Guernsey
Company Law is based upon English Company Law, although relatively
undeveloped. College Chambers Administrative Services Limited acts
as Corporate Secretary and provides administrative services to companies
established in many jurisdictions. Not surprisingly companies incorporated
in Guernsey are commonly chosen by clients and advisers due to the
international reputation of Guernsey as a Financial Centre.
Names
of companies may be in English or French. In English they must end
with the word ‘Limited’, and in French ‘Avec Responsabilite
Limitee’. Certain names cannot be used whilst special rules apply
to banking, insurance and collective investment companies.
All
Guernsey companies have to file with the Companies Registrar
by 31st January each year an annual return giving details
of share capital, registered shareholders, directors and the address
of the registered office of the company (which must be in Guernsey)
as at 1st January each year, together with a fee
of £260 (annual return and filing dee). Changes in registered shareholders or directors during the
year do not have to be notified at the time of change, but should be
reflected in the next annual return.
Strict
penalties are imposed for late filing of the annual return and it
is in the best interests of the promoters of the company to ensure
the return is filed on time.
Memorandum
and Articles of Association.
The Memorandum sets out the objects of the company and the Articles set
out the regulations for administering the company. A copy signed by 2
subscribers is filed locally at the Compnaies Registry where public
registers are kept, at the time the company is incorporated. Under The
Companies (Guernsey) Law, 1994 a company is now able to state in its
Memorandum that its object is to carry on business as a general
commercial company and by doing so it may carry on any trade or
business whatsoever and do anything which is incidental or conducive to
the carrying on of any trade or business. It is possible for the
Objects of a company to be changed by Special Resolution.
Share
Capital. This can be in Pounds Sterling, or any foreign currency.
The minimum number of shareholders is 2 who must hold at east 1 share
each. Subject to that, any number of shares can be issued and there
can be more that one class of shares. The amount of authorised capital
(being the amount of capital that can be issued) is set out in the
Memorandum although this can be increased later by a resolution of
the members. Document Duty is payable on the authorised capital of
the company at the rate 50p per £100 up to a maximum of £5,000.00.
On formation of a company the minimum Document Duty payable is £50
and it is normal practice to form companies with an authorised capital
of £10,000 or the equivalent in another currency. Where confidentiality
is required, the issued shares may be held by nominees. Annual shareholders’
meetings are normally held in Guernsey particularly where nominee
shareholders are appointed although meetings can be held by proxy.
Nominee shareholders are provided by College Chambers Administrative
Services Limited if required. No bearer shares may be issued by Guernsey
companies.
Management.
The company’s affairs are conducted through directors or through
agents appointed by the directors. The first directors are appointed
by the subscribers to the Memorandum and Articles of Association.
All directors must consent in writing to act as directors. Directors’
decisions or resolutions must be formally recorded in a minute book
kept by the secretary of the company. Both Guernsey resident and non-resident
directors can be introduced by College Chambers Administrative Services
Limited. Exempt Companies normally have all directors resident in
Guernsey. A director may appoint someone to be his alternate to act
in specific or general circumstances in his place.
Secretarial
Services. College Chambers Administrative Services Limited provides
full company secretarial services including the keeping of the company’s
statutory records and minutes of directors and shareholders’
meetings.
N.B.
Minutes of directors and shareholders’ meetings are not filed
with any authority and a secretary need not attend any meetings.
Registered
Office. College Chambers Administrative Services Limited can provide
a registered office for Guernsey companies which must be situated
in the Island and advised to the local authorities.
Accountancy.
The company must keep accounting records of all transactions. The
accounting records can be kept anywhere but full details of accounts
and returns in respect of the business dealt with in the accounting
records must be kept at the registered office; an accountancy service
can be arranged through College Chambers Administrative Services Limited.
