This memorandum has been prepared for the assistance of our
clients in connection with the provisions relevant to arrangements
and reconstructions under the Companies (Guernsey) Law, 2008 (the
"Companies Law"). It is intended to
provide only a summary of the main legal and general principles and
it is not intended to be comprehensive in scope. It is strongly
recommended that you seek specific legal advice on such matters and
we would be pleased to assist in this respect. A series of
briefings on other specific aspects of Guernsey companies has been
produced by Ogier and is available on our website www.ogier.com.
Transitional provisions have also been made (a separate briefing
addresses the operation of these).
The memorandum has been prepared on the basis of the law and
practice in Guernsey as at 1 July 2008.
The Companies Law came into force on 1 July 2008.
The Companies Law has introduced statutory provisions dealing
with compromises and arrangements between the Company and its
members or the Company and its creditors. An
"arrangement" would include a reorganisation of share
capital by consolidation of classes or by division into
Scope of Application
The Companies Law does not prescribe any particular situations
where these provisions can be utilised. Accordingly a company may
be able to effect any kind of arrangement provided all necessary
procedures and approvals have been obtained. The essential
requirements for a compromise or arrangement are as follows:
an application to the Royal Court of Guernsey for an order
convening a meeting of the creditors or class of creditors, or the
members or class of members. The application may be made by:
any creditor or member of the company;
if the company is being wound-up, the liquidator;
if the company has an administration order in force, the
if the cell of the protected cell company has a receivership
order in force, the receiver;
where a meeting has been convened by the Court notice must be
given to creditors or members along with a statement explaining the
effect of the compromise or arrangement;
that meeting must then approve the compromise or arrangement by
majority and number representing 75% in value of the members or
class of members or creditors or class of creditors present and
voting either in person or by proxy; and
once such approval has been obtained application must be made
to the Court for the Court to sanction the compromise or
Effect of Application
Once a compromise or arrangement has been sanctioned by the
Court it will be binding upon:
all creditors or the class of creditors, or on the members or
class of members (as the case may be);
in the case of a company in the course of being wound-up, the
liquidator and contributories of the company;
in the case of a company with an administration order in force,
the administrator and contributories of the company; and
in the case of a cell of a protected cell company with a
receivership order in force, the receiver and all contributories of
the protected cell company.
It should be noted that where a proposed compromise or
arrangement would amount to, for example, an alteration of the
company's memorandum or articles, or an amalgamation or
migration, the Court may allow the compromise or arrangement to be
effected in accordance with the above provisions rather than in
accordance with the provisions relating to alteration of the
memorandum and articles or to amalgamation or migration.
Compromises or arrangements can be used in a number of
situations including but not limited to acquisitions, group
reorganisations and mergers. The Companies Law allows the Court to
make provision for a number of matters where an application is made
to the Court to sanction a compromise or arrangement and it is
shown that (a) the compromise or arrangement is in connection with
a reconstruction of any company or the merger of two or more
companies; and (b) that compromise or arrangement would result in
the transfer of the whole or any part of the undertaking or
property of any company concerned in the compromise or arrangement
to another company.
These matters include making arrangements for the transfer of
undertaking and property, the issuing or appropriation of shares or
debentures etc, the continuation of any legal proceedings and such
incidental, consequential and supplemental matters to ensure the
compromise or arrangement is effectively carried out. Where such an
order is made a copy of the order must be delivered to the
Registrar of Companies within seven days.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Now that the United Kingdom has served notice to leave the European Union under Article 50 of the Lisbon Treaty, managers of offshore funds have a clearer timetable for when Brexit will happen, with the UK scheduled to leave the EU in March 2019.
The EU has responded to the era of Big Data and mobile technology with new legislation that will affect anyone, anywhere, who trades in or shares data within the EU.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).