Business in Guernsey 2011

Business in

Guernsey

5 Ogier—Fuelling a Globalised Funds Market 7 HSBC Securities Services—Security in a Brand Name 9 Ardel Group—The Smart Choice for Global Marine Services

SPECIAL REPORT 2011

Published by Global Investment I Limited and distributed with The Sunday Telegraph

BVI, Cayman, Guernsey and Jersey legal and fiduciary services Welcome to Ogier

Image courtesy of Visit Guernsey

Ogier is one of the world’s leading providers of offshore legal and fiduciary services. We advise on BVI, Cayman, Guernsey and Jersey Law and associated fiduciary services through our network of offices across the globe.

Ogier has over 850 professional and support staff, including over 200 lawyers and 300 professional administrators with the strength in depth to deliver service excellence to our clients.

We offer a proactive and flexible approach and have the expertise to handle the most complex offshore structures across all time zones.

To find out more about how Ogier can assist you, please visit us at www.ogier.com or e-mail us at welcome@ogier.com PLC Which lawyer?

Law Firm Awards 2010 Winner

Law Firm of the Year: Channel Islands

Information on the Ogier Group and details of its regulators can be accessed via our website

www.ogier.com Bahrain • British Virgin Islands • Cayman Islands • Guernsey Hong Kong • Ireland • Jersey • London • Shanghai • Tokyo

‘Best Guernsey Law Firm 2010’ Corporate International Magazine

‘Private Equity Law Firm of the Year, Guernsey 2010’ ACQ Magazine Country Awards

‘Offshore Law Firm of the Year 2010’ Chambers Europe Awards for Excellence

‘Channel Islands Law Firm of the Year 2010’ PLC Which Lawyer?

‘Offshore Law Firm of the Year, 2008 and 2009’ British Legal Awards

‘Top Offshore Law Firm, 2009’ Alpha Awards

‘IFC Legal Team of the Year, 2009’ STEP Private Client Awards

Introduction Guernsey has been involved in financial services for more than half a century.

international reviews, objective measures, re-

contribution

ports and assessments over the last decade.

the UK economy.

While much has changed over the decades,

This includes those of the IMF, the Financial

In particular the

three things remain constant: our entrepre-

Action Task Force, the Financial Stability Fo-

review

neurial approach; our determination; and our

rum, and the OECD.

that Guernsey and the other Crown Depen-

to

noted

Lyndon Trott Chief Minister, Guernsey

commitment to innovation and excellence.

Earlier this year we welcomed the pub-

dencies provide significant economic benefit

This is underpinned by our contribution to

lication of six IMF evaluation reports into

to the UK and the City of London, providing

maintaining and promoting international

Guernsey’s banking and insurance sectors.

a gateway for funds to flow into the UK econ-

financial stability and to combating and pre-

The IMF found that Guernsey’s macroeco-

omy which would not otherwise route into

venting financial crime.

nomic performance is excellent, that it has

the United Kingdom.

Guernsey is a centre of excellence in the

a highly developed legal system, and that

global finance industry. For example, we are

financial sector regulation and supervision

the leading captive insurance centre in Eu-

are of a high standard across all sectors. The

• Guernsey PLC is in very good shape to

rope, and among the top four in the world,

ratings that have been achieved by Guernsey

meet the challenges that will come and to

with the City of London and more than 40 of

in the IMF assessment are among the highest

take advantage of opportunities that arise.

the FTSE 100 companies choosing Guernsey

awarded to any jurisdiction.

The messages for businesses in London, and elsewhere, are clear:

• We are a stable economy that meets the

when establishing a captive insurance vehi-

Guernsey is a jurisdiction that thinks

highest international standards—and is seen

cle. Our captive industry is global—firms from

globally. But we also remain close to the

to meet those standards by other govern-

the UK, Europe, the USA, the Middle East,

City of London and the UK, and we make a

ments and by supra-national bodies such as

Asia, South Africa, Australia and the Carib-

strong contribution to the UK economy. Our

the Global Forum, the OECD and the IMF.

bean have established captives in Guernsey.

relationship with London is one of partner-

• We are fiscally responsible. Our fiscal

Guernsey’s contribution to maintaining

ship. A 2009 HM Treasury-commissioned

approach is geared towards maintaining our

and promoting international financial stabil-

independent review of British Offshore Fi-

fiscal and economic competitiveness.

ity and to combating and preventing financial

nancial Centres, the “Foot Review”, offered a

crime has been substantiated by a number of

solid endorsement of Guernsey’s economic

It is against this background that we continue to maintain our commitment to excellence.

