New initiatives strengthen legal infrastructure
By Caroline Chan – By all indications, Guernsey remains an attractive centre for the domicile and servicing of investment funds. According to the latest statistics from the Guernsey Financial Services Commission, over the quarter ending March 31, the net asset value of total funds under management and administration in the jurisdiction increased by around 3.3 per cent, to approximately GBP270.1bn.
This figure also represents a year-on-year increase of 2.4 per cent. The quarterly increase is attributable, in part, to fund launches principally in the closed-ended and non-Guernsey scheme sectors.
Despite these encouraging indicators, the island is not resting on its laurels, but is working to improve and develop its legislative and regulatory infrastructure for funds in a number of areas, starting withopen-ended funds and proposed changes to the Class B rules.A consultation period on proposed changes to the Collective Investment Schemes (Class B) Rules 1990 has recently closed, and it is anticipated that the draft new rules will come into effect later this year.
In addition to updating certain existing rules, the draft rules reflect a move away from requiring formal statements of approval from the Commission for proposed amendments to a Class B scheme, toward notification-only requirements. The proposed amendments will improve timescales for implementing changes to Class B schemes, while retaining high governance standards through the disclosure-based regime.
Corporate governance is now a central focus for the global fund industry. Guernsey funds and certain entities licensed under Guernsey’s regulatory laws, including the Protection of Investors (Bailiwick of Guernsey) Law, are subject to the Finance Sector Code of Corporate Governance issued by the Commission.
The code came into effect at the beginning of 2012. Assurance statements in relation to compliance with the code are to be submitted to the Commission with the regulated entity’s annual return or its annual review, or at the latest by July 31, 2012.
Following the introduction of the Companies (Guernsey) Law 2008, certain transitional provisions were put in place, in part to assist companies set up under the previous regime. The transitional provisions have been extended again until December 31, 2013, giving a further breathing space for pre-2008 companies considering whether to amend their articles now or wait for the implementation of anticipated amendments to the law.
A consultation process on changes to the 2008 law was undertaken in 2010 and revisions to the amendment proposals were published at the end of May this year. The amending legislation is expected to be submitted for approval to the States of Guernsey in the near future.
Revised Channel Islands Stock Exchange listing rules came into effect on March 1. The changes include making the CISX more accessible for unregulated closed-ended funds.
A draft law to establish foundations in Guernsey is expected to be ready for approval by the States of Guernsey in July, with the aim of bringing the law into effect before the end of 2012.
Proposals to amend Guernsey’s limited partnership legislation are currently under consideration, including provisions permitting migrations, mergers and protected cell structures. Draft LLP legislation and an updated consultation document were published for consultation recently. These various legislative initiatives should offer further fund structuring opportunities.
Finally, Guernsey remains the leader in non-UK listings in terms of the number of companies listed or traded on the London Stock Exchange markets. At the end of last year, Guernsey had 108 vehicles listed across all London markets.
Caroline Chan is a partner with Ogier in Guernsey
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