Search terms: Offshore Services, Guernsey
The thriving financial centres of Guernsey and the other UK crown dependencies are an essential part of the UK economy – a fact which is not lost on the coalition government. The new administration came into power with a promise of a "bold, reforming government that puts fairness back into Britain". The question arises: how will this promise affect the United Kingdom's relationship with Guernsey?
The extent to which fund managers are given the reins to run offshore funds varies from structure to structure. The guiding principle is that the director of a corporate fund should not be shackled by discretions or powers which can be given directly to the manager. Rather, the manager may be delegated certain discretions or powers which remain subject to the overall supervision and veto of the directors.
The credit crunch has proved an irresistible temptation for companies to expand their use of unpaid internships, but it can be hard to distinguish between 'work experience' and 'working'. Employers should carefully consider the placements they offer, as they may face prosecution under minimum wage laws.
The States has approved the preparation of an ordinance to amend the Conditions of Employment (Guernsey) Law 1985. The change arises from an interesting example of the interplay between the different laws that impact upon the employment relationship. Occasionally, applying the law will require businesses to balance seemingly conflicting regulations – if in doubt, employers should seek legal advice.
The Commerce and Employment Department has released a consultation document regarding possible changes to the Companies (Guernsey) Law. Many of the proposed changes aim to clarify existing provisions. The consultation generally appears to be a
fine-tuning exercise aimed at improving the provisions of a law which is already regarded as taking a modern approach to company law issues.
A recent UK case is likely to have implications for banks and other financial services businesses operating in Guernsey. When refusing to act on a customer's instructions in seeking to comply with their anti-money laundering obligations, financial services businesses should be clear as to the nature of their suspicion and that their suspicion is relevant within the terms of the applicable legislation.
The UK Bribery Act - an ambitious piece of extraterritorial legislation that places the United Kingdom at the forefront of international 'citizenship' in the area of fair business practices - has passed into law. As a result, Guernsey financial services businesses should ensure that they have adequate systems in place to detect and prevent bribery within their organization.
Although the existing law on limited partnerships in Guernsey functions well, as part of a general review of the jurisdiction's commercial laws, the States of Guernsey has taken the opportunity to propose amendments to the law in order to increase its flexibility and certainty, thereby ensuring that Guernsey remains a frontrunner for those seeking to establish limited partnerships.
International Monetary Fund staff will soon revisit Guernsey to continue the assessment of the island's anti-money laundering (AML) legislation, among other things. Although the Guernsey AML framework has generally been regarded as robust, the Guernsey Financial Services Commission recently introduced changes in order to close certain loopholes, adapt to changing criminal practices and adopt certain IMF recommendations.
The Licensee (Conduct of Business) Rules have entered into force. Licence holders must face a number of challenges in order to comply with the rules. In a first step towards compliance, licence holders must classify all clients as either retail clients, professional clients or eligible counterparties. The deadline by which this classification must be submitted to the Guernsey Financial Services Commission is approaching.
As part of the regulatory regime for licensed fiduciaries, the Guernsey Financial Services Commission carries out onsite visits to both corporate and individual licensees. It is important for licensees to keep abreast of any relevant changes in legislation that have been issued by the commission and to prepare thoroughly so as to avoid any nasty surprises during an onsite visit.
A draft Code of Corporate Governance, prepared at the request of the Guernsey Financial Services Commission, has been circulated for industry consultation. The consultation period has ended and significant amendments are expected to be made before the final code is brought into force.
Amendments to the Data Protection (Bailiwick of Guernsey) Law 2001 have entered into force. The provisions on disclosure limitations, third-party data controllers and exemptions from data protection rules have all undergone changes. Heavier penatlies for those found to be in breach of the rules have also been introduced.
A recent Court of Appeal ruling will have a significant impact on future practice, since HMRC could now potentially be joined as a party to any Hastings-Bass application which may have UK tax consequences. Some critics argue that this position will create a 'slippery slope' regarding further intervention by foreign revenue authorities in cases which may have tax implications.
Companies, protected cell companies, incorporated cell companies, limited partnership interests and unit trusts can be listed on the Channel Islands Stock Exchange (CISX). The Channel Islands are not within the European Union and so the CISX is not a regulated market for the purposes of EU directives, which do not apply to the issuer by reason only of a listing on the CISX.
The Guernsey Court of Appeal recently held that Guernsey law would follow UK common law on the correct procedure for deciding whether a term regarding jurisdiction has been incorporated into an agreement. In such cases a preliminary decision should be taken on the incorporation of a jurisdiction clause, in accordance with the principles of Guernsey law, but without finally deciding the issue.
