Originally published in Corporate INTL, January 2011
As I write this article on the cusp of moving from one year to another it is an appropriate time to look back at the past 12 months and also into the crystal ball for what might lie in store during 2011. What I can clearly see is that Guernsey is well positioned to increase our supply of financial products and services to both corporate and private clients from India.
Guernsey is already recognised by a significant number of Indian institutions and their advisers as a leading provider of corporate services, including structuring and incorporation, investment fund administration and exchange listings. London Stock Exchange (LSE) data shows that – of those Indian entities on its Alternative Investment Market (AIM) at the end of October 2010 – the latest five to list have all been established in Guernsey, including all three added during the year. We can see that these entities operating principally in India and incorporated in Guernsey are, in the main, sizeable companies and also spread across a broad range of sectors including private equity, transportation, energy and film.
In addition, more general LSE statistics to the end of September 2010 also show that there are more Guernsey-incorporated companies on each of the UK main market, AIM and the Specialist Fund Market (SFM) than any competitor jurisdiction. Indeed, a significant attraction of using Guernsey is the ability to establish vehicles which can then be listed on these exchanges or Euronext, as well as the local Channel Islands Stock Exchange (CISX). This provides promoters with a menu of options which can be utilised as they best see fit. For example, some promoters want the comfort of using a recognised exchange such as the CISX while at the same time having access to the investment pool and liquidity provided by a London capital market such as AIM. Establishing vehicles through Guernsey allows for either to be accessed independently or both to be used as part of one overall structure.
Guernsey also offers significant potential as a leading centre for investment funds. The total value of funds under management and administration was 34% year on year to reach more than £243 billion at the end of September 2010. Our business includes alternatives such as property and substantial proportion of private equity/venture capital. The general characteristics of this latter asset class, including the fact that it will be held for a significant time period before being realised, make it similar to infrastructure funds where there is notable demand for investment into India.
During October 2010 we held our first official delegation to India, led by Carla McNulty Bauer, Minister for the Commerce and Employment Department within the Guernsey Government. We had a series of meetings across both Delhi and Mumbai with some very senior government, regulatory and business officials as well as a number of industry practitioners. In addition, we hosted our own specific Guernsey event in Mumbai which proved to be an extremely popular networking opportunity.
We were able to inform our hosts about Guernsey but also learn from them about how we can do business together in the future. There appear to be plenty of opportunities and not just in corporate services but also the wealth management arena where we can capitalise on our experience in providing fiduciary services for high net worth individuals. Guernsey can meet the needs of private clients, no matter whether resident or non-resident Indians, who are trying manage their wealth and assets for the benefit of future generations in an increasingly globalised world. The Island has more than 150 licensed fiduciary providers ranging from independent, boutique operations to large multinational organisations, who together hold more than £300 billion of client assets in trust and company structures. The breadth and depth of our finance industry means we also have private banks, asset managers and the full range of tax and legal advisers to offer Family Office services.
A study by The Banker magazine published in September 2010 ranked Guernsey number four in a list the world's specialised finance centres. In the same month, the eighth Global Financial Centres Index (GFCI) also ranked Guernsey very much within the top tier of 'offshore' finance centres.
Guernsey has 50 years experience as an international finance centre which means that we are tried and tested, have developed significant infrastructure and accumulated a wealth of expertise across a broad range of products and services. We are also dynamic and forward-thinking, as demonstrated by the launch of our own regional stock exchange, the CISX, and our innovation of the cell company concept.
The Guernsey Financial Services Commission (GFSC) has built a reputation for robust yet pragmatic regulation, an approach that encourages flexibility and creativity while ensuring agencies such as the IMF are able to declare that the Island is working to international standards. The Guernsey Government also continues to ensure we adopt international standards of tax transparency, as exemplified by the fact that the Island was within the first wave of territories placed on the OECD/G20 'white list'.
In addition, Guernsey has already begun talks on signing a Tax Information Exchange Agreement (TIEA) with India. While Guernsey does not have a Double Taxation Agreement (DTA) with India, we do have a corporate tax regime with a standard 0% rate for all companies. This is under review but our government has made a commitment that investment funds will remain exempt and the regime as whole will be sustainable and competitive.
So, as you can see, there are plenty of reasons to believe that Guernsey is well positioned to increase our provision of financial products and services to both corporate and private clients from India during 2011.
GUERNSEY: IN BRIEF
- Situated in Europe between the United Kingdom (UK) and France.
- A British Crown Dependency
- A special relationship with the European Union (EU)
- English speaking
- Currency: British pound Sterling (GBP)
- Same time zone as the UK
- Direct links to both London and Europe
For more information about Guernsey's finance industry please visit www.guernseyfinance.com.
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