The Collective Investment Schemes (Class B) Rules 2013 (the “Class B Rules”), are intended by the GFSC to be as flexible as possible consistent with meaningful investor protection. The Class B Rules are essentially a codification of best practice, with reliance placed on disclosure. The GFSC also has power to derogate the requirements of any of the Class B Rules. The main characteristics of the Class B Rules are as follows:
Unless the fund can be classed as Qualifying Investor or Registered fund, which are both subject to a turnaround time of 3 working days, there is a three-stage process which applies to Class B funds.
This entails the submission of a fully completed Form GFA and such supporting documentation as required by the Form.
Form GFA is usually submitted by the designated manager, fund manager or advocate acting for the promoter, but requires the supporting signature of the proposed designated manager and the proposed trustee/custodian. Completion of the Form requires basic details of the scheme structure and objectives, the promoters and associated parties, fees to be charged and any unusual features of the scheme. All questions should be completed and the form signed and dated. If information cannot be provided at this stage (for example, if plans are provisional) this should be stated, but late changes to a scheme may result in the application being delayed, or in extreme cases, refused. Where parties not known to the GFSC are to be associated with the scheme, additional documentation will need to be submitted, as specified on the form. If the promoter is already known to the GFSC, or has received a positive response after submitting a New Promoters Introductory Checklist, the amount of information required by Form GFA (and the time taken for it to be processed) should be considerably reduced.
It is not necessary to submit a prospectus (scheme particulars, or equivalent offer document) at this stage as it will not be reviewed by the Commission.
If all parties meet the policy of selectivity and the detailed proposals otherwise appear acceptable to the Commission, the scheme will receive a letter granting ‘Outline Authorisation’.
If outline authorisation is not to be granted immediately, a letter requesting further information or clarification will be sent.
The applicant should submit a near-final draft of the prospectus for the scheme (or equivalent offer document), together with a copy of any application form the scheme will employ and the non-refundable application fee. Applicants are advised not to submit multiple redrafts of the prospectus, as this absorbs Investment Business Division (“IBD”) staff time, requires several rounds of correspondence and will delay the application. Any additional drafts which are submitted must be black-lined with reference to the previous copy submitted to the GFSC. Revised drafts which are not black-lined will not be reviewed.
The applicant should also submit a fully completed and signed Application Form APB with the prospectus.
The application form includes disclosure checklists which adhere to the requirements of the Class B Rules. Any matter specified by the schedules to be included in the prospectus must be so included. The applicant is asked to indicate on the disclosure checklist how each requirement is satisfied: this is done by identifying the page number of the prospectus upon which a relevant disclosure may be found. Where the documents do not adequately satisfy a stated requirement (or IBD staff have been unable to find adequate reference) a point will be raised with the applicant.
The Application form requires a signature by each of the proposed designated persons which will demonstrate to the GFSC that all parties are fully aware of the detail contained within the prospectus.
If the proposals have changed to a material extent since the completion of Form GFA, this should be brought to the attention of IBD staff at the time the application form is submitted. Such changes may result in the application being delayed.
The above is not exhaustive and other criteria may need consideration.
It is the GFSC’s intention to review the prospectus and disclosure checklist and issue a letter granting Interim Authorisation within ten working days of receipt. The ten-day period is indicative and, although every effort will be made to adhere to it, the GFSC cannot in any way be bound by it.
Any requests for derogations or modifications from applicable rules should be made to the GFSC at this stage. Please note the onus is on the applicant. The Class A Rules may not be modified and no derogations will be granted.
All points raised in the Outline or Interim letter must be resolved to the satisfaction of the GFSC before formal authorisation can be considered. Applicants should be aware that late changes to the scheme (for example, the introduction of new parties) will cause proportionate delays to any final authorisation, and may in extreme cases result in authorisation being refused.
Formal authorisation is granted only when all the following conditions are satisfied:
Any formal conditions to be imposed upon the authorisation of a Class B fund or any derogations from or modifications of the Rules will be incorporated into this certificate. Applicants should note that the Class A Rules may not be modified and no derogations will be granted. An annual authorisation fee is payable, but is reduced pro rata in the first year of authorisation. The amount due will be stated in the authorisation letter and will be followed by the posting of an invoice within five business days.
The designated manager is normally deemed responsible for payment of all fees. Current fee scales are set out here.
There is also a three working days fast track approval process for authorised closed-ended funds established as “registered” or as a “QIF” in Guernsey. This fast track approval process is explained in more detail in the website.
For an Incorporated Cell Company (ICC) or Protected Cell Company (PCC) a separate formal approval needs to be issued following outline authorisation in order that the vehicle can be registered with the Guernsey Registry. This will not normally be granted until the scheme has reached “outline” stage and requires a specific request from the applicant.