Limited partnership continuance guidance
Introduction
The JFSC is publishing this guidance in order to facilitate the migration of non-Jersey limited partnerships into Jersey. We are mindful of the need for good quality business to occasionally move jurisdictions for a number of different reasons. We would not want to encourage or facilitate any migration where the rationale is purely for regulatory arbitrage purposes or registered office only business. We will be reviewing each migration application to address any concerns in this regard.
The requirements of the Taxation (Companies – Economic Substance) (Jersey) Law 2019 apply to fund management business activities undertaken in relation to a limited partnership.
Consents
The continuance application certificate and the relevant consent under the Control of Borrowing (Jersey) Order 1958 (COBO) will not be granted until all other consents, which are required to permit the activities of the limited partnership to continue in Jersey, are ready to be granted by us.
Regulations
The following guidance is in respect of applications for non-Jersey limited partnerships to be continued into Jersey in accordance with the requirements of the Limited Partnerships (Continuance) (Jersey) Regulations 2020 (Regulations) and the Limited Partnerships (Jersey) Law 1994 (Limited Partnerships Law).
The Regulations follow very closely the existing legal and Registry process for continuance by non-Jersey companies wishing to migrate to Jersey and become Jersey companies. There is one main exception in that there is no provision for any limited partnerships to continue out of Jersey.
The effect of continuance is that the limited partnership is no longer to be treated as formed under the laws of another jurisdiction. All assets and other property previously held is taken to be held by the limited partnership under the Limited Partnerships Law.
New limited partnership is not created
An important feature of the Regulations is that continuance does not create a new limited partnership. It does not affect any partnership interest or any act done, or any rights, powers, authorities, functions or obligations existing, before the continuance. In particular, a continuance will not release a limited partnership (or any partner or other person in relation to the limited partnership) from any judgment, ruling, order, claim, debt or liability (existing or future). Any pending civil or criminal proceedings (by or against the limited partnership or related partner or other person) will not be affected.
The application process will follow that for companies and will involve solvency declarations and an application for COBO consent which will also involve, as is the case for all new Jersey limited partnerships, a review against the requirements of the Sound Business Practice Policy and Registry Processing Statement.
Eligibility
Under the Regulations, continuance into Jersey is only permitted to an “eligible foreign limited partnership”, which means a limited partnership, without legal personality, formed under the law of a jurisdiction outside Jersey. Such continuance is not permitted if the law of the jurisdiction in which the eligible foreign limited partnership is formed prohibits its continuance within Jersey.
Under the Regulations a continuance is not permitted if:
- the limited partnership is being wound up
- a receiver or manager has been appointed in relation to any of the assets of the limited partnership
- an application has been made to a court in another jurisdiction for the winding up of the limited partnership or for the limited partnership to be subject to equivalent insolvency proceedings and has not been determined; or
- the limited partnership has been deregistered for a purpose other than continuing as a limited partnership within Jersey in accordance with these Regulations.
Applications
An application for an eligible foreign limited partnership to continue as a limited partnership within Jersey must be provided to us in a Limited Partnership Continuance form (LP3C) and accompanied by –
- a copy (certified, in an approved form, to be a true copy) of its certificate of formation, or another document that evidences its formation;
- a declaration naming and signed by the general partner stating that –
- the limited partnership is solvent
- the limited partnership has applied to the JFSC for its consent to the creation of interests under the limited partnership in accordance with Article 10 of the Control of Borrowing (Jersey) Order 1958 Registration of a partnership form (P2)
- the limited partnership has applied to the registrar for registration as a limited partnership under the Limited Partnerships Law
- the limited partnership is not to have legal personality on its continuance within Jersey
- any other documents or information as we may require in respect of the application
- any published application fee
Fee cost
The continuance fee is £670. This fee is separate to any other fees payable.
Further confirmations / information to be provided
The application must also be accompanied by evidence in the LP3C form, satisfactory to us, of the following –
- that the application to continue has been approved by the general partner
- if the law of the jurisdiction under which the eligible foreign limited partnership is or was formed requires an authorisation to continue as a limited partnership within Jersey, that the limited partnership has obtained that authorisation.
Where not previously advised in the continuance application, the COBO application form in the further information section needs to include:
- details of the activities undertaken to date by the limited partnership
- details of whether the limited partnership has ever been or required to have been regulated in the jurisdiction in which it was formed and if so the name of the regulator and the details and status of that regulation
- confirmation that the limited partnership is of good regulatory standing and not currently subject to any regulatory proceedings elsewhere
- the rationale for the migration
- confirmation that all investors have been informed and where necessary have not objected to the migration.
Determination of applications and appeal
We will inform the applicant once a decision has been made and upon request by the applicant for a statement in writing of the reasons for the decision within 14 days of the request.
Right to refuse
We have the right to refuse an application if we are of the opinion that it would be contrary to the public interest to register the foreign limited partnership.
