Business in Guernsey 2011

7/29/2019 Business in Guernsey 2011

1/12

Business inGuernsey

SPECIAL REPORT 2011Published by Global Investment I Limited and distributed with The Sunday Telegraph

5OgierFuelling a Globalised Funds Market7HSBC Securities ServicesSecurity in a Brand Name9 Ardel GroupThe Smart Choice for Global Marine Services


2/12

www.ogier.com

Bahrain British Virgin IslandsCayman IslandsGuernseyHong KongIrelandJerseyLondonShanghaiTokyo

Ogier is one of the worlds leading providers of offshore legal

and duciary services. We advise on BVI, Cayman, Guernsey

and Jersey Law and associated duciary services through our

network of ofces 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 exible approach and have theexpertise to handle the most complex offshore structures

across all time zones.

To nd out more about how Ogier can assist you, please visit

us at www.ogier.com or e-mail us at [email protected]

Best Guernsey Law Firm 2010Corporate International Magazine

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

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

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

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

Top Offshore Law Firm, 2009Alpha Awards

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

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

BVI, Cayman, Guernsey and Jersey

legal and fduciary servicesWelcome to Ogier

PLCWhich lawyer?

Law Firm Awards 2010Winner

Law Firm of the Year: Channel Islands

Image courtesy of Visit Guernsey


3/123

IntroductionGuernsey has been involved in nancial

services for more than half a century.

While much has changed over the decades,

three things remain constant: our entrepre-

neurial approach; our determination; and our

commitment to innovation and excellence.

This is underpinned by our contribution to

maintaining and promoting international

nancial stability and to combating and pre-

venting nancial crime.

Guernsey is a centre of excellence in the

global nance industry. For example, we are

the leading captive insurance centre in Eu-

rope, and among the top four in the world,

with the City of London and more than 40 of

the FTSE 100 companies choosing Guernsey

when establishing a captive insurance vehi-cle. Our captive industry is globalrms from

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

Asia, South Africa, Australia and the Carib-

bean have established captives in Guernsey.

Guernseys contribution to maintaining

and promoting international nancial stabil-

ity and to combating and preventing nancial

crime has been substantiated by a number of

international reviews, objective measures, re-

ports and assessments over the last decade.

This includes those of the IMF, the Financial

Action Task Force, the Financial Stability Fo-

rum, and the OECD.

Earlier this year we welcomed the pub-

lication of six IMF evaluation reports into

Guernseys banking and insurance sectors.

The IMF found that Guernseys macroeco-

nomic performance is excellent, that it has

a highly developed legal system, and that

nancial sector regulation and supervision

are of a high standard across all sectors. The

ratings that have been achieved by Guernsey

in the IMF assessment are among the highest

awarded to any jurisdiction.

Guernsey is a jurisdiction that thinksglobally. But we also remain close to the

City of London and the UK, and we make a

strong contribution to the UK economy. Our

relationship with London is one of partner-

ship. A 2009 HM Treasury-commissioned

independent review of British Offshore Fi-

nancial Centres, the Foot Review, offered a

solid endorsement of Guernseys economic

contribution to

the UK economy.

In particular the

review noted

that Guernsey and the other Crown Depen-

dencies provide signicant economic benet

to the UK and the City of London, providing

a gateway for funds to ow into the UK econ-

omy which would not otherwise route into

the United Kingdom.

The messages for businesses in London,

and elsewhere, are clear:

Guernsey PLC is in very good shape to

meet the challenges that will come and to

take advantage of opportunities that arise.

We are a stable economy that meets the

highest international standardsand is seento meet those standards by other govern-

ments and by supra-national bodies such as

the Global Forum, the OECD and the IMF.

We are scally responsible. Our scal

approach is geared towards maintaining our

scal and economic competitiveness.

It is against this background that we contin-

ue to maintain our commitment to excellence.

[email protected]: +44 (0)20 7125 0579F: +44 (0)20 7183 8393

Editor: Joseph BoveProject Manager: Kuljit KalerDesign: The Arland Group

Suite 404, 324 Regent Street,London, W1B 3HHRegistered in England & WalesRegistration No. 06900033

Te views expressed in Business in Guernsey Special Report2011 are not necessarily those shared with the publisher, GlobalInvestment I Limited. Wishing to reect the true nature oGuernsey, the editor has included articles rom a number o

sources, and the views expressed are those o the individualcontributors.No responsibility or liability is accepted by Global Invest-ment I Limited or any loss to any person, legal or physical,as a result o any statement, act or fgure contained in Busi-ness in Guernsey Special Report 2011. Tis publication is nota substitute or advice on a specifc transaction.

