LLC introduction enhances Jersey proposition for US alternative fund managers
New Limited Liability Company (LLC) legislation can significantly enhance Jersey's proposition as a leading jurisdiction supporting US alternative fund managers.
Officially approved by the Government of Jersey this week (7 February), the law, which enters into force on 14 February, expands Jersey’s existing comprehensive suite of private fund vehicles, adding a new structure that is intended to be familiar to US private equity, venture capital and other alternative fund professionals.
Benefitting from a simple registration process and flexible governance requirements, the Jersey LLC, which will have separate legal personality and can be classed as a ‘body corporate’, is expected to offer a number of key opportunities, including being used for issuing securities, as a manager vehicle, and as a fund entity in conjunction with the hugely successful Jersey Private Fund (JPF) regime.
The structure also provides certainty for US managers looking to fundraise within the EU, with the Jersey LLC able to market into Europe, subject to the usual fund permissions from the Jersey Financial Services Commission (JFSC), under the Alternative Fund Managers Directive (AIFMD) third country private placement rules.
Elliot Refson, Head of Funds, Jersey Finance, said: “Following a period of extensive consultation, the introduction of the Jersey LLC is a significant development for Jersey’s funds sector and bolsters our ability considerably to support US fund managers.
“The Jersey LLC has been deliberately and specifically developed to be a structure US managers and investors are familiar with, backed up by Jersey’s world-class ecosystem for cross-border alternative funds, our leading regulatory framework and our position as a non-EU European time-zone hub.
“Through the Jersey LLC, US fund managers will now be able to take advantage of seamless marketing into the EU via national private placement regimes, underlining our proposition as the ideal gateway into Europe.”
Philip Pirecki, Jersey Finance Lead in the Americas, added: “LLCs are hugely popular in the US private markets space, with advisers, managers, and investors very familiar with the structure. In that light, we see significant opportunity for the Jersey LLC to support their needs.
“Since opening our office in New York three years ago, we have seen our book of US business increase significantly. By adding the LLC structure to our proposition, we are expanding our solutions for the US market even further, as we look to meet the cross-border needs of US managers and sophisticated investors.”
Michael Johnson, Chair of the JFA, commented: “The funds industry has seen a sustained increase in business from the US over recent years, particularly as alternative managers have sought to draw on Jersey’s platform for accessing EU investor capital efficiently. The introduction of the long-awaited Jersey LLC meets a growing need in that light, offering a vehicle that is familiar to managers but at the same time that offers all the benefits of Jersey as an expert and well-regulated alternative funds centre in Europe. We expect to see strong appeal for the LLC in the months ahead from managers across the private equity and venture capital space.”
The introduction of the Jersey LLC follows a period of sustained growth for Jersey’s funds industry in relation to the US market, with funds business from US promoters more than doubling over the past five years.