OF A GUERNSEY COMPANY
The establishment and operation
of companies in Guernsey is regulated under the Companies (Guernsey)
Law, 2008. This law consolidated a
number of earlier laws with regard to companies and their operation in Guernsey. In general
the principles contained in the Guernsey
legislation are based on English company law.
legislation recognises a number of different types of company. A company may therefore be a cell company
(either a protected cell company or an incorporated cell company) an
incorporated cell of an incorporated cell, or a non-cellular company. In respect of the liability of its members a
company is either limited by shares or guarantee, unlimited or of mixed
liability. A single shareholder entity
With regard to the names of
companies, generally these are in English but for a company with limited
liability, limited by shares instead of limited or with limited liability, the
company may use the terms “Avec Responsabilitie Limitee” or “ARL”. Certain names cannot be used whilst special
names apply to banking, insurance and collection investment companies.
As a result of the introduction
of the new legislation and the creation of the Guernsey Registry, incorporations
of companies may be dealt on-line by licensed fiduciaries or corporate service
providers. F. Haskins & Co is the
holder of a full fiduciary licence and controls a number of companies through
which corporate and administrative services might be provided. The principal company in this respect is
College Chambers Administrative Services Limited (company number 31946 in Guernsey). Once
due diligence has been completed and all documentation is in order, a company
may be incorporated on-line within a twenty-four hour period. It is possible for incorporation to be
concluded within a shorter period (subject to approval by the relevant
authorities) upon payment of an increased fee.
An incorporation can still be completed within office hours only.
Prior to the introduction of the
new legislation, various forms would be filed at the Greffe in Guernsey.
Different information is required for incorporations on-line. This includes details of the activities to be
undertaken by the company so that an economic code can be assigned to the
company. Full details of the
classification of economic activities and the codes appear in the information
set out on the Guernsey Registry website which can be found at www.guernseyregistry.com.
Memorandum and Articles of Association
The Memorandum of a company sets
out the objects of the company and the Articles set out the regulations for
administering the company. The original
subscriber(s) sign these documents. A
standard form of Memorandum and Articles of Association has now been created
and might be used for a company formation.
Those requiring more specific terms might still incorporate a company
utilising custom Memorandum and Articles of Association which can be uploaded
during the on-line incorporation process.
Shares issued by a company may be
denominated in any currency and different classes of shares may be denominated
in different currencies. Fractional
shares and shares of no par value are permitted by the law.
A company’s affairs must be
managed by or under the directional supervision of the Board of Directors of
the company. A company must have at
least one director. At the time of an
application to incorporate a company, a statement of the proposed first
directors must be filed. For each
director proposed, the individual in question must in writing consent to being
a director and declare that he is not ineligible under section 137 of the
law. This section deals with in
particular disqualified directors.
Corporate directors are recognised under Guernsey
law. Directors’ decisions or resolutions
should be formally recorded in a minute book.
The 2008 legislation in Guernsey provides that a company may have a
secretary. A company may chose not to
have a secretary. A director of a
company may also be its secretary. The
law in Guernsey specifically sets out a number
of duties on the part of a company secretary.
These include taking reasonable steps to ensure that all registers and
indexes are maintained in accordance with the provisions of the law, all
notices and documents required to be filed are filed, all resolutions, records,
minutes are properly kept, the Memorandum and Articles are kept fully up to
date and the Board of Directors is aware of any obligations imposed on it by
the Memorandum and Articles or the rules of any Stock Exchange that the company
is listed on. College Chambers
Administrative Services Limited can provide a corporate secretarial service to
companies incorporated or registered in Guernsey.
A company must have at all times
a registered office in Guernsey to which all
communications and notices may be addressed.
Directors must also note that provision of an address in the register of
directors as a service address will mean that service of any summons, notice,
document or other matter at that address is deemed to be as effective as if it
was service at the director’s usual residential address.
Accounts and reports
Every company must keep
accounting records which are sufficient to show and explain its transactions
and are such as to disclose, with reasonable accuracy, at any time the financial position of the
company and enable the directors to ensure that any accounts prepared by the
company are prepared properly. A
company’s accounting records must be kept at the company’s registered office or
such other place as the directors deem fit.
If, however, the accounting records are kept outside Guernsey then
returns in relation to the business dealt within the accounting records must be
sent and kept at a place in Guernsey so as to
meet the requirements imposed above.
Accounting records shall at all reasonable times be open to inspection
by any director, secretary or officer of the company at the place at which they
are kept. Accounts are sent to each
member of the company within twelve months after the end of the financial year
It should be noted that the
requirements of the companies legislation with regard to accounts does not
address tax issues. There is specific
tax legislation with regard to the taxation of monies earned by a company and
specific advice should be sought. Specific returns must be completed depending
on the type of income earned by a company and requirements exist with regard to
the deemed distributions to the members.
A company’s accounts for a
financial year must be audited unless the company qualifies for an
exemption. The members of a company may
pass a waiver resolution in relation to such exemption. If there is no exemption an auditor must be
appointed for each financial year of the company. The auditor’s report accompanies the accounts
(and a director’s report) sent to a company’s members within twelve months of
the end of the relevant financial year.
Audited accounts may be required for income tax purposes.
Bank accounts can be opened with
banks in Guernsey or elsewhere. A wide choice of international banks is
available in the Channel Islands, all of whom
are licensed by the local authorities.
has introduced, with effect from the beginning of 2008, a zero-10 tax
policy. As a result the standard rate of
income tax for companies is 0%. However,
certain income, such as rental income or that derived from certain regulated
activities, is subject to tax at the rate of 20%. The receipt of investment income and certain
other events will trigger a deemed distribution of income which may be taxable. A brief explanation of the tax policy and its
workings is available on the States of Guernsey Income Tax Department
companies offer great flexibility as to the type of company and its
activities. The formation process once
due diligence has been completed is quick and being carried out on-line means
that documentation might be available within a short period of time. Guernsey
offers a jurisdiction in which there is a high degree of professional expertise
available within a well regulated financial services industry.
Revised: 22nd July, 2008