Current market conditions have severely restricted the ability of many UK companies to obtain debt finance to fund their activities. Cashbox structures are increasingly being used as an efficient way of raising equity funding without the requirement for compliance with the statutory pre-emption regulations. The use of Guernsey companies as cash boxes affords many tax and non-tax related benefits.
A proposal to introduce limited liability partnerships (LLPs) into Guernsey law has been approved by the government. Guernsey's LLP regime will bear some similarities to that of the United Kingdom. Although their use will not be limited in scope, it is expected that the LLPs will mostly appeal to practitioners in professional firms who currently work within a general partnership.
The Companies (Panel on Takeovers and Mergers) Ordinance 2009 will come into force shortly, formalizing an agreement under which the UK-based panel regulates Guernsey takeovers and mergers by administering the City Code on Takeovers and Mergers.
Changing market conditions are having an effect on the risk appetite of investors in selecting investments. Increasingly, investors are mindful of the level of regulation in place in the jurisdictions in which investment vehicles are established. In response, Guernsey has finalized a number of measures that have been in the pipeline and has enacted three new laws.
The entry into force of the Companies Law 2008 on July 1 2008 brought a significant change to the types of company that still require a statutory audit. It also introduced a different process for adopting the extended exemptions from audit now allowed. While the number of companies that can now qualify for audit exemption has increased, the potential for missing critical filing deadlines if care is not taken has grown.
The States of Guernsey has established a deposit compensation scheme to protect the deposits of retail depositors with local banks. The scheme covers the first £50,000 of deposits by individuals. As part of the second level of funding for the scheme, a captive insurance company has been established to fund the first £20 million of risk of the scheme.
Since July 1 2008 the procedures governing the migration of companies have been set out in the Companies (Guernsey) Law 2008. Such procedures are broadly similar to those that existed before the law entered into force. However, migration into Guernsey need no longer be approved by the Royal Court.
Since July 1 2008 the procedures governing the amalgamation of companies have been set out in the Companies (Guernsey) Law 2008. Such procedures are broadly similar to those that existed before the law entered into force. However, migration into Guernsey need no longer be approved by the Royal Court.
This update reviews the impact of the new Companies Law 2008 on directors and secretaries and considers the issues that have arisen in the first six months of its operation. The specific duties applying to directors are to be found in common law and the new Companies Law has not attempted to codify these duties. However, there are a number of changes to be mindful of under the new regime.
One of the many changes introduced in Guernsey's comprehensive new companies law allows a Guernsey company and its members to enter into a scheme of arrangement where 75% or more of the members vote in favour. The Royal Court has now approved the first such scheme under the new legislation.
Guernsey is continuing its efforts to enhance its competitive edge in the funds industry by introducing a number of key changes to its regulatory regime. In particular, all funds have been re-classified into authorized funds and registered funds for regulatory purposes.
Guernsey has been reasonably sheltered from insolvencies in previous downturns but the three recent high-profile events involving Northern Rock, Carlyle Capital Corporation Limited and Landsbanki have focused the attention of bankers and other creditors dealing with Guernsey counterparties.
The Companies Law 2008, which came into force on July 1 2008, makes a number of improvements and additions. Among other things, the ability to acquire minority shareholdings in a takeover situation (so-called ‘drag-along’ provisions) and two new types of members' resolution have been introduced.
The Guernsey Financial Services Commission is considering proposals to fast-track applications for licences under the Protection of Investors Law 1987. The funds industry has welcomed the proposal as it would strengthen the island's competitiveness in the global funds industry. It underlines Guernsey's commitment to developing practical, user-friendly procedures without compromising quality.
The underlying objective of the Trusts (Guernsey) Law 2007 is to ensure that Guernsey remains attractive in an increasingly competitive market. The amended law allows for the creation of a non-charitable purpose trust. Any (legal) purpose is permissible and a valid trust can be created even where there is no ascertainable beneficiary.
The Royal Court Civil Rules 2007 have come into force, replacing the previous procedural rules which dated back to 1989. The new rules are far more detailed and include various Woolf-type reforms and versions of those English Civil Procedure Rules that are suited to Guernsey, including an overriding objective and active case management.
There are three new pieces of legislation on the horizon designed to give the Guernsey Financial Services Commission greater enforcement and investigative powers. Non-compliance with the new legislation by anyone operating or connected to a licensed financial services business may result in the commission of criminal offences, liability to financial penalties or, in more serious cases, terms of imprisonment.
