Introduction
This memorandum has been prepared for the assistance of our clients in connection with the savings and transitional provisions that apply to Guernsey companies that were incorporated and existed prior to the enactment of the Companies (Guernsey) Law, 2008 (the "Companies Law") which came into force on 1 July 2008. These transitional provisions are found in the Companies (Transitional Provisions) Regulations, 2008 and schedule 4 of the Companies Law (together, the "Transitional Provisions").
This memorandum is intended to provide a summary of the main principles applicable to such matters and it is not intended to be comprehensive in scope. It is strongly recommended that you seek specific legal advice on any such matters should further assistance be required. A series of briefings on other aspects of Guernsey law has been produced by Ogier and is available on request. This memorandum has been prepared on the basis of the law and practice as at 1 August 2008.
Transitional Provisions
The purpose of the Transitional Provisions is to prescribe savings and transitional provisions in connection with the commencement of the Companies Law and to effect the transition for pre-existing companies from the application of the Companies (Guernsey) Law, 1994 (the "1994 Law") and the various ordinances that were repealed by the enactment of the Companies Law. We summarise the principal Transitional Provisions briefly below.
The Transitional Provisions provide that HM Greffier shall transfer the public "Register of Companies incorporated with Limited Liability" together with all related documents and information (including details of company director disqualification and other disqualification orders) in his custody to the Registrar of Companies.
The Transitional Provisions specify those provisions of the Companies Law which do not apply immediately to pre-existing Guernsey companies but will do so either on 1 January 2009 or 1 January 2010.
Although a number of provisions of the Companies Law do not apply immediately to pre-existing Guernsey companies, it is imperative that such companies ensure they comply with these provisions by the dates stated in the Transitional Provisions because failure to do so in some cases will result in the directors or the company being guilty of offences under the Companies Law.
One example of the delayed application of certain provisions relates to a company's obligation to keep a register of directors that contains the details stipulated under the relevant provisions of the Companies Law. A pre-existing company must ensure that it compiles a register by 1 January 2009 that must be kept at the company's registered office. The company will be guilty of an offence should it fail to comply by the deadline.
Another example of the delayed application of certain provisions relates to a company's existing memorandum and articles of association. A pre-existing company's existing memorandum and articles of association that were lawful under the 1994 Law continue to be treated as that company's articles under the Companies Law. In addition, the company is deemed to have disapplied the standard articles prescribed under the Companies Law. However, where any provision of the company's existing memorandum and/or articles is rendered invalid and unenforceable by any provision of the Companies Law, then the Company must ensure that before 1 January 2010 the necessary amendments are made to ensure that it conforms with the Companies Law.
The Companies Law requires certain Guernsey companies to appoint a resident agent in Guernsey and that resident agent is required to take reasonable steps to identify the beneficial owner of the company for which they act. However, pre-existing companies are only obligated to ensure that they appoint a resident agent (i.e. an individual director resident in Guernsey or a corporate service provider) by 1 January 2009. A company which fails to comply will be guilty of an offence and may be liable to be struck off the Register of Companies.
Any amalgamation of two or more companies commenced before 1 July 2008 may be continued and completed in accordance with the provisions of the previous relevant legislation. Once the amalgamation is completed, then the relevant provisions of the Companies Law are deemed to have been satisfied.
Similarly, a migration of a company from Guernsey to another jurisdiction or the migration of an overseas company to Guernsey that commenced before 1 July 2008 may be continued and completed in accordance with the provisions of the previous relevant legislation. Once the migration is completed then the relevant provisions of the Companies Law are deemed to have been satisfied.
Where a company has bought back its own shares before 1 July 2008, such transactions will not be affected by the Companies Law.
The giving of financial assistance by a company or any of its subsidiaries in accordance with the previous legislation before 1 July 2008 will not be affected by anything in the Companies Law.
Winding up proceedings commenced before 1 July 2008 may continue under the regime set out in the 1994 Law.
In addition to the above, the Transitional Provisions apply to and deal with a number of other matters including the following:
- ratification of an act carried out by a "shadow director" which exceeds his or her powers or amounts to negligence, default, breach of duty or breach of trust to the company;
- disclosure by a "shadow" director of his or her interests in a transaction to the board of directors;
- a director's consent and his or her eligibility to be appointed to that role;
- notifying the Registrar of a change of directors;
- provisions exempting and/or indemnifying directors from liability in respect to negligence, default, breach of duty or breach of trust;
- a transaction in which a director is interested that a company wishes to avoid;
- duties and responsibilities that are carried out by the secretary of a company;
- the keeping of a register of secretaries;
- ordinary, special and unanimous resolutions passed by the members of a company (including waiver resolutions);
- notices required for general meetings;
- the company's auditor's report on the accounts of a company that is prepared to be sent out to the members of that company;
- any alteration of a company of its share capital;
- the issue of shares by a company and the exercise of directors' powers to issue those shares;
- companies that have been struck off the Register of Companies;
- a pre-existing company that has not filed its annual return by the commencement of the Companies Law;
- disqualification orders made by the Royal Court of Guernsey prohibiting a person from acting in respect to any company; and
- reduction of share capital of a company.
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.