Regulatory Review By: Nik van Leuven, Director General, Guernsey

fully capture all the risks the modern super-

ted to meeting high international standards

Financial Services Commission

visor should be considering. This is work in

– necessarily follows suit. The Commission

progress. Both the Commission and indus-

is commended by the regulated sector for the

As in other jurisdictions, the regulatory and supervisory framework in Guernsey is undergoing significant change. The

try should benefit from a linked project on

constructive dialogue it maintains with them,

the introduction of an extranet so that sta-

and the Commission remains determined to

tistical and other returns can be provided to

ensure that the regulations for which it is

drivers for this change include some notable

us electronically.

responsible are sensibly, practically and con-

failures of supervisory models demonstrat-

Guernsey has been active for many years

ed in the economic and financial crisis; the

in monitoring and promoting developments

emergence of revised standards being set by

in corporate governance. For example, our

the Basel Committee on Banking Supervi-

insurance regulation has long included stan-

sion, the International Association of Insur-

dards expected to be applied by regulated

ance Supervisors, the International Organi-

businesses, and the application of the prin-

zation of Securities Commissions and the

ciples and practices of good corporate gover-

Financial Action Task Force; tests of supervi-

nance have played an increasing part in the

sory equivalence imposed by groups of juris-

Commission’s supervisory activities.

dictions in order to achieve access to their

financial crisis gave particular colour to this

financial markets; the supervisory reactions

work, as did the developing recognition that

of our neighbours to developments; and the

good corporate governance and effective reg-

evolution of thinking at the Commission as a

ulatory compliance are inextricably linked.

result of our own experience.

In almost all cases in which the Commission

The

One of our immediate responses to the

has felt compelled to move to enforce the reg-

changing international regulatory environ-

ulations for which it is responsible, attitudes

ment has been to revisit our approach to

to and practices of corporate governance by

recognising and addressing risk so that we

the licensees concerned were found wanting.

can focus our resources most efficiently on

Just

as

the

regulatory

environment

the areas of greatest risk. Part of our activity

worldwide has developed to reflect issues

on risk has involved a review of the statistics

highlighted by, and consequent on, the finan-

we collect and to what extent these statistics

cial crisis, so Guernsey – which is commit-

3

structively applied.

info@globalinvestmenti.com www.globalinvestmenti.com T: +44 (0)20 7125 0579 F: +44 (0)20 7183 8393 Editor: Joseph Bove Project Manager: Kuljit Kaler Design: The Arland Group Suite 404, 324 Regent Street, London, W1B 3HH Registered in England & Wales Registration No. 06900033 The views expressed in Business in Guernsey Special Report 2011 are not necessarily those shared with the publisher, Global Investment I Limited. Wishing to reflect the true nature of Guernsey, the editor has included articles from a number of sources, and the views expressed are those of the individual contributors.

No responsibility or liability is accepted by Global Investment I Limited for any loss to any person, legal or physical, as a result of any statement, fact or figure contained in Business in Guernsey Special Report 2011. This publication is not a substitute for advice on a specific transaction.

Business in Guernsey

Guernsey homing in on emerging markets Fiona Le Poidevin, Deputy Chief Executive at Guernsey Finance, looks at how the Island is seeking to supplement business from its traditional centres, such as the City of London, with flows from the emerging economies, including the the Far East, India and Russia.

The foundations of Guernsey’s modern finance industry can be traced back to the early 1960s when a clutch of merchant banks established operations in the Island. In the subsequent 50 years, Guernsey has established itself as a leading international finance centre:

By Fiona Le Poidevin, Deputy Chief Executive, Guernsey Finance

morrow’ but a long term commitment. Guernsey Finance has been and continues to work with government, industry and the regulator to maximise our returns from the potential opportunities in these regions.

Far East. Guernsey opened a representative office in Shanghai at the

• 38 licensed banks holding £114 billion of deposits

end of 2007. We have seen delegations of senior politicians, regulators

• An investment funds industry with total business valued at more

and business leaders in both directions. Towards the end of last year,

than £274 billion.

• An asset management and stockbroking sector with more than £81 billion of assets • 150 fiduciary licensees who together hold more than £350 billion of wealth and assets in trust and company structures • The largest captive insurance industry in Europe and number four globally

the Guernsey Government signed a Tax Information Exchange Agreement (TIEA) with the Chinese central government tax authorities and a Memorandum of Understanding (MoU) for exchange and cooperation with the Shanghai Financial Services Office.

The growing interest in not just China but the wider Far East region is reflected by the fact that an increasing number of Guernsey firms have established operations on the ground in Shanghai, Hong Kong and

• A network of professional support services such as multi-jurisdictional law firms and the ‘big four’ accountancy firms • The Channel Islands Stock Exchange (CISX), which has more than 4,000 securities listed • A Guernsey Registry for company incorporations and Intellectual

Singapore. In addition, Guernsey has gained approval for its companies to list on the Hong Kong Stock Exchange (HKEx). We are now continuing our work to reach agreements with regulators and other stock exchanges as a way to help smooth the path for Guernsey providers to do business in the region.

