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26 October 2020
What are the attributes of a company under Guernsey Law?
Companies limited by shares
Companies limited by guarantee
Register of members
Register of directors
How to set up a Guernsey limited liability company
How much does it cost to incorporate a Guernsey limited liability company?
Who can set up a Guernsey limited liability company?
Effect of incorporation
Naming a Guernsey limited liability company
Register of beneficial ownership
How much information about a limited liability company is available to the public?
The benefits of using a Guernsey company in terms of company law provisions and tax treatment are extremely wide but generally include:
Companies in Guernsey are governed by the Companies (Guernsey) Law 2008.
The Companies (Guernsey) Law defines a 'company' as "a legal person, separate from its members, which comes into existence upon incorporation and continues until it is removed from the Register of Companies". There are various types of company under the Companies (Guernsey) Law, including limited liability non-cellular companies and cellular companies (protected cell companies and incorporated cell companies).
In respect of the liability of its members, a limited liability company can be:
Guernsey law does not distinguish between private and public companies in the same way as English law does.
The Companies (Guernsey) Law enables shares to be denominated in any currency and issued either with a par value or with no par value in one or more classes with differing attributes, including as to participation in voting, capital, income and conversion or redemption.
These features, coupled with a tax-neutral environment in Guernsey for most companies, enable Guernsey companies to be structured to meet a wide variety of business purposes – from commercial trading and joint ventures to investment holding vehicles.
A company limited by shares must have:
That means that if shares of £1 are issued to a shareholder and the shareholder pays the company £1, they will have no further liability to the company.
Guernsey law does not provide for the concept of a share premium account; accordingly, dividends and distributions can be made from any source provided that the company meets the statutory solvency test, which the directors must certify.
Subject to its constitutional documents, a Guernsey company limited by shares can issue different classes of share which:
A Guernsey company limited by shares can also issue shares of no par value, fractional shares and shares of a low value.
A company limited by guarantee must have a share capital and have members who are liable for the company's debt only to the amount guaranteed by them. A company limited by guarantee may have a share capital. However, unlike a company limited by shares, a company limited by guarantee must have members whose liability for the company's debts is limited to the guaranteed amount (known as 'guarantee members') and, where the company has share capital, have shareholders.
Where a company is limited by guarantee, and also has shareholders, the memorandum or articles may require a guarantee member also to be a shareholder or prohibit a guarantee member from also being a shareholder. If the memorandum and articles do not make provision for this, a guarantee member may also be a shareholder.
The guaranteed amount is defined in the Companies (Guernsey) Law as the amount that a guarantee member undertakes to contribute to the assets of the company in the event of it being wound up while they are a member or within one year of them ceasing to be a member:
Unlike a traditional shareholding, if the guaranteed amounts are different for different members, the different amounts will not of themselves create different interests in the company as between those guarantee members.
Companies limited by guarantee are often used for charitable purposes.
Limited liability companies are the most commonly incorporated types of company as shareholders are protected from the company's creditors in the case of insolvency. A limited liability company must have at least one founder member and at least one director. No minor or person under legal disability may be a founder member of a company.
The company must have a memorandum of incorporation which states the main constitutional details pertaining to the company, including:
In the case of a limited liability company with a founder member who is a guarantee member, the memorandum must also include the guaranteed amount of each member. The memorandum must also state, in the case of a company limited by guarantee, the guarantee amount of each member.
While the Companies (Guernsey) Law provides that a Guernsey limited liability company may have unrestricted objects (being a list of the activities that a company can undertake), it may also have restricted objects. In this case, the objects must be set out in the memorandum.
In addition, the company must have articles of incorporation. These state the way in which the company will conduct itself. Different articles may apply for different types and descriptions of company and may be provided as standard by the Registrar of Companies or bespoke.
The articles are in respect of matters concerning the constitution of the company, a binding contract between the company and its members, and may be amended by a special resolution of the members.
A Guernsey limited liability company must have at least one director.
The business and affairs of a Guernsey limited liability company must be managed by, or under the supervision of, the board of directors of the company.
