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