Property (IP) • A bespoke professional development facility, the GTA University Centre

Russia. Existing business already on the Island from the region includes investment companies and funds from a range of houses. Speaking to

These providers work under the supervision of the Guernsey Finan-

these players, we hear that they are particularly attracted by the fact that

cial Services Commission (GFSC), which has grown a reputation for its

we are considered a well regulated and transparent international finance

robust yet pragmatic approach to regulation. Then there is Guernsey

centre. This message was reinforced to us when a delegation from Guern-

Finance—the joint industry and government sponsored promotional

sey visited Moscow in May this year and we are now identifying further

agency for the Island’s finance industry.

opportunities for investment and wealth management providers to in-

Guernsey Finance works extremely closely with industry on empha-

crease business links with Russia.

sising to potential clients and their advisers how the Island’s heritage has helped build an industry with significant infrastructure, expertise and in-

India. The Island is already gaining a reputation as the new home for

novation for providing a wide range of financial products and services to

Indian focused listings on London’s Alternative Investment Market (AIM).

meet the exacting needs of a global client base.

A delegation from Guernsey visited Delhi and Mumbai towards the end

For example, Guernsey’s long-standing familiarity in using trust

of 2010 to enhance financial services links between the two jurisdictions.

schemes for personal pensions has meant that it has been able to capital-

We have followed this up by attending a series of third-party conferences

ise on developments in overseas pensions to the extent that the Island is

and are planning another trip at the end of 2011. In addition, our authori-

considered the pre-eminent jurisdiction for supplying Qualifying Recog-

ties are also progressing towards signing a TIEA with India.

nised Overseas Pension Schemes (QROPS).

High standards. Guernsey has now signed a total of 28 TIEAs. The Emerging markets. Traditionally, Guernsey’s introducer markets have

Island was within the first wave of territories placed on the OECD

been UK and European centres and in particular, the City of London. In-

‘white list’ and our commitment to tax transparency and exchange

deed, Guernsey’s close relationship with London is reflected by statistics

of information has been endorsed by the OECD’s Global Forum. Also

which show the way in which the Island’s banks act as a supplier of posi-

published early in 2011 were the IMF’s evaluation reports which com-

tive net financing for the City. London also remains Guernsey’s principal

mended Guernsey’s high standards of financial regulation, supervi-

source of new business.

sion and stability along with its robust criminal justice framework.

However, several years ago, Guernsey Finance and local industry

Indeed, one of our central messages to key decision makers in

recognised that the emerging markets represented increasingly signifi-

these emerging markets is that Guernsey is a leading international

cant pools of untapped corporate and private wealth. We were keenly

finance centre offering a range of financial products and services at

aware that in these emerging markets it is not simply a case of ‘jam to-

the very highest global standards. v

Guernsey Finance • PO Box 655, St Peter Port, Guernsey GY1 3PN • T: +44 (0)1481 720071 F: +44 (0)1481 720091 email: info@guernseyfinance.com • twitter.com/guernseyfinance • guernseyfinance.com

Business in Guernsey

Fuelling a Globalised Funds Market Ogier makes good use out of a new office in Hong Kong to increase cross border fund transactions.

How have cross border fund listings evolved over the last five years?

What are the benefits of listing on the AIM in London via Guernsey for medium to large scale corporations based in the Middle East, Asia, and elsewhere?

The number of Guernsey funds (including

By William Simpson Partner, Ogier (Guernsey)

open-ended, closed-ended and non-Guern-

There is no restriction on foreign investment via Guernsey or on

sey schemes which have some element of

foreign ownership of Guernsey companies. There is no exchange con-

administration, custody or management in

trol legislation and capital can move easily in and out of companies,

Guernsey) has increased significantly over

subject to solvency. Guernsey company law, including the availability

the last five years by nearly 400 in number

of protected cell companies which have separate and distinct cells

and three times in value. The total net asset

within the same legal entity, is attractive to clients and allows them

value of funds under management and ad-

maximum flexibility in the management of their funds. The modern

ministration in Guernsey stand at an all time

Guernsey company law meshes well with the regulatory environment

high of £274.5 billion as at 30th June 2011.

of AIM and is proving to be particularly attractive to Middle and Far

We often see country or sector specific funds and the Guernsey

Eastern investment managers and investors.

Financial Services Commission (the “GFSC”) is willing to consider

In your opinion why is the Hong Kong Stock Exchange so attractive at the moment?

funds with esoteric asset classes. The GFSC will require the service providers to understand and mitigate the risks of any particular asset class.

The Hong Kong Stock Exchange (the “HKEx”) offers a great opportunity for companies wishing to attract investors based in Asia.

Do you currently believe investors are more comfortable with investing internationally?

