Until recently, both the raising of capital (in certain cases) and borrowing by a Guernsey company were regulated by The Control of Borrowing (Bailiwick of Guernsey) Ordininace, 1959 (as amended), commonly known as "COBO".
With effect from 27 February 2013 COBO will be no more.
The legislation was originally introduced for the regulation of borrowing, raising of monies, promotion and financing of transactions throughout the British Isles after the end of WWII, at a time of chronic financial difficulty. COBO became law during a period when control of borrowing was essential for economic reasons. However following several amendments to the legislation, the application of COBO in recent times applied it to much more. It became the bane of most local and London lawyers' lives!
With the introduction of the revised 2008 companies legislation and certain amendments to our protection of investors legislation in Guernsey, COBO's reach was somewhat restricted and reduced. Most of the provisions of COBO were replaced or repealed at that time. Since 2008, COBO has only been relevant in limited circumstances to the raising of money by the issuance of securities but still applied to lending transactions and certain security issues.
There was general consensus between the regulatory authorities and industry that COBO no longer served any useful purpose from either a regulatory or commercial point of view, nevertheless, failure to comply with COBO still amounted to a criminal offence and COBO consent could not be given retrospectively.
COBO will be repealed in its entirety by The Control of Borrowing (Repeal) (Bailiwick of Guernsey) Ordinance, 2013.
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.