Guernsey Finance's Fiona Le Poidevin looks at the creation of the Guernsey Foundation and what it offers that makes it different to other private client solutions.

Guernsey lies on a bedrock of granite, a strong foundation material which in the past was exported to London for many uses, including the building of the granite steps in front of St Paul's Cathedral and the repaving of London Bridge. In the present day, Guernsey is exporting a new kind of foundation to the City and beyond. On 25th July 2012, the States of Guernsey, the Guernsey parliament, approved The Foundations (Guernsey) Law, 2012 and gained Royal Assent from the Privy Council in early 2013. As we shall see below, the Guernsey Foundation creates a unique proposition in managing the wealth of clients.

Why foundations?

One of the most compelling arguments for adopting the foundation was because Guernsey is renowned for the trust. The trust is a common-law concept which is familiar to those in the Anglo-Saxon world of the UK, US and Canada, for example, but is less well understood in civil law jurisdictions such as continental Europe and some of the emerging' markets which are the major sources of new private and corporate wealth.

Guernsey's introduction of the foundation would provide clients with the ability to use the Island even if they were uncomfortable with a trust. It would also provide an added level of flexibility to service providers who would have an extra tool on the menu of options available for best meeting client needs while still using Guernsey structures.

High standards

There are many clients and their advisers who want a foundation solution, rather than a trust. While some would prefer one from a civil law country, others would prefer one from a jurisdiction, such as Guernsey, which, although renowned for administering trusts, in doing so has built up considerable infrastructure and expertise in managing the wealth of private clients. In fact, there are already a number of foundations that have been established elsewhere which are administered in Guernsey because of our reputation for administrative excellence, whether for trusts, companies, partnerships or foundations.

Indeed, Guernsey has over 50 years' experience in wealth management. Today, there are 154 lead corporate fiduciary licensees (as well as nearly 40 licensed individuals, who can act as directors, co-trustees or trust protectors). These range from multinational organisations to independent, locally-owned firms, who in total employ more than 2,000 members of staff. The fiduciaries are also complemented by the broader financial services industry in the Island, including banking, investment and insurance sectors as well as a strong network of professional support services, including multi-jurisdictional law firms and global accountancy practices. In addition, Guernsey has a long standing and well respected judicial infrastructure which is experienced in dealing with fiduciary matters.

We do not necessarily expect a flurry of activity, with huge numbers of new foundations being established but we are looking at quality and not just quantity. Indeed, we believe that Guernsey's high standards in terms of regulation and tax transparency combined with our expertise in servicing private clients means that we are especially well placed to administer complex structures and in particular, where they are for philanthropic purposes.

What I am hearing from a number of local practitioners is that they have had inquiries from clients who have foundations currently domiciled in other jurisdictions but they are now considering the migration of these to Guernsey once the legislation is enacted.

Unique features

The Guernsey Foundation is an incorporated entity with a separate legal personality. However, it does not have shareholders to whom the board are accountable. Instead, the foundation holds assets (in its own name) on behalf of beneficiaries, particular purposes, or both, in accordance with the foundation's constitution.

The foundation's constitution comprises a charter setting out the foundation's purposes, initial assets and duration (which may be unlimited) as well as rules prescribing, among other things, the functions of the council and procedures they must follow. There are no 'trustees' and instead, council members perform a similar role by having a duty to the foundation to act in good faith, and cannot, without express authorisation, profit directly or indirectly from their position. Guernsey has taken note of the fact that some clients may worry about confidentiality because as foundations are registered entities, they are, unlike trusts, publicly visible. In Guernsey, limited details are available to the public (although full disclosure must be made to the registrar) whereas in other jurisdictions such as Jersey and the Isle of Man, the whole charter is commonly visible. Yet, Guernsey's approach also means that this limited visibility offers the benefit of being able to prove the foundation's existence quickly when dealing with third parties. In Guernsey, the founder's role is flexible but perhaps more restrictive than in Jersey. However, Guernsey has taken an approach which will be more familiar to those versed in the traditional civil law model where the foundation not only has a separate legal personality but also a legal personality that is independent of the founder.

This may also help to clarify the appropriate tax treatment for the founder in their own country of residence. A particular innovation of the Guernsey Foundation is the ability for beneficiaries to be classed as either being 'enfranchised' or 'disenfranchised'. Enfranchised beneficiaries will have rights to certain information regarding the foundation, whereas disenfranchised beneficiaries are not entitled to any at all. Where there are disenfranchised beneficiaries then the foundation is required to have a guardian with a duty to act in good faith and en bon père de famille.


We believe that the provisions relating to confidentiality and control mean that the Guernsey Foundation is a very useful structure for asset protection, wealth planning and dynastic planning. Combined with the Island's high reputation and service standards, it means that Guernsey will see foundations being established in relation to sophisticated and quality business, such as for philanthropic purposes. A foundation is also useful for corporate entities looking to create an orphan structure where the assets of a particular entity can be held in a foundation, rather than having a parent company and being an asset on that company's balance sheet. This means that the foundation may be used in fund structuring as well as other corporate purposes.

We're not saying that a foundation or indeed a Guernsey Foundation is always most appropriate to meet a client's need. However, we believe that the Guernsey Foundation – the combination of the jurisdiction and specific provisions in the new law – can offer benefits compared to others already in the market.

Originally published in STEP Directory, January 2013

For more information about Guernsey's finance industry please visit

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.