The introduction of foundations earlier this year as an additional product in Guernsey for asset protection and wealth planning has brought with it many opportunities for individuals who wish to take advantage of the increasingly competitive market for foundations. Matt Sanders and Stephen Ozanne of AO Hall take a closer look.
Importantly, it is now possible for an existing foundation established in another jurisdiction to be migrated to Guernsey ("Migration"). The reasons behind a decision to migrate a foundation to Guernsey vary, but may include moves to take advantage of the legislative, regulatory or financial benefits (including administrative costs savings) offered in Guernsey as well as the reputation it has as an international financial centre.
Migration is effected by application to the Guernsey Registrar of Foundations (the "Registrar") and therefore no court application is required, which enables a streamlined process for migrations.
Effect of Migration
Migration will operate in almost exactly the same manner as for the migration of companies to Guernsey. In this regard, Migration will not create a new legal person nor will it prejudice or affect the identity or continuity of the legal person constituted by the foundation. In other words, as a matter of Guernsey law:
- All property and rights to which the foundation was entitled immediately before Migration, will remain its property and rights after Migration;
- The foundation will remain subject to all criminal and civil liabilities, and all contracts, debts and other obligations, to which it was subject immediately before Migration;
- All legal proceedings which, immediately before Migration could have been instituted or continued by or against the foundation may still be instituted or continued by or against it after Migration; and
- A conviction, ruling, order or judgment in favour of or against the foundation before Migration will be able to be enforced by or against it after Migration.
Migration to Guernsey
The foundation must apply to the Registrar to be registered as a Guernsey foundation on the Guernsey Foundations Register (the "Register"). Broadly, the application procedure entails the following steps:
- The foundation's current foundation officials must approve the Migration in accordance with the terms of the foundation's constitutional documents; and
- A written application must be made to the Registrar using the standard form that is provided by the Guernsey Registry for this purpose, which includes the Migration Details (see below).
The application may only be made by a Guernsey licensed fiduciary ("Fiduciary"). The application may propose the date on which registration as a Guernsey foundation shall take effect, provided that the date which is proposed is no later than three months following the date of the application. Upon receipt of an application which meets these requirements, the Registrar will register the foundation on the Register, issue a certificate of registration and provide a registration number.
The application must include the following (the "Migration Details"):
- The proposed name of the foundation;
- The existing registered office of the foundation;
- The proposed registered office of the foundation in Guernsey;
- The purpose of the foundation;
- Whether there are, or there are intended to be, any disenfranchised beneficiaries of the foundation;
- The names, dates of birth and addresses for each of the current councillors ("Councillors") of the foundation;
- The proposed resident agent of the foundation in Guernsey (which is required if at any time the foundation has no foundation officials who are a Fiduciary in Guernsey); and
- The name and address of the proposed guardian ("Guardian") of the foundation. Guardians are required in Guernsey if the foundation is established for a purpose and the foundation does not have any beneficiaries, or if there are disenfranchised beneficiaries.
The application must be accompanied by the following documents:
- The proposed charter for the foundation on registration in Guernsey;
- The existing charter for the foundation (or foreign equivalent);
- The consent to act of the Councillors upon registration in Guernsey;
- The consent to act of the Guardian (if any) upon registration in Guernsey;
- A copy of the foundation's current certificate of establishment;
- A legal opinion issued by legal counsel in the jurisdiction in which the foundation is currently registered (the "Current Jurisdiction") confirming that:
- The foundation is not prohibited from being registered in Guernsey by reason of the laws of the Current Jurisdiction; and
- The foundation has legal personality in the Current Jurisdiction;
- A confirmation from the registrar of foundations in the Current Jurisdiction that on the date of registration of the foundation in Guernsey the foundation will cease to be established and registered under the law of any place outside of Guernsey; and
- The application fee payable to the Registrar in respect of the Migration.
The statutory fee payable to the Registrar for a Migration is Â£100. As noted above, the application must be made by a Fiduciary and the costs payable to the Fiduciary will ultimately depend on what is negotiated with them and the scope of their role.
As far as legal fees are concerned, these are usually estimated on a case-by-case basis and will depend on the complexity of the matter, as well as the role which the Fiduciary plays.
Guernsey is considered to be highly competitive on costs, and the costs savings arising are likely to be a key reason for Migrations. This advantage, coupled with the other benefits that Guernsey offers in financial services, should introduce Guernsey as a key competitor in the foundations market.
For more information about Guernsey's finance industry please visit www.guernseyfinance.com.