States of Guernsey gained approval for Guernsey as an “Acceptable

Earlier this year the Commerce & Employment Department of the

The comfort level continues to increase particularly as investors

Overseas Jurisdiction” on this exchange. A Guernsey company wish-

look for new asset classes and new end locations for their money,

ing to list its shares on the HKEx can now follow a streamlined listing

which inevitably takes them into international investments. Invest-

process. Structuring a HKEx listing using Guernsey offers companies

ing internationally, via tax neutral jurisdictions, minimises the du-

the best of both worlds - a listing in one of the fastest growing eco-

plication of tax and probably puts more tax into the treasuries of

nomic areas in the world and a corporate domicile in a well-respected

the investors’ home jurisdictions than would otherwise be the case.

and well-regulated jurisdiction in the heart of Europe.

Guernsey has been particularly careful to ensure that laws are in place, with strict penalties, to deter tax evasion both in Guernsey, but more particularly abroad. The reputation generated by this approach, which is also reflected in a strong, practical regulatory regime, has encouraged people to follow this investment path.

Many jurisdictions have witnessed an increase in corporate mergers, acquisitions, and corporate insolvencies. Has Ogier been involved in any high level cases recently?

Ogier has been involved in a number of high level mergers and acquisitions and corporate insolvencies recently, both Guernsey based and

What kind of movement has Ogier seen from Asian based funds using Guernsey to list on the London Stock Exchange?

multi-jurisdictional. We have acted in relation to transactions such as the

Statistics issued by the London Stock Exchange show that as at

roders PLC by JP Morgan Worldwide Security Services. This established a

the end of 2010 there were more Guernsey incorporated companies

presence in Guernsey for JP Morgan which demonstrates the confidence

listed on the Main Market, AIM and SFM than any other tax neutral

that international organisations have in Guernsey. We have also acted

jurisdiction. A number of these funds invest solely or predominantly

on a number of very significant acquisitions throughout Europe by lo-

in China or India. In Ogier’s Hong Kong office, which includes Marcus

cally based funds. In the contentious arena we are currently acting in

Leese, a Guernsey partner and a qualified Guernsey lawyer, a sig-

a number of international matters including as Guernsey legal advisors

nificant amount of the work undertaken is for investment managers

for The Carlyle Group in claims brought by the liquidators of a Guernsey

and fund promoters located in Hong Kong, Singapore and Tokyo, with

incorporated fund. Often overlooked, Guernsey has a strong and efficient

the majority involved in hedge funds that usually invest on interna-

judicial system, with a first class judiciary, which is an essential ingredi-

tional markets.

ent in selecting a tax neutral jurisdiction..

acquisition of the private equity administration services business of Sch-

v

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Business in Guernsey

The CISX Leads By Example The rapid growth of the Exchange and the growing demand for the Exchange’s services within the Channel Islands and beyond, confirms the regard that the CISX is held within the international financial community. Its trademark, high standard of personal service delivered efficiently and pragmatically, has attracted an ever-increasing number of international issuers. At the same time,

but within the framework of internationally accepted standards. There

the Exchange’s disclosure regime and credible track record has enabled

structure (a hybrid company that has Members and Shareholders), its

the CISX to obtain recognition from regulatory authorities in some of

membership structure (listing agents are actually Members of the Ex-

the world’s leading economies. The CISX has raised its profile inter-

change), to the fact that the Market Authority meets daily to approve

nationally and occupies a significant position in the financial services

listings. A reputation for embracing innovative products and creating

sector of the Channel Islands, completing the range of services offered

market firsts has stood the Exchange well in the international financial

by financial services professionals and attracting new business to the

community. The achievement of recognition from international regula-

Channel Islands.

tors is, of course, essential for any exchange to establish credibility and

is a wealth of knowledge within the Channel Islands to service all aspects of investment business and the CISX has a considerable number of property funds listed which are professionally administered within the Islands.

The CISX itself is innovative on many levels, from its corporate

The CISX is a full service exchange, with both listing and trading

for international issuers and investors to have the confidence in the

facilities. There is a broad range of securities listed with well over 200

exchange’s role in setting standards of disclosure and for regulating its

international issuers in more than 20 jurisdictions represented on the

market in accordance with international practice. Currently the Market

CISX Official List. The CISX has established niche markets in the list-

Authority is continuing its dialogue with a number of additional juris-

ing of specialist debt securities and, within the investment funds sec-

dictions for the purpose of recognition including France and Hong Kong.

tor, particular focus on structured funds, property and the alternative

It might be helpful to appreciate that whilst the CISX is a niche ex-

funds sector. There has been increasing use of the Exchange for fund

change on a far smaller scale than others, it has adopted equally high

structures to date in 2011 particularly venture capital and private eq-

standards of regulation. The Market Authority works with many of the

uity funds and the alternative market in general.

