This article was originally published in Business Brief, October 2010.

Andrew Keast, Senior Associate at Ogier in Guernsey, highlights what Guernsey offers for promoters looking to establish Middle East and/or Islamic funds.

Activity in the Middle East and Islamic regions has undergone significant growth in recent years. The Islamic funds market is one of the fastest growing sectors within the worldwide financial system. It is estimated that there is presently approximately US$400 billion of Islamic assets under management globally and more than 350 Islamic funds now exist.

Whilst Guernsey may not have been viewed as a traditional jurisdiction in which to establish fund structures for investment into the Middle East and Islamic regions or for Middle East and Islamic investors, in recent years Guernsey has seen an increase in such activity, including Shariah-compliant investment funds.

Guernsey advantages

There are a number of key reasons why Guernsey has become an attractive jurisdiction for Middle East and Islamic investment business. These include:

  1. Regulation - Guernsey is a well-regulated jurisdiction and does not offer unregulated funds structures, which means that it generally one of the best regarded jurisdictions for governance;
  2. Service providers - Guernsey has high quality service providers, who are able to provide legal, accounting, valuation, registrar, company secretarial and audit services for the structuring, launch and ongoing administration of funds with a Middle East and/or Islamic focus. Many of these advisers have had previous experience in providing advice in connection with Shariah-compliant structures and transactions involving Murabaha contracts, and understand the limitations and requirements of Middle East / Islamic investment and Middle East/Islamic investors; and
  3. Structural flexibility - Guernsey funds structures range from companies (including protected cell companies) to unit trusts and limited partnerships, providing a number of options for Middle East and Islamic clients to structure their product to suit its needs and to take advantage of efficiencies, such as those provided in respect of protected cell companies. Fund structures that are Shariah-compliant must satisfy certain requirements in order for the fund to be considered compliant. The Guernsey fund regime is sufficiently flexible to allow such requirements to be incorporated into fund structures, in particular to the investment guidelines and restrictions that are required to be adhered to.

World Shariah Funds PCC Limited

The combination of the above factors has attracted the establishment and ongoing administration in Guernsey of Shariah-compliant funds such as World Shariah Funds PCC Limited (WSF). WSF is an authorised open-ended collective investment scheme which is suitable for investment by UCITS funds. The shares of WSF are also listed on the Channel Islands Stock Exchange, LBG, increasing their marketability.

WSF has been structured as a protected cell company and initially comprises three cells, with a number of sub-classes in each cell. Each of the cells has a different investment objective, thus allowing investors to invest in the cell that suits their portfolio focus whilst allowing the different cells to take advantage of the administrative benefits that arise from being a part of the protected cell structure.

The first cell invests in Shariah-compliant global equities, predominantly those approved by the S&P Developed BMI Shariah Index. The second is focused on shariah-compliant equities in the Asian-Pacific region (excluding Japan), predominantly those approved by the Dow Jones Islamic Market Indices. The third cell invests in shariah-compliant equities in the MENA region, predominantly those approved by the S&P Pan Arab Shariah Composite Index. Further cells may be added to the WSF structure at a later stage, however each will have the over-riding principle of investing in Shariah-compliant equities.

Several Guernsey service providers are involved in the establishment and ongoing administration of WSF. Ogier provided legal advice in connection with its establishment and provides legal advice on an ongoing basis. The principal manager of WSF is Argyll Investment Services Limited, custodial services are provided by State Street Trustees (Guernsey) Limited and Legis Fund Services Limited provides administration services to WSF.

WSF has also brought together three major Islamic investment teams to act as discretionary investment managers in respect of each of the cell: From Malaysia, Reliance Asset Management (Malaysia) with approximately US$4.3 billion assets under management; the south-east Asian CIMB Principal Asset Management Berhad with approximately US$6.85 billion assets under management; and Markaz of Kuwait with approximately US$2.2 billion assets under management.

With Guernsey's well-regulated fund regime, its suitably experienced service providers and the structural flexibility Guernsey's regulatory regime provides for fund structures, it is well-placed to be considered one of the leading jurisdictions in which to establish fund structures for investment into the Middle East and Islamic regions or for Middle East and Islamic investors. WSF is just one of a number of examples which demonstrate that for Middle East and Islamic investment business, Guernsey represents an attractive jurisdiction in which to carry out business.

For more information about Guernsey's finance industry please visit

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