The following types of companies can be incorporated in Guernsey:
- Limited liability company;
- Guarantee company;
- Unlimited liability company;
- Mixed liability company;
- Protected cell company; and
- Incorporated cell company.
Guernsey companies are governed by the Companies (Guernsey) Law, 2008. The Guernsey Financial Services Commission (GFSC) is the regulatory body for the finance industry in Guernsey and has the primary objective of regulating and supervising all financial services in Guernsey, including the services of corporate service providers.
This guide outlines the main features of limited liability companies. Please contact Oak Trust Group should you require further information on these or the other types of companies listed above. An important factor in deciding to use a particular type of corporate vehicle is the tax and regulatory treatment that will be applied to the company both in Guernsey and any foreign country. It is imperative that appropriate legal and tax advice is sought in all relevant jurisdictions to determine the type of corporate vehicle that will be best suited to your circumstances.
Oak Trust Group has produced this as a general summary based on publicly available information. This document is not intended as taxation or legal advice and this document should not replace professional tax or legal advice tailored to your circumstances.
Formation of Companies
Submissions to form Guernsey companies are made to Guernsey Registry (the Guernsey Registrar of Companies) which is responsible for maintaining various registers as required under Guernsey legislation.
Setting up a company in Guernsey will involve:
- Choosing a name that must not be misleading or undesirable;
- Preparing the memorandum of incorporation which sets out the constitution of the company (including type of company and details of share capital and the founder members);
- Preparing the articles of incorporation which sets out the regulations governing the internal management and procedures of the company;
- Issuing share capital and maintaining a share register identifying the ultimate beneficial ownership of the company. A Guernsey company can issue shares with a par value or no par value. Shares must be issued in registered form with or without a share certificate. Bearer shares are not permitted;
- Advising the Registry of the type of business the company will be carrying out. If the company will be involved in banking, insurance, investment or fiduciary services or certain other sensitive activities, certain information regarding the proposed activities will need to be disclosed and a regulatory license may be required;
- Setting a registered office address which must be in Guernsey;
- Electing at least one director. Guernsey companies may have corporate directors. There is no requirement for the directors to be resident in Guernsey although, if a company does not have a Guernsey resident director, it will need to appoint a licenced corporate services provider as its resident agent; and
- Holding an inaugaral board meeting.
There are a number of annual requirements as follows:
Annual validation - before the end of January each year, every company must complete an annual validation, lodge it with Guernsey Registry and pay the filing fee (which varies according to type of company). The annual validation must state details of its directors, particulars of its resident agent, the category of business it undertakes, whether the company is exempt from audit and details of the company's issued share capital including the aggregate value of the issued share capital. Failure to file the annual validation in time will result in a late filing fee becoming payable and the company will be guilty of an offence. If no annual return has been delivered by the end of June, the company may be liable to be struck off by Guernsey Registry.
Accounting records - every company must keep accounting records sufficient to show and explain its transactions and which disclose the financial position of the company at any time and enable the directors to ensure that any accounts comply with the requirements of the Law. It is not necessary that the accounting records be kept in Guernsey. The records must be kept for at least six years.
Financial statements - must be prepared for each financial year of the company. The financial statements must be prepared in accordance with generally accepted accounting principles and must show a true and fair view of the profit or loss of the company. There is no public filing requirement in respect of the financial statements of a Guernsey company.
Audit - certain Guernsey companies may be exempt from having their financial statements audited. For those companies eligible to be exempt from audit, the shareholders must pass a waiver resolution resolving that it be exempt – this can be done annually or passed for an indefinite number of financial years.
Shareholder meetings - a company must hold its first annual general meeting within 18 months of incorporation. Thereafter it must hold an annual general meeting in every calendar year provided that no more than 15 months shall elapse between each annual general meeting.
Registers - every company must keep registers containing specified details of its members, its directors, its resident agent and its secretary which must be kept at the company's registered office. Where shares are held by nominee, there is no requirement that the details of the beneficial owner be entered in the register of members.
Resolutions - a printed copy of every special resolution and waiver resolution must be delivered to Guernsey Registry within 30 days of the resolution being passed. A copy of the ordinary resolutions of a company do not need to be delivered to Guernsey Registry, but there are exceptions, including ordinary resolutions to alter share capital.
Information available to the public - Guernsey Registry maintains a register of companies registered in Guernsey. The following information is available to the public from the Registry:
- copy certificates of incorporation;
- copy memorandum and articles of incorporation;
- annual validations;
- all special and waiver resolutions filed (and certain ordinary resolutions);
- all changes of directors and resident agents;
- registered office details; and
- the company's status (normal, dissolved or in liquidation).
Basis - A company is resident if it is incorporated in Guernsey or controlled in Guernsey by virtue of shareholding and voting rights. A company incorporated outside Guernsey is considered to be tax resident in Guernsey if its management and control is exercised in Guernsey.
Rate - Companies are subject to income tax on their profits at a rate of 0%. Guernsey tax resident companies are subject to income tax on their worldwide income, (there is no separate corporation tax). Non-Guernsey tax resident companies are taxed only on income generated in Guernsey. As a general rule this 0% rate of tax applies to all companies carrying on business on the islands. Certain specified activities in Guernsey are taxed at 10%, including banking operations, fiduciary business and domestic insurance business.
Capital gains – Capital gains are not subject to tax in Guernsey.
VAT – Guernsey does not have a VAT or sales tax system.
Foreign tax credit – Guernsey has full double tax arrangements in place with Cyprus, Hong Kong, Isle of Man, Jersey, Liechtenstein, Luxembourg, Malta, Mauritius, Monaco, Qatar, Seychelles, Singapore, and the UK. Therefore, double tax relief, potentially will be available only for tax suffered in these jurisdictions.
Dividends – No tax is withheld on dividends paid to a non-resident. Companies paying dividends to a Guernsey resident individual must deduct or account for the difference between tax incurred by the company and the shareholder's individual tax rate (20%) on actual distributions.
Tax year & filing requirements – The tax year runs on a calendar year basis and any tax return due must be submitted by 30 November after the tax year end.
Oak Trust Group Corporate Services
Our offices in Guernsey and Mauritius can offer incorporation services for companies in Guernsey, the British Virgin Islands and Mauritius, amongst other jurisdictions. We have vast experience in setting up and administering companies and we can offer the following services:
- Provision of directors
- Provision of company secretary
- Provision of registered agent
- Provision of registered office
- Provisions of nominee shareholders
- Book keeping, accounting and financial reporting
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.