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Guernsey investment funds

21 August 2023

Guernsey is, for many, the jurisdiction of choice for the establishment of investment funds and other investment structures across a wide range of asset classes. Guernsey is highly regarded for the quality of its regulatory regime and the competence and flexibility of its service providers. Investment funds activity forms a significant part of Guernsey's finance industry and many innovative products and structures are available to suit different types of investors and promoters. At the end of the first quarter of 2023, the total net asset value of Guernsey funds was £288.7 billion.

As a third country for EU law purposes, funds and managers established in Guernsey sit outside the full scope of requirements under the Alternative Investment Fund Managers regime, while at the same time benefiting from the national private placement regime in many EU member states.

Legal and regulatory overview

If a vehicle established in Guernsey satisfies the criteria for a "collective investment scheme" or "fund", it will be subject to the provisions of The Protection of Investors (Bailiwick of Guernsey) Law, 2020 (the “POI Law”) and will need to be authorised by or registered with the Guernsey Financial Services Commission (the ''GFSC'').

All Guernsey-domiciled funds, open or closed-ended, authorised or registered, must appoint a local administrator licensed by the GFSC (referred to as an "administrator" in this briefing) which will be responsible for providing a degree of third-party oversight for compliance with applicable law and regulation and the fund's constitutional documents, as well as carrying out secretarial and accounting services. The administrator will also often provide directors and a Money Laundering Reporting Officer to the structure, as well as registered office services.

Types of fund vehicles used in Guernsey

Guernsey law permits fund vehicles to be structured using a variety of vehicles to suit the needs of the particular fund and its investors. The following vehicles are available in Guernsey:

  • non-cellular companies, which are similar to, but in some ways more flexible than, traditional English companies limited by shares;
  • protected cell companies ("PCCs"), which are a form of company that permits the establishment of separate protected cells, the assets and liabilities of which are segregated by statute from one another and from the company's core;
  • incorporated cell companies ("ICCs"), which are similar to PCCs save that each incorporated cell of an ICC is a separately registered legal entity;
  • limited partnerships ("Limited Partnerships"), which are partnerships that are registered and must have a minimum of one general partner, responsible for its management and having unlimited liability, and any number of limited partners, whose limited liability is protected by statute; and
  • unit trusts, which are a form of trust where underlying assets are held for the benefit of investors issued with "units" under the terms of a trust instrument.

Open-ended vs. closed-ended

Guernsey makes a fundamental distinction between open-ended funds and closed-ended funds.

An open-ended fund is one in which the investors are entitled under the terms of the scheme to have their investment redeemed or repurchased by the fund during the life of the fund at a price related to the value of the property to which they relate.          

In a closed-ended fund, investors have no right to have their interests redeemed or repurchased during the life of the fund. The fund will, however, have a pre-determined term, at the end of which it is expected that its assets will be realised and the proceeds distributed to investors as part of its winding-up.

A closed-ended fund is not required to appoint a local custodian, whereas every Guernsey open-ended fund must appoint a Guernsey licensed custodian to hold its assets on trust.

Authorised and registered funds

Guernsey funds must either be authorised by or registered with the GFSC. Authorised funds receive their authorisation following a substantive review of their suitability by the GFSC, whereas registered funds receive their registration following a representation of suitability given by the fund's administrator, which scrutinises the fund and its promoter in lieu of the GFSC and takes on an ongoing responsibility for monitoring and oversight of the fund.

Registered funds

Traditional registered funds offer a great deal of flexibility and are a very popular choice for funds of all sizes, open- and closed-ended, employing company or limited partnership structures. There are no restrictions on the type or number of investors that a registered fund may be marketed to and the applicable rules are relatively light-touch. There is no requirement for registered funds to appoint a Guernsey licensed manager, but a Guernsey licensed administrator and, in the case of registered open-ended funds, a Guernsey licensed custodian will need to be appointed, just as in the case of an authorised fund.

One key requirement of the registered funds regime, which can make them less attractive in the case of smaller funds, is the requirement for each registered fund to produce an offering document which complies with the GFSC's prospectus rules. However, as this offering document may be made up of several documents, including the fund's constitutional and subscription documents, the burden of producing this offering document is often not as onerous as it may at first appear.

Private investment funds (''PIFs'')

PIFs are technically a sub-class of registered funds, so they will also receive their registration following a representation of suitability from the administrator. However, a separate set of rules apply to PIFs to the exclusion of the registered fund rules, making them effectively a distinct type of Guernsey fund.

