FUND LEGISLATION
FUND LEGISLATION
The Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended (POI Law) and the Control of Borrowing (Bailiwick of Guernsey) Ordinances 1959 to 1989 as amended (COBO).
The POI Law covers both licensing of persons providing services to investment funds (custodians, administrators, managers etc) and the authorisation of open-ended investment funds.
Closed-ended investment funds require the consent of the States of Guernsey Policy Council under COBO. New legislation (still at the approval stage) amending the POI Law will change this position in due course, whereupon closed-ended investment funds will receive regulatory consent or regulation under the POI Law.
NUMBER OF FUNDS
The Guernsey Financial Services Commission’s quarterly statistical review to 31st March 2008 found at www.gfsc.gg reveals that there were 290 open-ended funds authorised in Guernsey comprising a total of 1,815 sub-funds (total value £71 billion) and 582 closed-ended funds (total value £79 billion).
NUMBER OF FUNDS BY CATEGORY
Open-ended funds are categorised by type (equity, debt etc), class (A, B, Q) and constitution (OEIC, unit trust, pcc etc) and closed-ended funds are categorised by constitution and main investment objective; details found in the GFSC quarterly statistical review.
REGULATOR
In Guernsey the business of investment funds is regulated by the investment business division of the GFSC at La Plaiderie Chambers, La Plaiderie, St Peter Port, Guernsey GY1 3HQ.
SERVICE PROVIDERS
Open-ended investment funds authorised under the POI Law require a designated manager (who conducts the day to day administration of the fund) and a designated trustee/custodian, both of whom are incorporated in Guernsey and appropriately licensed to conduct category 1 controlled investment business. Closed-ended investment funds (category 2 controlled investments) require a Guernsey licensed administrator. A list of the financial services businesses licensed to conduct controlled investment business can be found on the GFSC website.
There are a total of 15 law firms in the Island (although not all undertake fund work) and a directory of firms can be found at www.guernseybar.com.
The ‘big four’ accountancy practices are represented in the Island, as well as a number of other investment fund specialists. Local stock exchange Channel Island Stock Exchange LBG; details found at www.cisx.com. Local fund industry body Guernsey Investment Fund Association; details found at www.gifa.org.gg. Promotion agency for funds/financial sector Guernsey Finance; details found at www.guernseyfinance.com.
DOUBLE TAXATION TREATIES
Double taxation treaties exist between Guernsey and Jersey and Guernsey and the UK; details found at www.gov.gg/ccm/navigation/income-tax.
TAX INFORMATION EXCHANGE AGREEMENTS
Tax information exchange agreement exists between Guernsey and the Netherlands and Guernsey and the USA; details found at www.gov.gg/ccm/navigation/income-tax.
ALTERNATIVE FUND, MANAGER AND SERVICE PROVIDER INFORMATION
TYPES OF ALTERNATIVE FUND VEHICLE
Limited company, protected cell company, incorporated cell company, unit trust, limited partnership.
TYPES OF REGULATORY FUND CATEGORY
Open-ended Class A (retail), Class B (authorised persons and professional investors) and Class Q (qualifying professional investors) Closed-ended Also 3 application processes:
– Traditional approval process (open-ended and closed-ended funds)
– QIF (Qualifying Investor Fund) regime (open-ended and closed-ended funds)
– Registered closed-ended fund regime (currently closed-ended funds only).
AUDIT REQUIREMENTS
Local auditors are usually required for both funds and Guernsey POI Law licensees providing services to funds. The GFSC may exceptionally allow non-local auditors where particular specialist knowledge is required.
FINANCIAL STATEMENT REQUIREMENTS
For open-ended funds, to be prepared and published in accordance with the Rules made by the GFSC applicable to the class of fund in question. For closed-ended funds, to be filed with the GFSC upon publication. There are no statutorily imposed accounting standards. Fund managers have freedom to choose whichever accounting standard is thought appropriate.
REGULATORY FEES
| Open-ended funds | application fee of £2,800 | annual fee of £2,800 |
| Closed-ended funds | application fee of £2,400 | annual fee of £2,400 |
OVERALL COST OF FUND ESTABLISHMENT
Establishment costs can vary greatly depending on the nature and complexity of the fund structure.
REGULATORY APPROVAL TIME
– Traditional approval process: 6 – 8 weeks
– QIF regime: 3 days from provision of full and complete documentation
– Registered closed-ended fund regime: 3 days from provision of full and complete documentation (assuming that the local service provider has completed its own due diligence/verification process and is able to provide the necessary certification to the GFSC).
OVERALL ESTABLISHMENT TIME
Times can vary greatly depending on the nature and complexity of the fund structure, and will depend on timing of finalising the offering documentation and the material contracts. Additional time will be required where the promoter of the fund is not known to the GFSC or where the fund structure requires a new licensee to be established.