At first glance, Guernsey leases appear to be virtually identical to UK leases. The style, content and format are strikingly similar and it is obvious that the form of lease used in Guernsey draws heavily on that used in the United Kingdom. However, there are several important distinctions between the two that could easily catch one out.
The Companies (Guernsey) Law 2008 is new legislation that primarily consolidates existing law but will also incorporate a number of improvements. It was approved by the States of Guernsey (the island's government) on January 30 2008 and is now awaiting royal assent. It is expected to enter into force no later than July 1 2008.
In 2007 the Guernsey Financial Services Commission released a consultation draft of the Collective Investment Schemes (Class A) Rules 2008. These will replace the current rules which were introduced in 2002 and regulate matters in relation to open-ended collective investment schemes authorized in Guernsey as class A schemes. The new rules will bring Guernsey funds into line with the EU approach.
On January 1 2008 a new corporate tax regime, known as the 'zero-10 regime', will be introduced. Two other regimes will be abolished: those for exempt companies, which pay an annual £600 exemption fee, and international business companies. Collective investment schemes may still apply for exempt company status.
It is difficult for a regulator of a small island economy always to make decisions that are compatible with its duties under the law, but that make for a sustainable competitive arena in the field of utilities where such high levels of investment are required. New changes to the law will allow the government to give greater direction to the Office of Utility Regulation and bring in a new appeals mechanism.
The Uncertificated Securities (Enabling Provisions) (Guernsey) Law 2005 permits the Commerce and Employment Department to make regulations providing for title to securities to be evidenced and transferred without a written instrument. It is proposed that regulations be introduced under the law to provide a framework for title to securities to be evidenced and transferred through a computerized system.
There has long been an awareness of the need for a comprehensive overhaul of Guernsey's company law that would integrate and consolidate all existing amendments as well as ensuring the highest international standards. Proposals have thus been put forward for a comprehensive revision of company law. This update lists major and other proposed changes.
Guernsey has introduced the concept of registered investment funds suitable for certain closed-ended investment funds. The new regime should simplify the application procedure and enable a three-working-day turnaround time for approval by the Guernsey Financial Services Commission.
Following the entry into force of the Companies (Guernsey) (Amendment) Law 2005, there is now a general administration procedure for all companies granting statutory protection from creditors during the period of an administration order if the company is capable of being sold as a going concern or if there is the possibility of a more advantageous realization of assets than in a winding-up.
An incorporated cell company is a company which houses within it incorporated cells, each of which is a company in its own right. There are no annual return fees for an incorporated cell and the document duty on share capital is lower for an incorporated cell than a normal company. The first incorporated cell was registered at Guernsey's companies registry on October 11.
Legislative reforms expected this autumn will drag Guernsey's archaic inheritance laws into the 21st century, making them compliant with human rights requirements regarding the rights of illegitimate children and other descendants of a deceased. They will also abolish some aspects of Guernsey's ancient customary laws and introduce other helpful provisions.
The Protected Cell Companies (Amendment) Ordinance 2006, which came into force on May 1 2006, amends and clarifies the existing laws in several ways. The enhancements to the protected cell company legislation will no doubt serve to increase the popularity of Guernsey as a jurisdiction for the establishment of such companies.
Guernsey has introduced new legislation to enable the establishment of incorporated cell companies. The chief advantage is the status of each incorporated cell as a separate company, thus enjoying defined legal segregation. This is particularly important when dealing with counterparties in jurisdictions less familiar with the concept of protected cell companies.
Recent changes to the IP laws enacted by the States (Parliament) of Guernsey will bring the Bailiwick right up to speed with the rest of the world and provide a unique advantage for Guernsey as a place to manage intellectual property in an offshore, tax-benign environment. The biggest change is in relation to trademarks.
The Employment Protection (Guernsey) (Amendment) Law 2005 has been passed by the States and is now in force. The new law makes some significant changes to the existing law and generally introduces greater rights for employees. This in turn means greater risk - and potential expense - for employers.
The new Protected Cell Companies (Prescribed Company) Regulations 2005 have significantly opened up the protected cell company (PCC) concept in Guernsey. Subject to the consent of the Guernsey Financial Services Commission, any class or description of business other than that required to be licensed under the relevant regulatory laws may now be established as, or converted into, a PCC structure.
