Guernsey: Clear Skies Ahead

Last Updated: 27 October 2015
Article by Kate Clouston

Most Read Contributor in Guernsey, September 2016

What does the future hold in store for Guernsey? Guernsey Finance's Kate Clouston paints pfm a bright picture

Guernsey's reputation as a leading funds domicile has been reinforced by findings in a recent report published by KPMG.

The report, International Capital Flows, reveals the extent to which Guernsey's funds industry facilitates the flow of capital globally, including £105 billion of investment in Europe – 49 percent of which originates from investors located outside Europe itself. Guernsey is highlighted as an integral conduit facilitating the raising of capital from investors in different countries, subsequently allowing for the redeployment of this capital into global assets. The report also emphasizes the fact that global investors are comfortable utilizing Guernsey structures, in large part due to the island's reputation, regulatory track record and high standards of transparency.

The findings of the report reaffirm Guernsey's particular expertise in working with alternative investment assets. Alternative investment assets remain a key asset class for many investors, and as such comprise an essential component of global capital flows. In August 2015, Preqin Investor Outlook surveyed 460 investors with a combined AUM of $7.2 trillion, finding that 79 percent of institutional investors were invested in at least one alternative asset class and over half of them had additional allocations in private equity, hedge funds and real estate. Private equity is the dominant sector in the Guernsey funds market, encompassing 70 percent of all deployed assets, while infrastructure and property each account for 8 percent of the market.

Capital markets

One of Guernsey's key strengths in facilitating this type of global investment is the ability for Guernsey entities to quickly and easily access a wide range of international capital markets.

This includes not just the locally based Channel Islands Securities Exchange (CISE) but also the London Stock Exchange (LSE) and exchanges in Ireland, Paris, Amsterdam, Frankfurt, New York, Toronto, Johannesburg, Australia and Hong Kong.

Indeed, there are more Guernsey incorporated companies listed on the LSE than from any other jurisdiction except the UK. LSE data to the end of July 2015 indicates that there were 125 Guernsey-incorporated entities listed across the Main Market, AIM and the Specialist Fund Market. Many of these are entities established for cross-border investment, including a significant number of funds.

Notably, the largest AIM listing of 2014 was a Guernsey entity. The real estate focused Market Tech Holdings Limited combined a £750 million initial public offering with an oversubscribed placing which raised £100 million.


Guernsey's position "offshore" and outside of the EU enables tailored optionality for the international fund community. Onerous EU regulations, such as the Alternative Investment Fund Managers Directive (AIFMD), have driven many fund managers to focus efforts on their own domestic markets – a tactic that may well enable managers to avoid burdensome regulation but will also restrict access to investor interest and potentially lucrative investment opportunities across Europe.

In response to these challenges, Guernsey has introduced a dual regulatory regime in which it is possible to continue to distribute Guernsey funds into both European and non-European countries. This consists of the existing regime for those managers not requiring an AIFMD fund, including those using National Private Placement (NPP) regimes and those marketing outside Europe, as well as a new opt-in regime which is fully AIFMD compliant.

The Guernsey model

Our unique regime enables managers and funds with no connection to Europe to continue to operate under Guernsey's existing regulatory framework, which is completely free from the requirements and costs associated with AIFMD.

For managers wishing to market into Europe, Guernsey provides a platform to access all the benefits and opportunities of European capital markets, but crucially is not actually in the EU. Indeed, the NPP route should be used where possible and full AIFMD status should only be sought if there is a specific commercial reason to do so. For those managers with elements of EU and non-EU business, parallel structures can also be utilized.

In July, the European Securities and Markets Authority (ESMA) announced its recommendation to grant Guernsey a "third country" passport under AIFMD. Guernsey is one of only three jurisdictions to receive the recommendation, which, if approved by the relevant European authorities later this year, would further enhance Guernsey's position to distribute funds into Europe.

OECD backing

As a crown dependency, Guernsey has attained OECD membership via that of the UK – a fact that may not always be readily apparent. The UK's HM Treasury and Ministry of Justice issued a clarifying statement in June of this year supporting the Island's attractiveness as a fund domicile due to its position within the OECD.

The statement from the UK authorities explains the OECD Convention: "The OECD Convention was extended to Guernsey on 20 July 1990. This means that the OECD Convention applies to Guernsey and it is part of UK's membership of the OECD. OECD decisions and recommendations apply to the same extent to Guernsey as they do to the UK."

This point of clarification regarding OECD membership is particularly important as certain market regulators may prohibit the marketing of funds that do not originate from an OECD country. This also reinforces Guernsey's position as an internationally compliant and reputable jurisdiction, and strengthens the attractiveness of Guernsey as a fund domicile.


Legislation such as AIFMD and Base Erosion and Profit Shifting (BEPS), amongst others, has generated increased scrutiny of structuring arrangements and in particular, issues of substance. Unlike some competitor jurisdictions, significant substance is already present in many existing Guernsey structures.

Our strong corporate governance is additionally enhanced by a significant pool of experienced non-executive directors with a deep knowledge of investment funds.

Leading investment houses such as Apax, Apollo, BC Partners, Coller Capital, HarbourVest, KKR, Pantheon, Permira and Starwood have funds domiciled and serviced in Guernsey (with a number also including offices and staff present). In fact, some $100 billion of non-Guernsey funds, typically from the Cayman Islands or Delaware, are administered and managed in Guernsey – a testament to our quality service provision. Additionally, our flexible migration rules allow certain promoters to easily re-domicile funds to Guernsey. In total, Guernsey's funds industry now manages and administers more than 800 funds valued at nearly half a trillion US dollars.

Guernsey administrators range from major international names such as Northern Trust, State Street, JP Morgan and Citco to specialist independent administrators. Major global custodians are based in Guernsey, supplemented by specialist administrators that have established Guernsey-based depositaries to service private equity and real estate funds. These specialists can provide funds access to a depositary-lite regime for non-financial assets under AIFMD, even if they have not previously been subject to the requirement.


The KPMG report has showcased the way in which Guernsey acts as a facilitator of global capital flows. It has also reinforced the fact that the Island is well respected for its transparency, proven regulatory track record and expertise in listing entities on a wide range of stock exchanges globally. Our high standards combined with market and structuring adaptability ensures that Guernsey will continue to offer a fresh solution for promoters, managers and investors in the global financial community.

An original version of this article was published in PFM, October 2015.

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.