aifmd - ESMA RECOMMENDS 3rd COUNTRY PASSPORT FOR JERSEY AND GUERNSEY

TODAY’S ANNOUNCEMENTESMA has today concluded that “no obstacles exist to the extension of the passport toGuernsey and Jersey”.ESMA has assessed six jurisdictions to date and said that Switzerland will remove anyremaining obstacles with the enactment of pending legislation and that it had formedno definitive view on the other three (Hong Kong, Singapore, and the USA).The six jurisdictions were selected based on various factors including the amount offunds activity under existing EU national private placement regimes and the experienceof EU national authorities in dealing with these jurisdictions.The selection of Jersey and Guernsey in the list of jurisdictions for priority assessment istestament to their international importance as fund domiciles (which together have over£500 billion of assets under management) and of their standing as internationally cooperativeand transparent jurisdictions. ESMA’s recommendation that they be grantedfull EU passport access underlines the flexibility and “future-proofing” that they offer.Guernsey funds partner Ben Morgan said: “Since the advent of AIFMD, fundestablishment in Guernsey and Jersey has continued on a more or less business-as-usualbasis. Firstly, funds are regularly established by promoters with no EU connectionsand secondly, Guernsey/Jersey funds are often established by EU AIFMs and non-EUAIFMs for marketing Guernsey/Jersey funds under the NPP regimes of EEA states.“In addition, Guernsey and Jersey structures have also been established alongsideEU AIFs (for passporting purposes). The extension to Guernsey and Jersey of thepassporting regime will mean that the entire fund structure can be domiciled in theChannel Islands, something which should be welcomed by all investors, including thosein EEA member states, given the resultant cost and time savings associated with havingeverything in one place.”Jersey funds partner Dan O’Connor said “Ultimately, with this announcement, clientshave full AIFMD optionality. The existence of mature and experienced fund servicesindustries and internationally recognised regulatory regimes that combine speed,certainty and flexibility with an appropriate level of regulatory oversight, have playeda large part in the influx of new fund managers and the record growth in fund assetsunder management that Jersey and Guernsey have been experiencing.“We have seen many fund managers significantly reduce operational costs and disclosurerequirements by choosing Jersey and Guernsey funds and marketing to potential EUinvestors using NPP regimes. We expect this announcement to provide further comfortto fund managers and their advisers that Jersey and Guernsey funds provide the best ofboth worlds.”2 / JULY 2015 | AIFMD – ESMA RECOMMENDS 3RD COUNTRY PASSPORT FOR JERSEY AND GUERNSEY

TECHNICAL BRIEFJersey and Guernsey are outside the European Union and regarded as “third countries”for AIFMD purposes. Each has implemented AIFMD requirements only to the extentnecessary to allow their funds and managers to access investors in EU/EEA countries.Channel Islands funds are eligible to be marketed into the EU / EEA in accordancewith the AIFMD through national private placement regimes and (once available)through the EU passporting regime.For Jersey and Guernsey funds (and other non-EU funds) with a Jersey or Guernseymanager:• Outside AIFMDWhere the fund is not an “AIF” or is not “marketed” into the EU/EEA (as definedin the AIFMD), the fund and its manager are not subject to any AIFMD-relatedrequirements.• Article 42 requirements onlyThe fund can be “marketed” into the EU/EEA through national private placement(“NPP”) regimes by complying with only the requirements of AIFMD Article 42(annual reports, pre-investment disclosure and regulatory reporting on liquidity,risk management arrangements and leverage). This reduces costs as other AIFMDrequirements do not apply, including that no depositary is needed (although a smallnumber of EU/EEA countries require a depository before permitting marketing).• Full complianceA Jersey or Guernsey manager can opt for full AIFMD compliance under its localfunds regime, to be ready for the extension of the AIFMD passporting regime tothird countries.ESMA’s advice and opinion have been sent to the EU Commission, Parliament andCouncil for their consideration on whether to activate the relevant provision in theAIFMD extending the passport through a Delegated Act. ESMA aims to finalise theassessments of Hong Kong, Singapore and the USA as soon as practicable and to assessfurther groups of non-EU countries until it has provided advice on all the non-EUcountries that it considers should be included in the extension of the passport.The full press release can be found at:http://www.esma.europa.eu/content/ESMA-advises-extension-AIFMD-passportnon-EU-jurisdictions3 / JULY 2015 | AIFMD – ESMA RECOMMENDS 3RD COUNTRY PASSPORT FOR JERSEY AND GUERNSEY

CONTACT USkey contactschristopher AndersonPartner | GuernseyT +44 (0)1481 741537E christopher.anderson@careyolsen.comBEN MORGANPartner | GuernseyT +44 (0)1481 741557E ben.morgan@careyolsen.comdaniel o’connorPartner | JerseyT +44 (0)1534 822249E daniel.oconnor@careyolsen.comGUERNSEYT +44 (0)1481 727272Carey House PO Box 98 Les BanquesSt Peter Port Guernsey GY1 4BZ Channel Islandschristopher AndersonPartnerT +44 (0)1481 741537E christopher.anderson@careyolsen.comandrew boycePartnerT +44 (0)1481 732078E andrew.boyce@careyolsen.comtom careyPartnerT +44 (0)1481 741559E tom.carey@careyolsen.comdavid croslandPartnerT +44 (0)1481 741556E david.crosland@careyolsen.comgraham hallPartnerT +44 (0)1481 732028E graham.hall@careyolsen.comTONY LANEPartnerT +44 (0)1481 732086E tony.lane@careyolsen.comBEN MORGANPartnerT +44 (0)1481 741557E ben.morgan@careyolsen.comemma russellPartner (LLP)T +44 (0)20 7614 5628E emma.russell@careyolsen.com4 / JULY 2015 | AIFMD – ESMA RECOMMENDS 3RD COUNTRY PASSPORT FOR JERSEY AND GUERNSEY

jerseyT +44 (0)1534 88890047 Esplanade St HelierJersey JE1 0BD Channel Islandsrobert milnerPartnerT +44 (0)1534 822336E robert.milner@careyolsen.comjames mulhollandPartnerT +44 (0)1534 822369E james.mulholland@careyolsen.comdaniel o’connorPartnerT +44 (0)1534 822249E daniel.oconnor@careyolsen.comrobin smithPartnerT +44 (0)1534 822264E robin.smith@careyolsen.comPlease note that this briefing is only intended to provide a very general overview of the matters to which itrelates. It is not intended as legal advice and should not be relied on as such.© Carey Olsen 20155 / JULY 2015 | AIFMD – ESMA RECOMMENDS 3RD COUNTRY PASSPORT FOR JERSEY AND GUERNSEY