Guernsey: A Prime Location For Investment Funds

Last Updated: 31 July 2009
Article by Peter Niven

Most Read Contributor in Guernsey, September 2018

Originally published in Corporate INTL, July 2009

Guernsey has become known as a major destination for domiciling and administrating investment funds, in particular alternative investment funds such as private equity, hedge funds and property funds.

The Island has a good combination of the right expertise, regulation and tax structures to make it a destination of choice for fund sponsors or promoters across the world.

Figures from Guernsey Finance show that funds under management and administration in Guernsey were at more than £200 billion at the end of December 2008, rising by more than 12.5% year on year, despite the fact that funds fell by £1 billion during the final quarter.

Around £150 billion of those monies are held within funds domiciled in Guernsey, with £45 billion administered, but not domiciled, in the Island.

The number of actual funds under management or administration rose by 8% year-on-year to reach 1,216 by the end of December 2008, with 919 of those domiciled in the Island.

One of the sources of Guernsey's growing success is the introduction of new legislation designed to add transparency to the process of setting up an alternative investment fund targeted at experienced investors.

Peter Niven, chief executive of Guernsey Finance, says the registered funds regime, was introduced to reflect what administrators have been doing for 12-18 months before that.

He said: "We moved to the registered fund regime, which is very much quicker because of the three day turn around. It is a very popular way of working, particularly for those who have an idea and want to get it to market very quickly."

He adds: "They can provide all the due diligence to the administrator, which is then looked at retrospectively by the Guernsey Financial Services Commission on visits to the administrator. The regulation seals the whole thing together, historically the closed ended fund had not been covered by a piece of legislation, but now it is part of the Protection of Investors Law and is more easily visible to potential promoters and introducers than before. Off-island lawyers looking in can now see exactly what the procedures are, before the legislation it was not so easy to fully understand how these types of funds were regulated."

The introduction of the self certification Qualifying Investor Fund (QIF) was extremely useful in the buoyant economy before the economic downturn, when new funds were springing up regularly and many investments were being made. Guernsey Finance figures show that the number of QIF funds has risen from just 2 in 2005 to 197 by the end of 2008.

Mr Niven says it is still proving popular in the downturn, as distressed property and private equity funds need to move quickly to take advantage of market conditions.

He said: "We are not seeing anywhere near as many structures put in place, there are still good ideas out there, catching the imagination of investors, but it's the investors that are not there. There is no lack of opportunities in all kinds of different asset classes."

He added: "There is still this impression on the part of some investors that we have not yet hit the bottom of the market in any asset class. People are still not calling the bottom of the market, but I would suggest that if you get in now, it may go down slightly but on a 3-7 year time horizon you are going to be fine."

Part of Guernsey's appeal lies in its "menu" of options, according to Mr Niven. He highlights the depth of experience within the professional community in the Island, including law firms, administrators, custodians, accountancy and audit and secretarial services.

This expertise is demonstrated, according to Mr Niven, in the fact that Guernsey was the first jurisdiction to introduce the innovative protected cell company (PCC) structure, now widely used across the world.

He said: "We innovated PCCs in 1997 for use in the captive insurance market, but other local service providers have taken them and used them for things like private equity and family wealth. The umbrella structure and ring fencing makes them ideal for separating currencies or asset classes. I know of late we have seen funds going to continuation votes, with maybe sterling denominated assets getting through, but not US dollar ones. It is a fairly easy mechanism to collapse the cell, give assets back and carry on with the others."

He added: "Some people still have a nagging doubt about the integrity of a PCC, but we now have the ICC (incorporated cell structure) that gives even greater ring fencing with a full corporate shield around each cell."

The existence of the Channel Islands Stock Exchange (CISX) and good links with European exchanges (i.e. Euronext Amsterdam) has meant that Guernsey has become an attractive location for alternative funds looking for access to European investors via a listing.


Mr Niven said: "The CISX adds an extra seal of approval to our jurisdiction. It has the strength in depth of 3,000 separate listings and is well recognised by all the major exchanges around the world. It gives Guernsey an extra recognition and an international dimension that says to people that Guernsey is a top flight international finance centre."

He added: "The original agreement with Euronext Amsterdam was why private equity firms KKR and Apollo came to Guernsey, because they wanted access to European markets. We were the first, but others have followed. It's great to be first because you are then known as the ones who have the longevity and understanding more than those who came afterwards."

The Island has further increased its attractiveness by securing a position on the OECD White List of offshore jurisdictions looked upon favourably as well regulated and tax transparent.

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
 
In association with
Related Topics
 
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