Right to appeal
The applicant has the right to appeal to the court against a refusal by us, but only on the ground that the decision was unreasonable having regard to all the circumstances of the case.
An appeal must be lodged with the Royal Court within 28 days of being informed of our decision and that on hearing the appeal the Royal Court may confirm or reverse the JFSC’s decision. It may also make an order for the costs of the appeal.
Further considerations
In all cases and in particular where the management of the limited partnership is not undertaken in Jersey, the Jersey-based service providers to the limited partnership will need to carefully consider and ensure appropriate compliance with all applicable AML/CFT requirements both in Jersey and in any other jurisdiction.
Registered office only
Service providers should note "registered office only" business is viewed by us as potentially high-risk business and Jersey-based service providers will need to have appropriate regard to this when providing their services to the limited partnership.
Timing
Service providers to a limited partnership should be aware of and manage potential timing considerations, when de-registering a non-Jersey limited partnership and making registration in Jersey. Consideration should also be made as to the sequence of migrating the limited partnership and where applicable its general partner. In any application for continuance details of the limited partnership or the general partner's continuance should be highlighted to us.
In principle consent
We request that at an early stage an “in principle consent” application is made to us for any continuance applications which may not fully comply with this guidance. This is to enable us and the applicant to consider all relevant matters before an application for continuance is made.
Further Jersey regulatory approvals
In relation to further Jersey regulatory approvals, it is anticipated that further approval will be required from us for migrating limited partnerships to be:
Jersey Private Funds (JPF) under the Jersey Private Fund Guide
Relevant considerations
- COBO consent needs to be granted at the time of issuance of the continuance certificate. The automated online process may be used, however the approval will be a manual process due to the need to co-ordinate from a timing perspective the JFSC review and approval of the continuance application. The 48 hour timeframe will not apply.
- In relation to the online application process for COBO consent, where the JPF has applied to continue (‘continuance’) into Jersey, select ‘Jersey’ as the jurisdiction.
- In relation to the online application process for COBO consent, where the JPF has applied to continue (‘continuance’) into Jersey, select ‘Jersey’ as the domicile.
- Select “Yes” when answering whether this application is a conversion from a Very Private, COBO Only or Private Placement Fund, or a continuance of a non-Jersey private fund into Jersey.
Collective Investment Funds
Relevant considerations
- Application will need to be made to the JFSC Authorisation Team – 3 day fast track timeframes will not apply
- Where the proposed activity for a limited partnership is to be an Unregulated Fund under the CIF Unregulated Funds Order we request that at an early stage an “in principle consent” application is made to us so that the applicant and the JFSC may consider all relevant matters before an application for continuance is made.
Investment warnings for:
- Jersey Private Funds
- Expert and Eligible Investor CIF Certified Funds
- Professional Investor Regulated Schemes under the Financial Services (Investment Business (Restricted Investment Business - Exemption)) (Jersey) Order 2001 and/or the Financial Services (Trust Company Business (Exemptions No.5)) (Jersey) Order 2001
can be adjusted, as necessary, to reflect the fact that the limited partnership was established elsewhere and the investment warning is in respect of the limited partnership becoming subject to the relevant Jersey financial services legislation and regulation.
In accordance with Regulation 5 (5) of the Regulations, for the purposes of investors accepting the investment warnings in respect of the 'subscription, purchase or exchange' of units in the fund, the continuance can effectively be treated as an 'exchange' of units or securities (i.e. foreign limited partnership interests for Jersey limited partnership interests).
Previous regulation
Structures that may be funds in another jurisdiction may not be funds when they migrate to Jersey, given the differences in the definitions in the other jurisdiction and Jersey legislation and guidance, such as the CIF Law and Jersey Private Fund Guide. However, we will need to understand both the Jersey and the previous regulatory status of the limited partnership (both in the other jurisdiction and in Jersey as a non-Jersey limited partnership) in our consideration of the continuance application.
In the circumstances where the migrating limited partnership moves from being regulated in the other jurisdiction to being unregulated in Jersey, we request that an “in principle consent” application is made to us at an early stage so that we can consider all relevant matters with the applicant before an application for continuance is made.
AIFMD
In relation to Jersey’s AIFMD regime, as the migrating limited partnership is the same limited partnership, which had already been marketed by the time it applied to migrate to Jersey, the position is that such limited partnerships should be subject to Jersey’s AIFMD regime and make the appropriate applications.
As the limited partnership will have been marketed in the EU / EEA it will therefore need at the point of migration the relevant AIF certificate under the AIF Regulations and also at the point of migration the AIFM of the limited partnership will need the relevant AIFSB licence under the FSJ Law or sub-threshold approval under the AIF Order. Consideration should be given to advising the relevant EU /EEA State regulators of the continuance of the limited partnership and if applicable its AIFM.