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The Island of Jersey’s Appeal to U.S. Investors and Fund Managers

In response to its growing relationship with the US, the Island of Jersey has recently enacted new LLC legislation, which offers familiarity to US fund managers and investors who already use LLC structures in jurisdictions like Delaware and Cayman, and adds further optionality to Jersey’s funds' regime.

In a recent SS&C webinar, we gathered industry experts from Carey Olsen, Jersey Finance and Eisner Amper to discuss the features of the legislation and explore the various factors that will influence US investors and fund managers to choose Jersey as their preferred fund domicile. The Jersey LLC is based primarily on the Delaware version. It has a separate legal personality with the option to elect to be a body corporate, provides limited liability for its members, and offers flexibility around its management and structure.

Setting up a Jersey LLC is straightforward and similar to the process of forming a Jersey company or partnership. An application, which can be submitted online, is required to confirm certain information including its proposed name (ending in LLC or Limited Liability Company), registered office in Jersey, and the activities and details of its managers, members and secretary. Only one member is required in order to register an LLC and there is no requirement for a separate manager. As required by the JFSC, the LLC agreement must be confirmed to be in writing and in place; however, the LLC agreement itself will not be made publicly available.

From a tax perspective, the LLC may elect to be treated for US tax purposes as either opaque or transparent. From a Jersey perspective, it is tax transparent—much like a partnership. Profits and losses are allocated among the members in the manner provided in the LLC agreement or, if it does not provide, based on the agreed value of the non-returned contributions made by them. The tax treatment in other jurisdictions should be confirmed as relevant in any given structure.

The Jersey LLC is anticipated to enhance the island’s proposition as a jurisdiction of choice and a gateway to Europe for US alternative fund managers. It expands Jersey’s existing suite of private fund vehicles, and with its simple registration process and flexible governance requirements, it is set to offer new opportunities for the island. Jersey is a cost-effective, well-regulated jurisdiction with more than 200 fund managers using Jersey to distribute 370 funds into Europe.

From a US point of view, US fund managers are familiar with LLCs, seeing them as a more efficient way to attract capital sources and manage tax exposure, and the implementation of this structure in Jersey will be of significant interest to US funds looking to expand and enter the European market.

SS&C enables alternative asset managers and investors to scale and focus on core competencies while streamlining and creating efficiencies across investment and fund operations. In Jersey, our experts on the ground provide fund administration and front-to-back office services, including fund valuations, treasury services and investor communications. We cover all asset classes across the spectrum of Jersey fund vehicles with independent portfolio and over-the-counter (OTC) derivative valuations through our proprietary web-based reporting. If you missed the webinar, click here to watch the "Jersey LLC Introduction – Enhancing Jersey’s Appeal to US Investors and Fund Managers" recording.

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