IN172 - Key Features of the New Guernsey Company Law and the New Guernsey Registry

The new Companies (Guernsey) Law came into force on 1st July 2008.

The revised legislation is intended to ensure that the attractiveness of Guernsey as an international centre for business is preserved. The Law consolidates existing company legislation and offers increased flexibility for organisations wishing to incorporate in Guernsey. At the same time it reflects Guernsey’s continued commitment to enhanced corporate governance.

Guernsey Registrar of Companies

The new Law establishes an administrative Companies Registry (previously a judicial process) run by the independent Registrar of Companies. Since the start of July 2008, companies can be incorporated in less than 24 hours, with 2 hour incorporations being possible. From October 2008, 15 minute incorporations will be available for certain types of company. The fee for a standard company incorporation, within 24 hours, is £100.

Additional features of the Guernsey Registry include:

• On-line searches and on-line submissions
• Company profiles, scans of physical documents and other Registry certificates available on-line
• Directors are issued with electronic signatures and automatically notified of all events at the Registry that affect their company
• Annual validation (companies simply validate the information held once a year)
• Companies can be pre-incorporated to start on a certain date
• Company names can be reserved for up to three months
• Voluntary strike-offs are possible (dormant companies can be removed by the Directors at no cost)

Intellectual Property

The Bailiwick of Guernsey Intellectual Property Office administers all Guernsey registered Trade Marks and Designs and provides information on the Intellectual Property Laws enacted in this jurisdiction. The Intellectual Property office is based at the Registry and will be integrated into the Registry systems by the end of 2008.

Key Features of the New Company Law

Corporate Service Providers and Beneficial Ownership

Previously companies could only be incorporated by advocates. Companies can now be incorporated by Corporate Service Providers (CSPs), who must be licensed and regulated by the Guernsey Financial Services Commission.

All Guernsey companies (with very few exceptions) must have a Resident Agent in Guernsey, who can either be a CSP or a locally resident Director. It is the ongoing duty of the Registered Agent to determine the beneficial ownership and to ensure that all information regarding beneficial ownership is up to date. The Register of Beneficial Interests is not available for public inspection.

Choice of Corporate Vehicle

Options are available under the new Companies Law to convert, amalgamate and migrate companies. Structures can therefore be managed effectively in a dynamic and changing international environment. Companies can be converted quickly from one type of company to another in a single process.

The Solvency Test

Solvency has historically been subject to an expensive and restrictive capital maintenance test. The revised solvency test requires the Directors to ensure that:

• The company can pay its debts as and when they fall due
• The value of the company assets is greater than the value of its liabilities

Corporate Governance and Directors’ Liability

Appointment of a Company Secretary is optional and a sole Director can also be a Company Secretary.

Companies under the new law cannot exempt from liability or indemnify any of their Directors in respect of any liability for negligence, default, breach of duty or breach of trust. Companies can continue to purchase insurance for their Directors in relation to such liability.

Waiver of the Requirement to Hold an Annual General Meeting

The new Law retains the requirement for all companies to hold an Annual General Meeting each year. Additional flexibility is, however, provided by introducing the right for members to waive this requirement, either for specific years or for an indefinite period. To be effective a waiver must be approved by a majority of not less than 90% of the voting rights (total or represented at a meeting).

Voluntary Company Strike-Offs

Company strike-offs are available on-line and are free. It is not acceptable for a company not to file an annual validation and to then expect to be struck off by the Registrar without further sanction.

Summary
The new Guernsey Companies Law and the new Registry are practical evidence of Guernsey’s determination to maintain its status as a high quality offshore jurisdiction, with an excellent international reputation. Greater flexibility has been introduced for companies while at the same time real responsibility and accountability is placed on company Directors. The new Law and Registry reflect an innovative approach while retaining or increasing the high standards of protection and corporate governance.

Additional Information

For further information on this topic please contact Alan Corlett or John Nelson at the Dixcart office in Guernsey, or contact us.