The company’s accounts must be presented to shareholders at each
annual general meeting. The accounts of Exempt Companies do not have
to be submitted to the Guernsey Administrator of Income Tax (nor any
other Guernsey authority) unless the company’s tax status is
in doubt. Guernsey resident companies and International Companies
must submit their accounts to the Guernsey Administrator of Income
Tax.
Auditors.
Guernsey company law states that an Auditor shall be appointed at
each annual general meeting of shareholders. Under The Companies (Guernsey)
Law, 1994 it is possible for companies who are dormant or who own
specified assets under specific conditions to opt to become exempt
from audit. An Auditor must produce a report to be annexed to the
accounts confirming they exhibit a true and fair view of the state
of the company’s affairs. College Chambers Administrative Services
Limited can arrange for the appointment of a Guernsey Auditor either
with a local firm of accountants or with the local office of any one
of the international firms of accountants represented in the Island.
Bank
Accounts. Bank accounts can be opened with banks in Guernsey or elsewhere.
A wide choice of international banks are available
in the Channel Islands all of whom are licensed by the local authorities.
Taxation: Guernsey
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.
This is a very brief indication of the taxation strategy of the
Sates of Guernsey. If further information is required, F Haskins
& Co can provide advice on Guernsey taxation in relation to
companies.
Formalities.
Formation:
Memorandum
and Articles of Association of the company signed by the subscribers
have to be filed with the Greffe with particulars of directors,
registered office and shareholders.
The
Director General of the Guernsey Financial Services Commission
has complete discretion whether to allow or refuse registration
of a company (e.g. if the company wishes to engage in illegal
activities) or to permit a particular name. It is therefore necessary
to obtain his approval in advance to ensure that the name and
proposed activities will be allowed. It is also necessary to disclose
detailed information concerning the ultimate beneficial owner
to the Director General of the Guernsey Financial Services Commission.
Any change in beneficial ownership must also be disclosed. This
information is not however disclosed to the Guernsey tax authorities
(except in the case of fraud) nor to tax authorities elsewhere.
Share
Capital is to be specified and duty paid in advance.
Companies
may be approved by the Royal Court on any working day. It
may take some time to prepare the necessary documentation and to
obtain the necessary approvals. Consequently instructions must normally be given to
F Haskins & Co at least three days in advance of the date
intended for incorporation. The completion of the due
diligence stage may take the longest time and delay
incorporation. Those wishing to incorporate a company should
note carefully the need to provide accurate and clear information
concerning the identity of those to be involved with the company
and its activities.
After
incorporation:
Certificate
of Registration is issued and Company Seal obtained.
First
meeting of the board of directors is held to confirm the directors,
the registered office and the secretary and to deal with the issuing
of shares, opening of bank account, appointment of auditors, etc.
An
annual general meeting must be held each year. The first annual
general meeting must be held within 18 months from the date of
formation. Thereafter no more that 15 months is permitted between
annual general meetings.
An
annual return must be made to the Company Registry as at 1st
January each year (see above).
Additional
requirements.
If the registered office is changed the Greffe must
be notified by
letter and a filing fee of
£25 paid.
General
meetings, either ordinary or extraordinary, must be held as necessary
subject to certain notice and quorum requirements.
To
change the name of the company, application must be made to the
Court.
Any
issue of shares must be notified to the Company Registry immediately.
On
a change of capital, the Company Registry has to be notified of any increase,
whilst a reduction of capital requires an application to the Court
for approval.
We
can advise on the use of a trust to hold the shares in a company. This can avoid difficulties arising
for example in
the event of the death of the beneficial owner whilst our simple nominee
shareholding arrangement is in place. This advice obviously depends
on the beneficial owner’s individual circumstances. We would
be pleased to provide further details on request.
To
summarize, Guernsey companies offer complete flexibility as to the
type of company and its activities, they are quick to form with a
minimum of formalities and offer confidentiality if required. Above all, Guernsey offers a safe location
with a high degree of professional expertise available.
Revised 4 April 2008.