world’s major financial institutions (that also list in London and else-

1604 SI Review A5 Landscape 15/12/05 5:49 pm Page 1 There are a number of distinct advantages including competitive

where) and with professional investment firms in many other global

pricing but ease of listing is often quoted as being the reason for se-

finance centres. More than half of all listings are securities which are

lecting the CISX. The CISX operates outside the EU and the Market Au-

domiciled in locations other than the Channel Islands making the

thority has adopted a pragmatic approach to disclosure requirements

CISX a truly global provider of Stock Exchange services. v

Geared Geared for for the future the future The CISX provides screen-based trading and Visit our website or contact us for details. the listing of investment funds, specialist debt P.O. Box 623, One Lefebvre Street, St Peter Port, or Guernsey GY1us 4PJfor details.

The instruments CISX provides screen-based andcompanies. the listing of investment Visit our website contact and shares intrading trading Guernsey Tel: +44 (0)1481 713831 Jersey Tel: +44 (0)1534 737151

funds, debtisinstruments and shares in companies. Fax: +44 (0)1481 714856 P.O. Box 623, One Lefebvre Street, St Peter Port, Guernsey GY1 4PJ Ourspecialist approach highly personalised, offering Guernsey Tel: +44 (0) 1481 713831 Jersey Tel: +44 (0) 1534 737151 of applications within a processing of Our fast-track approach isprocessing highly personalised, offering fast-track Fax: +44 (0) 1481 714856 www.cisx.com highly regulated and innovative marketplace. applications within a highly regulated and innovative marketplace. www.cisx.com

Business in Guernsey

Security in a Brand Name

HSBC Securities Services continues to attract clients as the flight to strong, highly regarded administrators continues.

Can you tell us a little bit about HSBC Securities Services in Guernsey?

seen a rebound in asset levels from pre-crisis levels for many of our

HSBC Securities Services in Guernsey is an integral part of the in-

which has shown that global assets in combined single manager and

ternational network, that HSBC leverages to provide its clients with a

fund of hedge funds had, prior to the recent market conditions, re-

tailored solution to fund administration and custody needs wherever

bounded to just short of the high water mark in 2008.

clients. This is consistent with data from recent industry research*

they are in the world. Globally, as at 30 June 2011, HSBC Securities Services has assets under administration of US$ 2.6 trillion and US$5.8 trillion assets under custody.

How are the planned regulatory changes in Europe (i.e. AIFMD) affecting your business?

HSBC Securities Services has been operating out of Guernsey since

The Alternative Investment Fund Manager Directive (AIFMD) in-

1973 during which time it has become one of the leading players in

troduces the new concept of the depositary into the alternative fund

the funds space. Core services provided include fund administra-

management world with responsibility for oversight of the fund, safe

tion, custody and related services. We are able to provide such related

keeping of assets that can be kept in safe custody and verifying that

services such as foreign exchange (FX) execution by leveraging other

the fund holds title to certain other assets. These three responsibilities

parts of the HSBC Group. HSBC Securities Services (Guernsey) Limited

place a stricter liability on the depositary. We believe that HSBC is well

is a market leader when it comes to providing administration services

placed to offer depositary expertise to our clients—with the strength

to alternative funds, and to providing custody solutions via its sister

of HSBC’s balance sheet, the security of our custody and global reach

company, HSBC Custody Services (Guernsey) Limited. We continue

(HSBC’s custody network spans 88 markets, 39 of which are HSBC enti-

to specialise in providing solutions for hedge funds, funds of hedge

ties). We anticipate a shake out in the current number of providers as

funds, emerging market and distressed debt funds.

funds migrate to service providers who are able to demonstrate those

We aim to differentiate ourselves by the quality of our relationship

capabilities.

management team and the service quality we provide our clients. We are also continually investing in enhancing our products and services.

What trends do you see in new fund launches?

HSBC Securities Services has a global product team which drives our

The key trend we are seeing with new fund launches is that new

product strategy and development. By way of example we are in the

managers are finding it much more difficult to raise capital—we are

midst of a fund of hedge fund strategic investment programme, the

seeing more success from established managers with a demonstrable

objective of which is to create a market leading product and service

track record. We have seen a flight to quality from other providers to

offering to this important sector.

HSBC, along with, for example, wealth management platforms looking

The HSBC Group (HSBC) is also able to offer an integrated prime

for a strong custodian with trade execution capabilities.

services platform to our clients to provide them with seamless support for their custodial, financing, trade execution and collateral management needs by combining the security of its custody proposition with HSBC’s Global Banking and Markets products.

What areas of growth are you currently focused on?

With the situation in Europe deteriorating and the US debt problems causing even more instability and loss of investor confidence, how do you see your business being impacted in the next six months and how will you deal with the challenges that these potential crisis’ present?