The Limited Partnerships (Application of Audit Requirements) Regulation came into force in September 2005. The changes demonstrate how Guernsey's regulators and the finance industry are committed to working together to help improve Guernsey's jurisdictional competitiveness.
A number of changes are to be placed before the local legislature prior to a comprehensive new Companies Law coming into effect, which is due to happen in 2006. Among other things, it is proposed that the old Companies Law be amended to include provisions on administration and the appointment of an administrator.
Several amendments to the Partnership Law have been proposed. Among other things, these amendments affect the filing of the limited partnership agreement, the time period for filing accounts, and the obligation of limited partners to appoint an auditor to prepare a report for them, which will apply only in particular circumstances.
The Data Protection (Bailiwick of Guernsey) Law 2001 provides for three stages of implementation: the first transitional period and the second transitional period, during which certain exemptions are available, leading to full implementation of the law on October 24 2007. The first transitional period is now over and the second transitional period has begun with effect from August 1 2005.
It is quite common for non-residents of Guernsey to hold assets connected to the territory, whether real property or personal estate such as bank accounts, investments and share portfolios. Making a Guernsey will makes the administration of an estate far quicker and more efficient than it would otherwise be, and anticipates problems which would otherwise have to be dealt with by executors or administrators.
The Guernsey Financial Services Commission (GFSC) has introduced the Qualifying Investor Fund Regime. Under the new regime, the local administrator will carry out due diligence on the fund promoter and associated parties, and certify that they are fit and proper persons. This will allow the GFSC to grant the required fund approval within three working days of receiving an application.
The Guernsey Financial Services Commission recently provided guidance on what it considers to be the basic requirements for a sound corporate governance regime for the finance sector in Guernsey, detailing those areas that every director and manager of a finance business is expected to consider.
Guernsey is updating its expert funds regime by introducing self-certification from January 1 2005. This new streamlined process applies to the authorization of open and closed-ended funds that are marketed to professional, experienced and knowledgeable investors, and will give greater certainty over the approval process and timetable.
The establishment of the public trustee is a welcome addition to Guernsey's increasing armoury of legislation to protect its reputation as a leading finance and trust centre. It is likely that in the future the States of Guernsey will consider extending the powers and functions of the public trustee to cover other matters where the involvement of a public independent body is needed.
The Channel Islands Stock Exchange (CISX) has been designated a 'designated investment exchange' by the UK Financial Services Authority, confirming that the internal regulatory environment of the CISX affords an appropriate degree of investor protection. This latest development further enhances the competitive position of the CISX.
The Guernsey Financial Services Commission has confirmed that banks in the island may use the less onerous Financial Action Task Force criteria in relation to identification of introduced clients, rather than the earlier standard adopted by the Basel Committee.
A report by the International Monetary Fund (IMF) has endorsed the financial services regulatory regime in Guernsey and the island's law enforcement standards. The report was the result of an assessment carried out by the IMF at the invitation of the States of Guernsey Advisory and Finance Committee.
Due to the recent increase in the number of hedge funds being established in Guernsey, the Guernsey Financial Services Commission has decided to clarify in writing how it will apply its discretion to waive certain regulatory rules applying to funds in order to accommodate the particular requirements of hedge funds. Formal guidance is expected to follow shortly.
The Guernsey Financial Services Commission has issued informal guidance on disclosure and ongoing notification for closed-ended funds seeking consent under the Control of Borrowing Ordinance 1959. The guidance sets out the information the commission expects to see in any prospectus or other disclosure document it may review before granting consent under the ordinance.
In Equitable Life Assurance Society v Bowley the Commercial Court in England ruled against an attempt by the society's non-executive directors to stop a legal action taken by the society against them. This update considers the issues from a Guernsey perspective.
The Guernsey Financial Services Commission's Collective Investment Scheme (Class A) Rules 2002 have now entered into force following a transitional period. The rules were introduced to allow funds to be freely marketable in the United Kingdom.
The Guernsey Financial Services Commission has passed regulations introducing new fees for closed-ended funds. New funds must pay an application fee of £2,600. In addition to the application fee, there is an annual fee of £2,200 payable on or before January 31 each year.
Two new laws relating to insurance came into force in Guernsey, to reflect developments in the sector and to bring the legislation into line with laws governing other regulated activities. The laws have been supplemented by series of regulations, codes and rules, which establish a standard of professional conduct for insurance representatives, among other things.
The Migration of Companies Ordinance 1997 provides for the immigration of foreign companies into Guernsey and their subsequent registration in the Register of Companies, and the emigration of Guernsey companies to other jurisdictions and their subsequent removal from the register. Companies moving to the island must apply through an advocate for registration with the court.
