Guernsey: A Different Offshore Centre For The Asian Market

Last Updated: 31 December 2012
Article by Fiona Le Poidevin

Most Read Contributor in Guernsey, September 2018

Originally published in Asian Investor, December 2012

Fiona Le Poidevin, Chief Executive of Guernsey Finance, explains what Guernsey has to offer to Asian clients.

There is a growing awareness in Asia of the products and services that offshore centres can provide to Asian individuals and companies.

An offshore jurisdiction provides a third country location from which Asian families can protect and even enhance their wealth for the benefit of future generations, and Asian companies can establish entities for investing both out of or back into their home region.

However, what we are finding is that many in Asia still equate offshore with only those jurisdictions in the Caribbean, and in particular, the British Virgin Islands (BVI) and the Cayman Islands.

Asian clients and their advisers need to understand that offshore extends beyond those jurisdictions; indeed, not only are there other international finance centres but these offer a very different and in many cases better proposition. For example, the European-based British Crown Dependency of Guernsey is able to provide Asian clients with a full service proposition in a tax-neutral environment, with close proximity and strong links to the City of London.Guernsey is recognised by international organisations as meeting robust standards in terms of corporate governance, regulation and tax transparency. These attributes have gained added significance in the wake of the global financial crisis and provide extra comfort to both clients and their advisers.

In addition, it is our understanding that while the initial, upfront costs of doing business in Caribbean jurisdictions may be less than using Guernsey, in fact, over the longer term, the expense is likely to be broadly comparable.

The Guernsey offering

During the last 50 years, Guernsey has established itself as a leading international finance centre.

Today, the four main pillars of the Island's finance industry are:

* Banking – There are 33 licensed banks holding more than £103 billion ($164 billion) worth of deposits;

* Fiduciary services – There are 154 licensed fiduciaries, ranging from multinational organisations to independent, boutique operations, employing more than 2,000 members of staff;

* Investment funds – There are 50 fund managers, administrators and custodians with total net asset value of funds under management and administration of £271 billion ($430 billion); and

* Insurance – The Island is the largest captive insurance domicile in Europe and number four globally.

These sectors are supported by a network of professional services, including multi-jurisdictional law firms and global accountancy practices. Guernsey firms provide a wide range of products and services at the highest standards to clients from around the globe, including Asia.

Guernsey Finance, the promotional agency for the Island's finance industry, has long recognised that there is significant opportunity to increase business from Asia given the growth of private and corporate wealth in the region. As such, we established an office in Shanghai in 2007 and this has been followed by a number of Guernsey-based firms developing their own presence in the region. For example, law firm Ogier has offices in Hong Kong and Shanghai, Mourant Ozannes is now established in Hong Kong, and Collas Crill has set up in Singapore. Fiduciaries Louvre, Nerine and Newhaven have established offices in Hong Kong, and Richmond Fiduciary Group is in the process of opening an office in Shanghai. In addition, fund administrator International Administration Group (IAG) has established an office in Hong Kong, has opened another in Singapore and has established a partnership with Exceedor in Shanghai, which allows it to provide onshore renminbi-denominated private equity fund administration services in China. Guernsey's expertise within the funds industry is being utilised by the Chinese government and the country's fund managers to enhance the way its own funds sector is operated and regulated. Julian Carey, managing director of IAG's Asian operations, says discussions are concentrated on enhancing the reporting and corporate governance standards in China.

IAG's presence in the region is particularly pleasing because it means that there is a Guernsey firm in the region promoting the benefits of the Island as a centre from which Asian companies can establish entities for investing both out of or back into their home region.

Investment funds centre

Guernsey has a strong heritage in providing a domicile for corporate entities acting as investment vehicles and especially funds. This experience means that the Island has built a wealth of expertise and firstclass infrastructure for servicing not just traditional funds but also alternative asset classes.

