Guernsey: Key Focus on Good Relationships

Last Updated: 8 July 2010
Article by Paul Wilkes

Most Read Contributor in Guernsey, November 2018

Originally published in HFM Week, Guernsey Special Report, June 2010

Paul Wilkes and Wayne Atkinson of Collas Day echo that the close relationship between the GFSC and the fund industry help Guernsey maintain its high standing as a hedge fund domicile.

Though the hedge fund industry is, it seems, making an impressive recovery from the recent financial crisis, the lessons learnt from those dark days, which not only saw a dramatic fall in returns but also the collapse of Lehman Brothers and the Madoff scandal, are unlikely to be soon forgotten. As such, today the focus on liquidity, transparency and regulation is higher than ever before and it is for this reason that Guernsey is fast emerging as the jurisdiction of choice in an ever-changing hedge fund sector.

"Prior to recent events, many investors and promoters favoured the Caribbean domiciles, which took a lighter approach to regulation; that, however, has now changed dramatically," says Paul Wilkes, a senior associate at Guernsey law firm Collas Day. "Today, the appeal of the Channel Islands' model of robust but practical regulation is greater than ever."

This wide-scale change in attitudes has seen a number of high-profile funds leave said Caribbean jurisdictions and opt instead to redomicile in Guernsey.

"Traditionally hedge funds had largely opted for the Caribbean model and as a result Guernsey has only held a small market share of the hedge fund industry," he continues. "However, dependent on the final outcome of the EU Alternative Investment Fund Managers (AIFM) Directive, though of course, it is very likely that Guernsey may well gain a much bigger share of that market, the possibility is greater than anyone would have anticipated."

However, despite this growing interest in the domicile, there is still very much a focus on quality over quantity, Wayne Atkinson, also a senior associate at Collas Day, is keen to point out.

"This is one thing the regulator and industry have both always been very clear on," he asserts. "We don't want Guernsey to take a high-volume, low-cost approach to funds and be part of a 'race to the bottom', so to speak; that is, to allow the redomiciliation of a huge numbers of funds which aren't properly overseen. We want a good, sustainable industry and today, we are at an advantage because that is now what the rest of the world wants as well."

According to Atkinson, finding that delicate balance between regulation that is strong, but also flexible, has been key to the continued success of the domicile. "Guernsey has always been known for striking what is quite a difficult balance between having robust regulation but also providing funds and fund managers with flexibility to do what they need to do to turn a profit," he says.

What's more, the fact that Guernsey's regulatory approach prefigured the changing industry attitude – as opposing to arising in response to it – is one way in which the island stands apart from other jurisdictions.

"Essentially, Guernsey is in an excellent position to respond to the changing expectations of the fund industry because it already was in an excellent position when everything started to change," explains Atkinson.

"At the moment, there is a well-publicised global drive towards increasing regulation and increasing transparency and monitoring," he continues. "Not only does Guernsey have a long history of sound regulation but it also has a strong regulatory base to build on in order to meet new and constantly changing expectations."

Close relationships

According to Atkinson, a close relationship between the island's regulatory body, the Guernsey Financial Services Commission (GFSC), and the fund industry is also vital to its growing prominence as a leading centre for hedge funds.

"There is a consistently excellent dialogue between the regulator and the industry," he says. "It recently published a draft Code on Corporate Governance which received a tremendous response from the industry, something that I think clearly demonstrates the high level of general awareness of the importance of appropriate and adequate regulation."

The draft code aims to provide guidance to directors, not as to what decisions they should be making, but rather how they should be making those decisions with a view to making sure investors are well protected, as well as ensuring that the board is properly composed and kept up to speed with industry developments.

"The idea is essentially to make sure that a fund has a strong independent board that is able to provide the over-sight that both managers and investors want or need," says Atkinson. "We also currently have under consultation changes to the Protection of Investor law, which provide the GFSC with a formal role in approving a fund's directors and the overall composition of the board."

The combination of these different layers of regulation means that Guernsey provides investors with a triple level of protection – managers who look after the investors' best interests, directors who make sure that the managers are doing so, and the GFSC, ensuring that directors are fulfilling their role adequately. "It's a very strong regime and one that is being built very carefully and drawing upon a lot of industry input," says Atkinson.

Both Atkinson and Wilkes stress that, despite the growing popularity of Guernsey, the GFSC is far from becoming complacent in its approach to regulation. "Guernsey has always been adept at ensuring that its regulation is kept up-to-date," says Atkinson. "For example, at the beginning of this year, the Licensees (Conduct of Business) Rules 2009 came into effect, which relate to service providers of investment funds which are licensed by the GFSC, amongst other entities, and highlights a number of issues such as conflict of interest disclosure and fair dealing."

This, says Wilkes, is not a new focus but rather, an update of an area which was indeed already well regulated. "It wasn't so much the creation of regulation that wasn't there before; it is simply an act of clarifying, improving and building upon," he affirms.

A question of confidence

However, while Guernsey is clearly benefiting from the changing attitudes that have resulted from the events of recent years, like the hedge fund industry as a whole, low investor confidence still presents a challenge for future growth.

"Confidence at the moment is still relatively low for new structures and as such, these are being launched at a less frequent rate than perhaps they were a year or two ago, as well as raising slightly less money than they were at that time," says Wilkes. "There are positive signs, of course, but the recovery is likely to be a slow one. New funds are key to the continued success of any domicile and so we are hopeful that confidence will continue to improve as jurisdictions like Guernsey continue to respond to investor needs."

Atkinson also points to the aforementioned AIFM Directive as both a potential challenge and a potential opportunity for Guernsey. "Clearly the Directive is going to affect everyone in the fund industry, on a global scale, but what the main challenge for Guernsey will be is to take full advantage of whatever regime comes in and maintain its position notwithstanding that. There will inevitably be a period of adaptation, but I think Guernsey is well placed to do that."

Currently operating solely in Guernsey, Collas Day has, over the years, developed substantial knowledge of the local market. That said, the firm is very much an outward looking one, with staff from all over the world each bringing the firm their own experience and expertise from various global jurisdictions. "For example, we have established an exchange programme with a Luxembourg law firm with which we have close ties, which sees us 'swap' lawyers for a three to six month period to allow staff to gain vital experience of other jurisdictions," says Wilkes.

And while the firm is keeping a close eye on burgeoning opportunities outside of Guernsey – in the rapidly developing Far East, for example – they are, at the moment, very happy for Guernsey to remain as their key focus.

"We acknowledge, of course, that a number of entrants in the market have a global presence, but while this may be beneficial from a marketing point of view, in terms of service delivery, for someone launching a fund in a new jurisdiction, it doesn't really matter if the law firm they are working with has offices in several jurisdictions or just one," asserts Wilkes. "What matters is that the lawyers that they are working with are good at what they do – and this is something that we at Collas Day can confidently say is true."

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions