Commission consults on increasing Private Investment Fund (PIF) options

9th December 2020

The Commission has today published a Consultation Paper containing proposals which, if implemented, would allow different investor categories to take advantage of an appropriately regulated fund structure.

Whilst the proposals would see the current approach to registering a PIF continue, other paths would be introduced to complement this.

One of the new paths being proposed would enable a PIF to be created without an attached Protection of Investors Law (PoI) licensed manager. All investors would have to meet qualifying investor criteria which are designed to protect potentially more vulnerable investors. At the time of application, the PoI licensed fund administrator would be required to provide confirmations equivalent to those currently provided by a fund administrator in respect of any QIF application.

A third path to registration would place the PIF as a bespoke private wealth structure. Using this route, there would be a family relationship between investors and no capital raising from investors outside this relationship.  There would be no requirement to appoint a PoI licensed fund manager and at the time of application the PoI licensed fund administrator would be required to provide confirmation that effective procedures are in place to ensure that the PIF was restricted to only eligible family-related investors.

All currently registered PIFs would continue to be registered under the proposed regime as they will meet the requirements under the existing approach. If a currently registered PIF seeks to change the basis of its registration to either of the new options, then this will be treated as a new PIF application with a corresponding application fee being payable.

Speaking about this initiative, Gillian Browning, the Commission’s Director of Investment, Fiduciary and Pension Division, said: “The effect of providing a suite of options under the PIF regime would be to increase the Bailiwick’s offering in this area. One of the key changes is that the alternative routes to a PIF would no longer place reliance on a licensed manager, thereby potentially removing the need to make a related PoI licence application and hence reduce the associated costs”.

Director General, William Mason commented, “We have worked to enhance our funds regime, making it even more user friendly for family offices and sophisticated investors whilst maintaining protections designed to protect less sophisticated and wealthy investors.”

If the proposals are implemented, new guidance on PIF promoter due diligence would be provided and a standardised declaration form introduced.