Managers with a presence in Guernsey include major names such as Apax, Permira and Terra Firma. Other promoters of Guernsey funds include Better Capital, Coller Capital and KKR. Administrators based in Guernsey range from specialist boutiques to global players such as HSBC, JP Morgan, Northern Trust, RBC and State Street, which can also act as custodians. The majority of their business relates to servicing Guernsey open and closed-ended funds, which are now promoted by leading institutions from more than 55 financial centres globally.

However, Guernsey-based firms are also able to service schemes established in other jurisdictions, such as the Cayman Islands. What is more, it is not unheard of for promoters to be so satisfied with their experience of the Island through the 'non-Guernsey' route that they decide to redomicile their funds to Guernsey. Certainly, this provides more weight and substance from a tax perspective as the majority of services are provided from the jurisdiction in which the fund is domiciled.

Accessing capital markets

Guernsey has built a strong reputation as a domicile for private-equity funds and also infrastructure funds, in particular where there is demand to list on a stock exchange. For Asian clients, Guernsey provides an ideal gateway to accessing European capital markets. Guernsey entities can be listed on a range of stock exchanges, including the London Stock Exchange (LSE) and the local Channel Islands Stock Exchange (CISX), among many others. There are more non-UK entities from Guernsey listed on the markets of the LSE than any other jurisdiction globally. Examples include the Main Market-listed Macau Property Opportunities Fund Limited, which invests in a range of property within Asia, and the AIM-traded China Growth Opportunities Limited, which invests in companies within China.

In addition, Guernsey entities can also be listed on the Hong Kong Stock Exchange (HKEx) and we have been holding discussions with the authorities in both Shenzhen and Singapore with a view to reaching a similar conclusion in respect of their exchanges.

Why Guernsey?

Guernsey's vast experience as an international finance centre means we are tried and tested but 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. In addition, the Guernsey Financial Services Commission (GFSC) has built a reputation for robust yet pragmatic regulation. For example, 'fast track' routes have been introduced which allow for the speedy launch of funds targeted at professional investors, and yet those investors also have the security of knowing that all Guernsey funds are regulated.

The Island is also providing certainty by announcing that it plans to provide a dual regime under the EU's Alternative Investment Fund Managers Directive (AIFMD). It is Guernsey's intention to operate a full AIFMD equivalent regime for those marketing funds within the EU or who choose this as their preferred option, while retaining a parallel regime with its own appropriate set of regulations for those with structures not touching the EU. The GFSC also ensures that funds follow the appropriate local or international codes of corporate governance and the fact that the Island has a pool of experienced and qualified non-executive directors reassures investors and promoters. This means that agencies such as the International Monetary Fund are able to declare that the Island is working to robust international standards. The Guernsey government also continues to ensure we adopt international standards of tax transparency so that, for example, the Island was within the first wave of jurisdictions placed on the OECD/G20 'white list' in April 2009.

Further, we are well advanced to signing double-tax arrangements (DTAs) with both Singapore and Hong Kong. Even in advance of those coming into effect we have a corporate tax regime where all financial products are either taxed at 0% or are tax exempt.

A different offshore centre

The Asian market has traditionally used offshore centres in the Caribbean but this article highlights to clients and their advisers that Guernsey provides a different proposition which is more in tune with the future direction of the global financial services industry.

Guernsey: In Brief

Situated in Europe between the UK and France

A British Crown Dependency

Not part of, but a special relationship with, the European Union (EU)

English speaking

Currency: British pound Sterling (GBP)

Same time zone as the UK

Links to both London and Europe

Guernsey as a finance centre: Quick facts

OECD/G20 'white list'

Signed 38 TIEAs, including China

A growing network of DTAs

IMF commended regulation

The Banker rankings: No. 2 Specialist Finance Centre*

Global Financial Centres Index: No. 2 Offshore Finance Centre (28th overall)*

*Both published September, 2012

For more information about Guernsey's finance industry please visit www.guernseyfinance.com.

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 Mondaq.com.

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

Authors
Similar Articles
Relevancy Powered by MondaqAI
GuernseyFinance
GuernseyFinance
GuernseyFinance
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
GuernseyFinance
GuernseyFinance
GuernseyFinance
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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