Provided that someone is not a minor or subject to a disqualification order under Part XXV of the Companies (Guernsey) Law, anyone can be a director of a Guernsey limited liability company.
A person must not be appointed as a director unless they have in writing:
In compliance with the Companies (Guernsey) Law, a Guernsey limited liability company must keep certain records and registers at its registered office address, including:
Such records must be made available for inspection, where permitted under the Companies (Guernsey) Law.
Company records may be kept in hard copy or electronic form and may be arranged in such manner as the directors or secretary think fit, provided that the information in question is adequately recorded for future reference.
Where company records are kept in electronic form, they:
A Guernsey limited liability company must keep a register of its members at its registered office.
The following details must be entered in the company's register of members:
A Guernsey limited liability company must keep a register of directors at its registered office.
Where a director is an individual, the following particulars must be entered in the register of directors:
Where a director is not an individual, the following particulars must be entered in the register of directors:
In order to establish a Guernsey limited liability company, an application must be made to the Registrar of Companies, accompanied by:
The application may propose a date on which the incorporation will take effect, provided that the date is no longer than three months after the date of the application.
If the Registrar of Companies is satisfied with the application, it will register the company and issue the certificate of incorporation.
The fees for incorporating a Guernsey limited liability company depend on how quickly the client wants the application to be processed. In summary, the costs are as follows:
Guernsey limited liability companies can be incorporated only by:
Every year, before the last day of February, a Guernsey limited liability company must submit an annual validation to the Registry.
If the Registrar of Companies grants the application for incorporation, it will:
There are few limitations on the naming of a Guernsey limited liability company and the Companies (Guernsey) Law allows incorporated companies to apply to the Registrar of Companies to change their name, so long as certain formalities are met. In the case of a company limited by shares, the name must include 'Limited', 'Ltd', 'with limited liability' or similar. In the case of a company limited by guarantee, it must include 'limited by guarantee', 'LBG' or similar.
However, a company cannot have the same name as another company registered with the Registrar of Companies or another company that has reserved that name. A Guernsey limited liability company's proposed name may also be rejected by the Registrar of Companies if it is deemed likely to confuse the public or is misleading, contrary to public policy or contrary to the accepted principles of morality. In addition, the proposed name cannot imply an association with royalty or government, although the Companies (Guernsey) Law does allow for this in limited situations where Her Majesty's Procurer has given written permission for the use of the name.
When incorporating a Guernsey limited liability company, the Registry requires the submission of details of its beneficial owner. Accordingly, a Guernsey limited liability company must also keep a register of its beneficial owners.
Beneficial owners are all persons that:
The following details are required of all natural persons on the register of beneficial owners, maintained by the resident agent:
A beneficial owner is under a duty to update the resident agent within 21 days of a change of any of these particulars.
If the beneficial owner is a corporate beneficial owner, its name must be reported.
If the resident agent has ascertained that there are no beneficial owners in relation to a Guernsey limited liability company, this must be recorded in the register.
It has always been the intention that the register would remain inaccessible to the public and the States of Guernsey have gone to extraordinary lengths to limit its accessibility. Data received by the Registrar of Companies in accordance with the Companies (Guernsey) Law is centralised and retained in electronic format but on a closed system such that access to the information requires access to the physical building in which the server is held. Further, the number of people with authority to access the data is limited to an extremely restricted number and even with such authority, the search parameters controlling access are sufficiently restrictive to ensure that only specific and detailed requests from law enforcement agencies gain any benefit from the register.
Subject to a small fee, any person may obtain copies of any of the below documents from the Registry:
The public can also obtain information as to the registered office and registered number of a Guernsey limited liability company and its current status (ie, whether it is normal, dissolved or in liquidation) for free on the Registry's website.
For further information on this topic please contact Michelle Watson Bunn or William Schofield at Ogier by telephone (+44 1481 721 672) or email (email@example.com or firstname.lastname@example.org). The Ogier website can be accessed at www.ogier.com.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
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