Lyndon Trott

Chief Minister, Guernsey

By: Nik van Leuven, Director General, Guernsey

Financial Services Commission

As in other jurisdictions, the regulatory

and supervisory framework in Guernsey

is undergoing signicant change. The

drivers for this change include some notable

failures of supervisory models demonstrat-

ed in the economic and nancial crisis; the

emergence of revised standards being set by

the Basel Committee on Banking Supervi-

sion, the International Association of Insur-

ance Supervisors, the International Organi-

zation of Securities Commissions and the

Financial Action Task Force; tests of supervi-

sory equivalence imposed by groups of juris-

dictions in order to achieve access to their

nancial markets; the supervisory reactions

of our neighbours to developments; and the

evolution of thinking at the Commission as a

result of our own experience.

One of our immediate responses to the

changing international regulatory environ-

ment has been to revisit our approach to

recognising and addressing risk so that wecan focus our resources most efciently on

the areas of greatest risk. Part of our activity

on risk has involved a review of the statistics

we collect and to what extent these statistics

fully capture all the risks the modern super-

visor should be considering. This is work in

progress. Both the Commission and indus-

try should benet from a linked project on

the introduction of an extranet so that sta-

tistical and other returns can be provided to

us electronically.

Guernsey has been active for many years

in monitoring and promoting developments

in corporate governance. For example, our

insurance regulation has long included stan-

dards expected to be applied by regulated

businesses, and the application of the prin-

ciples and practices of good corporate gover-

nance have played an increasing part in the

Commissions supervisory activities. The

nancial crisis gave particular colour to this

work, as did the developing recognition that

good corporate governance and effective reg-

ulatory compliance are inextricably linked.

In almost all cases in which the Commission

has felt compelled to move to enforce the reg-

ulations for which it is responsible, attitudes

to and practices of corporate governance by

the licensees concerned were found wanting.Just as the regulatory environment

worldwide has developed to reect issues

highlighted by, and consequent on, the nan-

cial crisis, so Guernsey which is commit-

ted to meeting high international standards

necessarily follows suit. The Commission

is commended by the regulated sector for the

constructive dialogue it maintains with them,

and the Commission remains determined to

ensure that the regulations for which it is

responsible are sensibly, practically and con-

structively applied.

Regulatory Review


4/12

Business in Guernsey

Guernsey homing in onemerging marketsFiona Le Poidevin, Deputy Chief Executive at Guernsey Finance, looks at how the Islandis seeking to supplement business from its traditional centres, such as the City of London,with ows from the emerging economies, including the the Far East, India and Russia.

The foundations of Guernseys modern nance 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 inter-

national nance centre:

38 licensed banks holding 114 billion of deposits

An investment funds industry with total business valued at morethan 274 billion.

An asset management and stockbroking sector with more than 81

billion of assets

150 duciary 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

A network of professional support services such as multi-jurisdic-

tional law rms and the big four accountancy rms

The Channel Islands Stock Exchange (CISX), which has more than

4,000 securities listed

A Guernsey Registry for company incorporations and IntellectualProperty (IP)

A bespoke professional development facility, the GTA Univer-

sity Centre

These providers work under the supervision of the Guernsey Finan-

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

robust yet pragmatic approach to regulation. Then there is Guernsey

Financethe joint industry and government sponsored promotional

agency for the Islands nance industry.

Guernsey Finance works extremely closely with industry on empha-

sising to potential clients and their advisers how the Islands heritage has

helped build an industry with signicant infrastructure, expertise and in-

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

meet the exacting needs of a global client base.

For example, Guernseys long-standing familiarity in using trust

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

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

considered the pre-eminent jurisdiction for supplying Qualifying Recog-

nised Overseas Pension Schemes (QROPS).

