Changes to Guernsey's company law came into force on Thursday 3 September 2015. The only proposed change not now in force is that relating to the new requirements around hearings for applications to wind up 'supervised' (or financial services business) companies, which will not apply in respect of any hearing which takes place before 17 September 2015.
The changes are largely being introduced in response to industry feedback, to bring Guernsey's company law up to date and to surpass, where possible, other key financial centres - an exercise which is sometimes likened to painting the Forth Bridge.
The amending legislation introduces a comprehensive suite of changes. Whilst the below sets out the key changes, it is not an exhaustive summary.
For ease of reference the note is loosely divided into sections by relevance to different groups of readers.
COMPANY LAW TRANSITIONAL PROVISIONS
Administrators will of course be aware that the transitional provisions regulations will finally expire on 31 December 2016. This is the final date upon which all companies must have made the relevant changes to their constitutional documents in order to comply with the remaining provisions of the Companies (Guernsey) Law, 2008.
The Companies Registry has very helpfully published its guidance which is accessible at www.guernseyregistry.com.
|WHY DOES IT MATTER||ACTION|
|ADMINISTRATORS, CORPORATE SERVICE PROVIDERS, DIRECTORS|
|A company's name may appear in non-Roman alphabet or script which need not be identical to the company's principal name.||This should appeal to certain international clients.|
|Two members holding 5% of the total voting rights between them present in person or by proxy is sufficient to form a quorum.||Previously a quorum
could also be made up of members holding 5% of the issued share
capital which is not necessarily the same as voting rights.
The articles may still allow a single person present to form a quorum.
|Check and update articles|
|The memorandum and articles (M&As) may specify a different quorum requirement from the law for class meetings to deal with variations of class rights.||This gives extra flexibility to companies with different share classes.||Check and update articles|
|The M&As can provide for the closure of the register during the period of circulation of a written resolution.||This should provide clarity around the timing of changes in the share register, particularly helpful for funds and companies with large numbers of shareholders.||Check and update articles|
|The general rule is that written special, waiver or unanimous resolutions must be proposed as such. However exceptions may be introduced by regulations.|
|Regardless of whether
the company has more than one class of shares its directors may, to
the extent authorised by the M&As or by resolution of the
company, exercise any power to issue shares or grant rights to
subscribe for or to convert security into shares.
The authorisation is framed widely and is permissive rather than mandatory.
There is also a saving provision in relation to any issue of shares or transaction undertaken in contravention of those provisions.
|The limitation on
directors' rights to issue shares where there is more than one
class already in issue is being removed.
There was never any clear basis on which to make the distinction in the first place.
This is an important change as it significantly simplifies the process of issuing shares whilst allowing the company scope for limiting directors' powers on a case by case basis.
|Check and update
Post-2008 companies may have adopted the more stringent approach requiring authorisation
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.