We are committed to growing the business in a focused way ac-

The macro-economic situation remains uncertain for the reasons

cording to where our strengths lie. Whilst we have a good track record

you give. In these times, clients, driven by investor demand, require a

in the provision of fund services across most fund types, our heritage

strong administrator and custodian as the transparency and security of

lays with hedge funds, fund of funds and the alternative funds sectors.

assets is paramount. HSBC is seen as one of the most stable organisa-

HSBC’s global footprint has strength in both developed and emerg-

tions with a strong balance sheet and a geographically diverse footprint.

ing markets. Central to our strategy is leveraging this global footprint to

Our success is linked to our clients’ success. It is easy to lose sight of

our clients’ benefit. Given this, we expect growth to continue to come

this and we will continue to stay close to, and focus on, our clients and

from both the developed and, increasingly, emerging markets. With re-

supporting their needs. With the demand for increased transparency

spect to the emerging markets we are seeing an increase in new busi-

we are continuing to invest in our client information delivery platforms

ness opportunities in this space. We are also able to provide our existing

to provide our clients with access to the reporting and data that they

clients with our expertise in accessing these emerging markets. We can

and their investors demand. v

point to specific examples where we have been able to assist our clients Matthew_210x50H_01.pdf 1 09/09/2011 6:59 PM byHSBC2934_ facilitating access to our knowledge, experience and contacts in the

* HFMWeek’s 16th Biannual Assets under Administration survey (see 26 May edition)

emerging markets to support their growth aspirations in this area.

Piece authored by Amit Taylor, Managing Director, HSBC Securities Services (Guern-

Whilst there has been recent volatility in the markets, we have

sey)Limited.

ell

Business in Guernsey

Inside Perspective:

Mourant Ozannes

The evolution of the Guernsey Funds Industry.

Guernsey’s funds industry goes back over 30 years when the first retail unit trusts were established. At that time, Jersey had already established a firm foot-

Gavin Farrell hold with these retail products. Lacking first mover Partneradvantage encouraged Guernsey to find +44alternative 1481 731 457source of revenues from the funds sector and thus the Island opened gavin.farrell@mourantozannes.com

its arms to alternative product types that weren’t necessarily acceptable in Jersey.

From the late 1980’s onwards, Guernsey be-

By Gavin Farrell Partner, Mourant Ozannes

gan to attract the then smaller closed ended fund market and many smaller manage-

ended funds it means there are no liquidity requirements that would

ment firms and start-up funds. By the time

trigger the Fund of funds to put in an application for redemption at

that Jersey made a significant attempt to at-

the underlying funds level. This structure has led to rapid growth in

tract the growing alternative funds market it found that it was already

the London market for these types of funds. In turn it has created a

entrenched in Guernsey. The growth of the alternative funds market

dynamic infrastructure in Guernsey for the Fund of funds market and

helped place Guernsey on the map amongst leading off-shore fund juris-

has guided Guernsey to one of the leading positions worldwide for the

dictions. Guernsey had realised that within the off-shore world, the key

marketing and services provided to these managers.

thing is to have or get a hold of a new line of products, create a precedent,

Guernsey, like many other jurisdictions, is currently facing many challenges from legislative changes in both the EU and US. In the EU spe-

and the rest more often than not will follow suit.

Another interesting development in Guernsey’s history is the birth-

cifically the Alternative Investment Fund Managers Directive (AIFMD)

ing of the private equity industry. In the 1980’s and 1990’s private equity

has been met by most jurisdictions with levels of acceptance, but the

IFLR 1000, 2011 GavinThe as aGuernLeadingEU Commission has allowed voices to be heard until the final draft is umber ofwas years at considered to be in an alternative andrecognises start-up category.

Lawyer. s in both their London expected in November. Under the new regime, in the short term Guernsey offering to administer these funds and host them as a business site ual-qualified sey funds will still be able to benefit from the private placement regimes was French assisted and by the Guernsey ServicesaCommission adopting a GavinFinancial is considered "good commercial within individual member states whilst those regimes continue. In the more open and pragmatic approach to these types of products. As Guernhas multi-jurisdictional operator", Legal 500, 2011. sey attracted nce and specialises in more and more of these private equity products a body of longer term, it is anticipated that eventually Guernsey will look for “juMedia Group rates Gavin as created "World a risdictional recognition” by the EU to allow for so called “pass-porting” experience and expertiseLegal accumulated across the Island.

This Leading". of Guernsey products into the EU. AIFMD is not expected to hinder the significant snowball effect, and Guernsey soon became a worldwide leadolicitor (England) infinancial 1998, centres for the private equity funds market and as a funds industry over the long term and may in the short term encourage er amongst "Charismatic and creative, with wonderful d'appel de Parisforinthe 1998 home leading private equity fund administrators. attention to detail," Chambers and Partners, more fund structures to be established in Guernsey. uernsey) in 2002.