Emerging markets. Traditionally, Guernseys introducer markets havebeen UK and European centres and in particular, the City of London. In-

deed, Guernseys close relationship with London is reected by statistics

which show the way in which the Islands banks act as a supplier of posi-

tive net nancing for the City. London also remains Guernseys principal

source of new business.However, several years ago, Guernsey Finance and local industry

recognised that the emerging markets represented increasingly signi-

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

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

morrow but a long term commitment. Guernsey Finance has been and

continues to work with government, industry and the regulator to maxi-

mise our returns from the potential opportunities in these regions.

Far East.Guernsey opened a representative ofce in Shanghai at theend of 2007. We have seen delegations of senior politicians, regulators

and business leaders in both directions. Towards the end of last year,the Guernsey Government signed a Tax Information Exchange Agree-

ment (TIEA) with the Chinese central government tax authorities and

a Memorandum of Understanding (MoU) for exchange and coopera-

tion with the Shanghai Financial Services Ofce.

The growing interest in not just China but the wider Far East region

is reected by the fact that an increasing number of Guernsey rms

have established operations on the ground in Shanghai, Hong Kong and

Singapore. In addition, Guernsey has gained approval for its companies

to list on the Hong Kong Stock Exchange (HKEx). We are now continu-

ing our work to reach agreements with regulators and other stock ex-

changes as a way to help smooth the path for Guernsey providers to do

business in the region.

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

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

we are considered a well regulated and transparent international nance

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

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

opportunities for investment and wealth management providers to in-

crease business links with Russia.

India.The Island is already gaining a reputation as the new home forIndian focused listings on Londons Alternative Investment Market (AIM).

A delegation from Guernsey visited Delhi and Mumbai towards the end

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

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

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

ties are also progressing towards signing a TIEA with India.

High standards.Guernsey has now signed a total of 28 TIEAs. TheIsland was within the rst wave of territories placed on the OECD

white list and our commitment to tax transparency and exchange

of information has been endorsed by the OECDs Global Forum. Also

published early in 2011 were the IMFs evaluation reports which com-

mended Guernseys high standards of nancial regulation, supervi-

sion and stability along with its robust criminal justice framework.Indeed, one of our central messages to key decision makers in

these emerging markets is that Guernsey is a leading international

nance centre offering a range of nancial products and services at

the very highest global standards.v

By Fiona Le Poidevin,Deputy Chief Executive,Guernsey Finance

Guernsey Finance PO Box 655, St Peter Port, Guernsey GY1 3PN T: +44 (0)1481 720071 F: +44 (0)1481 720091email: [email protected] twitter.com/guernseynance guernseynance.com


5/12

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

5

How have cross border fund listings

evolved over the last ve years?

The number of Guernsey funds (including

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

sey schemes which have some element of

administration, custody or management in

Guernsey) has increased signicantly over

the last ve years by nearly 400 in number

and three times in value. The total net asset

value of funds under management and ad-

ministration in Guernsey stand at an all time

high of 274.5 billion as at 30th June 2011.We often see country or sector specic funds and the Guernsey

Financial Services Commission (the GFSC) is willing to consider

funds with esoteric asset classes. The GFSC will require the service

providers to understand and mitigate the risks of any particular as-

set class.

Do you currently believe investors are more comfortable

with investing internationally?

The comfort level continues to increase particularly as investors

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

which inevitably takes them into international investments. Invest-

ing internationally, via tax neutral jurisdictions, minimises the du-plication of tax and probably puts more tax into the treasuries of

the investors home jurisdictions than would otherwise be the case.

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 ap-

proach, which is also reected in a strong, practical regulatory re-

gime, has encouraged people to follow this investment path.

What kind of movement has Ogier seen from Asian based

funds using Guernsey to list on the London Stock Exchange?

Statistics issued by the London Stock Exchange show that as at

the end of 2010 there were more Guernsey incorporated companies

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

jurisdiction. A number of these funds invest solely or predominantly

in China or India. In Ogiers Hong Kong ofce, which includes Marcus

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

nicant amount of the work undertaken is for investment managers

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

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

tional markets.

What are the benets of listing on the AIM in London via Guern-

sey for medium to large scale corporations based in the Middle

East, Asia, and elsewhere?

