Guernsey: Changes To The Class B Rules In Guernsey

Last Updated: 10 June 2014
Article by Caroline Chan and Val Rouse

Most Read Contributor in Guernsey, September 2016

Caroline Chan and Val Rouse of Ogier discuss the changes to the Class B rules in Guernsey and what this means in practice for Guernsey funds.

The vast majority of open-ended funds in Guernsey tend to be established as Class B schemes because of the flexibility of the regime, which has operated successfully since 1990. It has only recently been updated for the first time. The Authorised Collective Investment Schemes (Class B) Rules, 2013 (Class B Rules) came into operation on 2 January 2014 and this article discusses certain of the changes that have been made and the main points to note.

If they have not already done so, Class B scheme service providers will need to take certain action. Scheme particulars must be updated by no later than 2 January 2015 and any derogation granted under the previous rules which continues to be required must be reapplied for within the same timeframe, otherwise it will lapse. If principal documents require updating, this must be carried out by no later than 2 January 2016. The changes include the following:


Each new class or cell of a Class B authorised scheme will now be declared approved by the Commission. A declaration will be valid for one year and may be revoked if the new cell or class is inactive.


A change of designated administrator or trustee continues to require prior notification and the Guernsey Financial Services Commission's approval in practice because of the need for the scheme's Class B declaration of authorisation to be varied. There are also new requirements relating to reconstructions which may result in the need to obtain the Commission's prior approval for any such a proposal. However, otherwise, the new regime is one of notification only.

In particular, there is no longer any need to obtain prior written approval from the Commission for a change to a scheme's investment, borrowing and hedging powers, although it is still necessary to notify the Commission in advance and give sufficient notice to holders to allow them to redeem their shares before the change takes place.

The requirement to obtain prior approval from the Commission for payment out of scheme property of previously unauthorised or undisclosed fees, expenses or charges has also been replaced with a requirement to notify the trustee and to give notice to holders.

Other notification requirements include a proposed change of principal manager, investment adviser, director, registrar or auditor and any proposal to terminate a class or cell. Suspension of dealings must also be notified, together with reasons, "forthwith".


The designated manager for the purposes of the Protection of Investors (Bailiwick of Guernsey) Law, 1987 as amended is now redefined in the Class B Rules as the "designated administrator" to better reflect its role. It is also now made clear that the term "principal manager" means the Guernsey-based principal manager (if any), who would normally delegate some or all of its administration functions to the designated administrator.

New guidance clarifies that the Commission expects the duties of a designated administrator normally to be limited to administering the scheme and monitoring the constituents of the scheme property. Responsibility for investment decisions is expected to be that of the principal manager (or in the case of a company scheme, the company).

As regards the trustee, its principal duties remain that of safe custody of scheme property and oversight over the designated administrator and the principal manager (if any). It has responsibility "for the safe custody of all the scheme property" and will be liable to the relevant authorised scheme "in the event that the loss of any scheme property occurs as a result of the trustee's unjustifiable failure to perform its obligations or its improper performance of them".

The Class B Rules now recognise that the function of registrar will often be carried out by a service provider other than the trustee, normally the designated administrator. Accordingly, that appointment may now be made direct by the scheme, subject to provision being made for the trustee's oversight role.

Respective roles and responsibilities of service providers under the Class B Rules are not necessarily the same as previously. For example, certain responsibilities which would previously have fallen to the "manager" (meaning either the designated manager or the principal manager or both) may now be stated as being those of a principal manager only (or in the case of a company scheme, the company). Further, the Commission notes by way of guidance that whoever is ultimately responsible will be a matter of contractual arrangement and that, in assessing compliance with the Class B Rules, it will take into account those contractual arrangements.

As a result of these changes, Class B scheme service providers should consider carrying out a full review of their roles under the Class B Rules in conjunction with the contractual arrangements under which they are appointed and take advice as appropriate.


One point to note, in particular, is that the prohibition on double charging is now stricter than previously. The Class B Rules provide that where a Class B scheme invests in other schemes managed by the same manager or investment adviser or persons in the same group, double charging of any charge payable by a target scheme is prohibited. The Commission has now confirmed by means of its Class B FAQs that "any charge" in fact means management or investment advisory charges. However, this is still stricter than the position under the previous rules where the prohibition was limited to preliminary or redemption charges. However, double charging in feeder fund structures is not prohibited, provided that the relevant fee structure is fully disclosed. It is no longer necessary for 90 days' notice to be given to holders of any increase in the manager's periodic charge. Instead, the Class B Rules provide that sufficient notice must be given such that an investor may redeem his shares prior to the increase coming into effect. Note, however, that there is now a requirement to disclose in the scheme particulars the amount of notice to be given to holders to increase the principal manager's and investment adviser's charges.


The minimum period of notice fixed by the Class B Rules for a meeting of holders is reduced from 14 to 10 days, subject to any longer period specified in the principal documents or by applicable law.

The provisions of the Companies (Guernsey) Law, 2008 relating to the deemed service of notices and documents will apply regardless of the constitution of the scheme in question. For some Class B schemes, this may extend the period that is normally allowed for deemed service and the position may need to be checked and advice taken, as appropriate. In relation to the powers of a meeting of holders, a resolution for this purpose now requires only a simple majority of the holders or class of holders in order to be passed. An extraordinary resolution is no longer required.


  • The Commission may object to undesirable or misleading names in relation to a scheme or class
  • The conflicts of interest section has been updated
  • Principal documents and scheme particulars may now be made available on a relevant website
  • There is no longer a specific requirement to issue certificates within 21 days or to file interim report and accounts with the Commission
  • Whilst minimum disclosure requirements for scheme particulars have been reduced, there are several new requirements, including disclosure of accounting standards, director's interests, material conflicts of interest, arrangements for the removal of service providers and the notice required to be given to increase principal manager or investment adviser charges
  • In respect of directors, details of any other directorships that are held and have been held in the past five years must be made available to any potential holder at the registered office of the authorised scheme
  • There are new provisions to enable a sub-fund of an umbrella fund to be wound up.

This article is a summary only. Specific legal advice should be sought in relation to any particular set of facts.

An original version of this article appeared in the HFMWeek Guernsey Report 2014, May 2014.

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
Mondaq Advice Centre (MACs)
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.