The key to Guernsey’s fund industry is to attract a new business A key aspect of the private equity industry on the Island is the 2010. line early so that London and other jurisdictions gain a certain level of number of high profile players who have established a physical presmember of the Guernsey good,’ client. and comfort with the service providers and level of expertise. This is borne ence within the Island, "'He and was who very operate bothsays the one management ociation (GIFA) and a 'Responsive and generally available hours out of the experience of the way that the funds industry has develadministration of their products in Guernsey. The likes of Guy after Hands nce Sectorfrom Group (FSG). oped in Guernsey and Jersey along different product lines. If you think Terra Firma, and John and then counsel Better Capiin aMoulton way thatofaAlchemy lot of Guernsey aren't'," es say: tal, Apax Funds, and Primera of securitisation products—Jersey took the lead; if you think of propFunds2010. have all established their own adIFLR 1000, erty holding vehicles—Jersey would also tend to be the jurisdiction of ministration in Guernsey. What these management groups have all op 25 investment funds Who's Who Legal lists Gavin in private funds. choice. However if your interest is in private equity, Funds of funds, found is a pool of experienced staff and a cost effective centre for ope World's Leading Lawyers PLCtheir Which Lawyer endorses Gavinfor forthem Banking: and UK listed close ended products, Guernsey would most probably be eration and interface with investor base.

It is attractive 11 & 2009.to take direct control of administration, rather than be dependent your first choice. So very often it is a herd mentality and first mover lenders and borrowers and Investment Funds. d for his investment funds being handled by third party administrators. jurisdictional advantage, purely and simply that leads fund product upon such functions "Knowledgeable and plugged-in," Legal 500, development; once you know the legal and regulatory framework of a While Guernsey has maintained a large presence in alternative mercially minded outlook'.

2009. jurisdiction, and the infrastructure that is in place, why reinvent the funds andhaving private equity funds, the Island has also been a dominant tional experience, "Consistently popular," Legal UK, 2009. wheel in another jurisdiction? The number of promotional trips taking player in the Fund of funds market. Fund of funds cover500 a wide specand Paris," Chambers place involving various government ministers and the private industrum of underlying funds where the main manager makes the selec"Impresses with his 'speed and depth of try is immense. No one is resting on their laurels and no one thinks tion of underlying funds to fit the investment strategy of each parresponse', is highly visible in the market," Legal yer for difficult the golden egg will keep hatching for decades. As the funds industicularquestions Fund of funds. While Guernsey is not a typical centre for hedge 500 UK, 2009. demand for his funds try in Guernsey has done in the past, it will continue to innovate and funds, it is a major player in the Fund of hedge funds arena. Evidence

helpful and technically excellent," managed

by Thames River Capital, Aida and s UK, 2011.of this are Fund of funds"Very the FRM stable of products.

Because most of these funds are close Chambers Europe.

LONDON

build new long term relationships. v

By Gavin Farrell, Partner, Mourant Ozannes

8

Local expertise.

International reputation.

Mourant Ozannes has more top tier legal directory* rankings than any other offshore law firm. *CHAMBERS, IFLR, LEGAL 500 To find out more visit mourantozannes.com

CAYMAN GUERNSEY JERSEY

Business in Guernsey

Guernsey – The Smart Choice for Global Marine Services Ardel Group provides a holistic approach for a Global Clientele.

Gary Le Cras, Manager Ardel Marine

Ardel Group, formerly The Bachmann Group was formed in 1974 by Peter Bachmann. The company origi-

look for future growth.

nally sold motorboats before expanding

and Ardel predominantly registers its

into financial services, initially adminis-

yachts throughout the member juris-

tering structures related only to the Ma-

dictions, but also in territories includ-

rine industry. As Guernsey’s financial sec-

ing Malta, The Marshall Islands and The

tor burgeoned over the last few decades,

Cook Islands.

Guernsey is a member of the “Red Ensign” Group, the world’s leading flag,

subsequently the Group developed sub-

The Red Ensign Group is comprised

stantially along with many other financial

of the UK, Crown Dependencies—Isle of

services organisations on the Island.

Man, Jersey, Guernsey and UK overseas

Ardel has come a long way from its

Territories, all of which operate ship-

humble beginnings to become one of

ping registers. Some registers place dif-

the largest independent fiduciary ser-

fering restrictions on the size and type

Gerry Williams, Chief Executive Ardel Group

vices companies in the Channel Islands, with operations in the UK,

of vessel they will admit. Guernsey’s register does not currently allow

Switzerland and New Zealand. Ardel offers the full range of trust and

yachts of over 150 gross tons although legislation is under review in

company administration services, including fiduciary structures for

an effort to increase this to 400. Guernsey has no restriction on the

both corporate and individual clients and international pension man-

length of yachts to be used for private and pleasure purposes, however

agement. The Group also has a fund administration division that ad-

does operate a maximum length of 24 metres for any yachts engaging

ministers a wide range of investment fund structures including closed

in commercially activity.

