Statutory requirements applying to companies in the Island are set out in The Companies (Guernsey) Law 1994, as amended by the Companies (Amendment) (Guernsey) Law 1996 and extended further by the Companies (Enabling Provisions) (Guernsey) Law 1996. Additional information regarding company law can be found in the forthcoming KPMG publication The Guernsey Company Law Handbook. Financial institutions are concerned primarily with complying with the relevant laws applicable to their sector. These are set out in detail in the KPMG publication Banking and Finance in Guernsey.
Incorporation is effected by registration. Registration confers legal personality and, unless limited in the Memorandum and Articles of Association, perpetual succession on the incorporated body.
There is no distinction in Guernsey between public and private companies. Provided that consent is obtained under Guernsey's Control of Borrowing Order there is no restriction on shares in a Guernsey company being offered for subscription to the public and quoted on a stock exchange.
Until 25 March 1997 it was possible only to incorporate a company whose liability was limited by shares. Since 26 March 1997 it has been possible also to incorporate a company limited by guarantee and a company limited in part by guarantee and in part by shares. Proposals exist to allow companies to issue shares with no par value. However there are no such proposals for companies in Guernsey to issue bearer shares.
The main documents to be registered are the Memorandum and Articles of Association. The main clauses of the Memorandum, which can subsequently be altered, specify:
- The name of the company.
- That the members' liability is limited.
- The objects of the company.
- The amount of authorised capital.
- The duration of the company if limited.
The Memorandum of Association is signed by the original members (subscribers), numbering at least two. These are often nominee companies operated by local professional firms. However, there is no legal requirement that the shareholders be local professional firms or that the shareholders be local residents. Nominee shareholders would normally sign share transfers and declarations of trust in favour of the beneficial owners, whose identities must be disclosed to the relevant authority on formation.
The Articles of Association represent the company's internal constitution and set out the rights of its members and the duties of its officers. The Articles may be altered by a special resolution, which requires a majority of two-thirds of votes. The subscribers to the Memorandum of Association appoint the first directors (any number subject to any limits in its Articles), none of whom needs to be a local resident.
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.