Guernsey's regulatory body, the Guernsey Financial Services Commission, has published guidelines which confirm its requirements with regard to the licensing and regulation of financial services businesses. Among other things, directors and managers must be fit and proper, meeting standards of integrity, solvency and competence.
The US Securities Exchange Commission has designated the Channel Islands Stock Exchange as a 'designated offshore securities market'. US investors who purchase securities of a company listed on the exchange may sell them on that exchange without the restrictions imposed under the Securities Act. The UK Inland Revenue has also recognized it as a 'recognized stock exchange'.
New regulations have been introduced which require financial services businesses to introduce appropriate anti-money laundering measures. Businesses that carry out certain activities must notify the Financial Services Commission of key information, including the names of their controlling officers and whether these persons have any criminal convictions.
The States of Guernsey recently approved amendments to the Criminal Justice (Fraud Investigation) Law. The amendments extend the class of persons to whom information obtained during fraud investigations may be disclosed, and make tipping off an offence.
The new financial services ombudsman scheme is intended to deal with consumers who feel that they have been misrepresented or misled by a financial services company. Its aim is to make transactions and dealings more transparent, and to protect the public against financial loss due to dishonesty, incompetence or malpractice by persons carrying on financial business.
The Electricity (Guernsey) Law 2001 makes provision for the generation, conveyance and supply of electricity under the new regulatory regime. Electricity operations are now subject to licence by the director general of utility regulation.
A new law provides for the provision of postal services under a new regulatory regime. The law makes it illegal (subject to certain exceptions) to provide postal services in the Bailiwick of Guernsey without a licence granted by the director general of utility regulation.
The new Telecommunications Law makes it illegal to operate a telecommunications network or provide telecommunications services without a licence. It also empowers the director general of utility regulation to issue directions in order to ensure the interoperability and protect the integrity of telecommunications networks.
A new law has empowered the States (government) of Guernsey to designate any company to be a states trading company, and to make such provision as it thinks fit in relation to the transfer to and vesting in a states trading company of the undertaking of the States or any part of it.
Guernsey is 'commercializing' certain trading boards previously run by the government. The government and the newly created Office of the Director General of Utility Regulation are together responsible for protecting consumer interests and ensuring the effective provision of utilities services.
In response to a Europe-wide initiative to update data protection legislation, and in particular to the enactment in the United Kingdom of the Data Protection Act 1998, a new draft law is expected that will set out principles for the processing, retention and transfer of data.
A new amendment allows limited partnerships to have legal personality if their general partners so elect. This was necessary as in certain jurisdictions it is necessary for local tax reasons that limited partnerships have legal personality, and Lloyds of London will only accept 'persons' as names.
As Guernsey's primary gambling legislation did not address investment contracts, it was unclear whether certain types of investment contracts could be caught under this law, specifically as contracts for differences. However, a new amendment has clarified that this is not the case.
The Guernsey Financial Services Commission has allowed protected cell companies to be used more widely for securitization vehicles and other financial services vehicles. This will enable multi-issuance vehicles to be established without the need for the incorporation of a new vehicle on each occasion.
In response to consultation with the finance industry, approved legislation on the regulation of fiduciaries incorporates a number of further amendments. Key points relate to regulated and exempted activities and appeals.
In June 1999 the Guernsey Financial Services Commission issued a consultation paper on the regulation of fiduciary business. A draft of the proposed legislation was recently produced for further consultation. This update sets out its main points.
The Electronic Transactions (Guernsey) Law 2000 is considered crucial to Guernsey's development as an offshore e-commerce jurisdiction, capable of providing a range of services to businesses. It will facilitate e-commerce by removing legal obstacles to enforcement, recognition and admissibility, and will allow the Parliament to legislate efficiently on certain matters.
The Guernsey Financial Services Commission has indicated that it will consider proposals for the outsourcing from Guernsey of certain administrative functions in respect of schemes authorized under The Protection of Investors (Bailiwick of Guernsey) Law 1987.
The protected cell company structure lends itself well to multi-class funds. This update provides some background on the regulation of open and closed-ended funds in Guernsey.
New regulations introduced by the Guernsey Financial Service Commission now permit closed-ended investment companies to be established as or converted into protected cell companies.
A provision of trusts law, with no UK equivalent, provides a useful remedy for beneficiaries.
It is still uncertain when the new law regulating the provision of fiduciary services will come into force.
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