Guernsey’s enviable position sitting outside the EU and VAT re-

and open ended funds, unit trusts and limited partnerships.

Being true to its roots, Ardel’s Marine division still constitutes an

gimes offers clear benefits. Non-EU yacht owners may select a Guern-

important part of the Group’s operation today. The division and its ac-

sey company and flag to obtain VAT Free sailing (known as temporary

tivities have evolved significantly over the years, and recently with the

importation), throughout Europe for up to 18 months at a time.

ongoing popularity of super yachts, owners are increasingly looking to Ardel for our expertise and solution provision.

VAT is a complex and highly specialised area and, perhaps surprisingly, the interpretation and application of VAT restrictions and regu-

Super yachts are generally owned through a limited liability com-

lation is far from consistent across the EU. Ardel works closely with

pany. Ardel administers companies incorporated in a range of juris-

qualified VAT planning experts to offer clients the specialist advice they

dictions each with its own benefits but all offering the advantages of

require. There are many structures in place for yacht owners, common-

enhanced confidentiality for the client, potential tax mitigation with

ly known as ‘leasing or charter arrangements’ from a wide spectrum

the appropriate structuring, and the simplification of estate planning.

of jurisdictions. Ardel is able to manage and operate any of this type of

Each individual’s unique situation, intended use of his vessel and the

arrangement that is recognised within the respective jurisdiction.

proposed cruising area will all be carefully considered before deciding on the most suitable jurisdiction for the entity’s incorporation.

An area of particular interest and growth has been as a result of recent changes in the application of EU Social Security legislation. Us-

Ardel’s marine client base is predominantly European. The number of clients has remained steady however the type of activity un-

ing Guernsey registered companies to employ yacht crews can offer savings of up to 12.8% for the owner in social securities dues.

dertaken on their behalf has increased. Despite the difficult economic climate in which the world has found itself in the past few years,

One Stop Shop

the company has been successful in maintaining its market position

Ardel administers approximately 2,500 entities holding a wide

through developing its product and service offering. Payroll admin-

range of asset type. These include residential and commercial prop-

istration, crew management, employment services are just a few ex-

erty, works of art and even racehorses unlike many of its competitors

amples of assistance which today’s super yacht owner requires.

that often restrict investments to more ‘traditional’ asset classes. The

Looking ahead, order books for new-builds looking healthier. The Far East and South America and other emerging markets in those re-

company develops bespoke arrangements for each client depending on their personal circumstances.

gions such as Brazil and China have increasing spending power and

For many of their marine clients, the yacht-owning entity will be one

will be seeking options for disposing of some of their fortunes. Owning

of several managed by Ardel as part of a larger wealth management and

a super yacht will always have certain kudos for the super-rich and it

planning structure. With expertise right across the fiduciary field this

is to these new markets that anyone working in this industry must

‘one-stop-shop’ holistic approach is one that many clients prefer.

email: Gary.lecras@ardeltrust.com • ardelholdings.com

10

v

Freedom.

Trust, Company and Fund Administration from a leader in the field.

Founded in 1974, Ardel is a leading independent fiduciary. With a strong belief in building lasting relationships our experienced practitioners work closely with private and corporate clients and their advisers to provide first class administration services for trusts, company management, marine, funds and pension products.

For further information contact Ian Rouget on +44 (0) 1481 723573, ian.rouget@ardeltrust.com or visit www.ardelholdings.com Ardel Trust Company (Guernsey) Limited, PO Box 175, Frances House, Sir William Place, St Peter Port, Guernsey GY1 4HQ.

Guernsey / London / Switzerland / New Zealand The company advises all clients to consult their own professional advisor on all legal, tax and fiscal matters as necessary.

Regulated by the Guernsey Financial Services Commission in accordance with The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2000 as amended 2008. Company registration number: 5487.

If you’re looking for an innovative financial solution there’s one place you should look

where?

Guernsey combines 50 years’ financial heritage with a modern, well regulated infrastructure.

The result is an international financial centre with the pedigree, experience and expertise to meet even the most exacting of needs, be they across banking, fiduciary services, investment funds, insurance, asset management or overseas pensions.

Add to this our reputation for innovation and a broad range of service providers, including a full set of support services and you can see why Guernsey offers an ideal location for your business.

Make Guernsey your first port of call.

Telephone: +44 (0) 1481 720071 Email: info@guernseyfinance.com

BANKING • FIDUCIARY • FUNDS • INSURANCE • ASSET MANAGEMENT

guernseyfinance.com