of approach is accepted. Currently, many fund companies hold board meetings in jurisdictions such as the Cayman Islands: if a proportion of these were to hold meetings in Jersey, this would both provide a stream of high value business travellers to the Island and also allow a large number of funds professionals to see firsthand the services the Island has to offer. This may persuade such persons that the next time they establish a fund, Jersey should be their jurisdiction of choice. In addition, Jersey has a pool of professionals who are regulated under the FS(J)L, but who are disadvantaged if they wish to act as directors to non-Jersey funds as this may bring the fund itself into the sphere of Jersey regulation. The change will allow such persons to market their services more effectively.

2.4 The change is effected by two orders. The first, made under CIF, provides that a non-Jersey company issuing units need not hold a permit even when it has a limited connection with Jersey (as described above). The second, made under the FS(J)L, arises from an exemption under the FS(J)L that provides that a company holding a permit under CIF need not hold a similar permit under the FS(J)L. An order under the FS(J)L is therefore needed to ensure that, having removed the requirement to hold a permit under CIF, the company does not then lose the benefit of the exemption to hold a permit under the FS(J)L.

3. OPINION AND RECOMMENDATION

3.1 The two Orders, if approved, will be beneficial to those engaged in the provision of services to fund companies, without exposing the Island to any reputational risk.

3.2 It is recommended that the Minister to sign, date and seal the Orders and the Director, Finance Industry Development notify the States Greffe, the Commission and the law draftsman before forwarding the Orders to the Greffe for archiving.

PAUL DE GRUCHY

Director, Finance Industry Development

14 February 2007