PIFs were introduced by the GFSC as a simple and quick-to-market private Guernsey fund, aimed at smaller funds where the manager has an existing and close relationship with the investors. Building on the success of the original PIFs, the GFSC has now created three types or "routes" of PIFs: Route 1 (POI Licensed Manager PIFs); Route 2 (Qualifying Investor PIFs); and Route 3 (Family Relationship PIFs). The GFSC undertakes to register all three routes within one business day of its receipt of a complete application.

The key features of each route are as follows:

  • Route 1 PIF – POI Licensed Manager:
  • Route 1 PIFs are suitable for funds where the fund manager has a close relationship with its investors;
  • no more than 50 investors holding an ultimate economic interest may be admitted;
  • no limit to the number of potential investors the PIF may be marketed to;
  • no requirement for any offering document;
  • a Guernsey licensed manager must be appointed; and
  • the manager must affirm to the GFSC that investors can sustain any losses incurred on their investment


  • Route 2 PIF – Qualifying Private Investor PIFs:
  • Route 2 PIFs are only open to investors who meet the definition of a Qualifying private investor, being a "Professional Investor", an "Experienced Investor" or a "Knowledgeable Employee" in the PIF Rules;
  • no more than 50 investors holding an ultimate economic interest may be admitted;
  • the PIF may only be marketed to a maximum of 200 people;
  • all investors must have received a disclosure document (including risk disclosures); and
  • there is no requirement to appoint a Guernsey manager.


  • Route 3 PIF – Family Relationship PIFs:
  • Route 3 PIFs are available to investors who share a "family relationship" or are an "eligible employee" of that family;
  • such an "eligible employee" must meet the definition of a Qualifying private investor (see Route 2); and
  • the PIF may not be marketed outside the family group.

Authorised funds

A traditional three stage approval process must be followed to obtain authorisation of a fund by the GFSC, unless the fund is a Qualifying Investment Fund (see below). The overall timing for this process is usually in the region of four to six weeks.

There are three types of authorisation available for open-ended funds available in Guernsey: Class A, Class B and Class Q (Qualifying Professional Investor funds) and one type of authorisation for closed-ended funds. Class A funds have essentially been superseded by the EU's Alternative Investment Fund Manager regime.

To avoid the three-stage process, an open- or closed-ended fund seeking authorisation as any of these authorised fund types may apply as a Qualifying Investor Funds ("QIFs"), which benefit from a fast-track application process, under which authorisation can be obtained within three business days. Only qualified investors, defined as professional investors, including individual investors investing US$100,000 or more, experienced investors and/or knowledgeable employees are permitted to invest in QIFs.

Despite the availability of the fast-track QIF regime, authorisation has seen a decline in popularity over recent years in favour of registration.

Sustainable funds

Guernsey Green Fund

Guernsey Green Fund designation provides investors with a trusted and transparent product, provided through compliance with the Guernsey Green Fund Rules, 2021, where a fund must ensure its portfolio meets the eligibility criteria where 75% of assets by value must meet the green criteria with the remainder invested more broadly, but must not lessen the overall objective of mitigating environmental damage and must not be invested in certain proscribed asset classes.

Natural Capital Fund

The Natural Capital Fund regime has a broader and more nature-focussed scope than the Guernsey Green Fund regime, whose focus is centred on climate change mitigation and adaptation. The Natural Capital Fund is provided through compliance with the Natural Capital Fund Rules, 2022. It was envisaged by the GFSC that through the introduction of the regime, a wider spectrum of investment strategies may be accommodated, thereby increasing the range of schemes which might seek designation.

Follow this link for details on Guernsey sustainable funds.

Why set up a fund in Guernsey?

Guernsey is one of the world’s largest offshore finance centres, and the Island has developed into a leading jurisdiction for the establishment of investment funds.

The growth of the investment funds industry in Guernsey is attributable in part to the policies of the Guernsey authorities and the high quality of services available in Guernsey in relation to fund management, administration and custody.

The close relationship between the GFSC and Guernsey’s funds industry ensures a high level of responsiveness. In approving a Guernsey fund, the GFSC is also willing to take a practical approach in determining the suitability of prospective managers.

As one of the most established, transparent and well-regulated offshore jurisdictions, Guernsey:

  • is a member of the OECD and was placed on the G20 whitelist of offshore jurisdictions in 2009;
  • has obtained designated territory status under the UK Financial Services and Markets Act, 2000; and
  • has been assessed as being amongst the best quality financial centres in the world when measured against the rigorous international standards for tackling money laundering and terrorist financing set by the FATF.

Guernsey’s low tax status, proximity to the financial markets of Europe (continuing to benefit from national private placement regimes), sophisticated banking and professional infrastructure and a simplistic and efficient regime with an innovative and pragmatic regulator have contributed to the success of the Island of Guernsey as a base for investment funds.

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