There is no restriction on foreign investment via Guernsey or on

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

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

subject to solvency. Guernsey company law, including the availability

of protected cell companies which have separate and distinct cells

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

maximum exibility in the management of their funds. The modern

Guernsey company law meshes well with the regulatory environment

of AIM and is proving to be particularly attractive to Middle and FarEastern investment managers and investors.

In your opinion why is the Hong Kong Stock Exchange so attrac-

tive at the moment?

The Hong Kong Stock Exchange (the HKEx) offers a great oppor-

tunity for companies wishing to attract investors based in Asia.

Earlier this year the Commerce & Employment Department of the

States of Guernsey gained approval for Guernsey as an Acceptable

Overseas Jurisdiction on this exchange. A Guernsey company wish-

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

process. Structuring a HKEx listing using Guernsey offers companies

the best of both worlds - a listing in one of the fastest growing eco-nomic areas in the world and a corporate domicile in a well-respected

and well-regulated jurisdiction in the heart of Europe.

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 ac-

quisitions and corporate insolvencies recently, both Guernsey based and

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

acquisition of the private equity administration services business of Sch-

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

presence in Guernsey for JP Morgan which demonstrates the condence

that international organisations have in Guernsey. We have also acted

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

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

a number of international matters including as Guernsey legal advisors

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

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

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

ent in selecting a tax neutral jurisdiction.. v


By William Simpson

Partner, Ogier

(Guernsey)

For the Best Rates in local and International Courier and Cargo Services

visit Global Logistic Solution Services online atglslogistics.co.uk

Low Cost express parCeL deLivery serviCe

delivering door to door worldwide


6/12

Geared for

the future

The CISX provides screen-based trading and

the listing of investment funds, specialist debt

instruments and shares in trading companies.

Our approach is highly personalised, offering

fast-track processing of applications within a

highly regulated and innovative marketplace.

Visit our website or contact us for details.

P.O. Box 623, One Lefebvre Street, St Peter Por t, Guernsey GY1 4PJ

Guernsey Tel: +44 (0)1481 713831 Jersey Tel: +44 (0)1534 737151

Fax: +44 (0)1481 714856

www.cisx.com

Geared for

the future

The CISX Leads By ExampleThe rapid growth of the Exchange and the growing demand for

the Exchanges services within the Channel Islands and beyond,

conrms the regard that the CISX is held within the international

nancial community. Its trademark, high standard of personal

service delivered efciently and pragmatically, has attracted an

ever-increasing number of international issuers. At the same time,

the Exchanges disclosure regime and credible track record has enabled

the CISX to obtain recognition from regulatory authorities in some of

the worlds leading economies. The CISX has raised its prole inter-

nationally and occupies a signicant position in the nancial services

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

by nancial services professionals and attracting new business to the

Channel Islands.

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

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

international issuers in more than 20 jurisdictions represented on theCISX Ofcial List. The CISX has established niche markets in the list-

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

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

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

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

uity funds and the alternative market in general.

There are a number of distinct advantages including competitive

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

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

thority has adopted a pragmatic approach to disclosure requirements

but within the framework of internationally accepted standards. There

is a wealth of knowledge within the Channel Islands to service all as-

pects 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

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

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

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

listings. A reputation for embracing innovative products and creating

market rsts has stood the Exchange well in the international nancial

community. The achievement of recognition from international regula-

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

for international issuers and investors to have the condence in the

exchanges role in setting standards of disclosure and for regulating its

market in accordance with international practice. Currently the MarketAuthority is continuing its dialogue with a number of additional juris-

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

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

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

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

worlds major nancial institutions (that also list in London and else-

where) and with professional investment rms in many other global

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

domiciled in locations other than the Channel Islands making the

CISX a truly global provider of Stock Exchange services.v



7/12

_ _ _

Security in a Brand NameHSBC Securities Services continues to attract clients as the ight to strong, highly regarded administrators continues.

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

Guernsey?

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

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

tailored solution to fund administration and custody needs wherever

they are in the world. Globally, as at 30 June 2011, HSBC Securities Ser-

vices has assets under administration of US$ 2.6 trillion and US$5.8

trillion assets under custody.

HSBC Securities Services has been operating out of Guernsey since

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

the funds space. Core services provided include fund administra-

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

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

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

is a market leader when it comes to providing administration servicesto alternative funds, and to providing custody solutions via its sister

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

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

funds, emerging market and distressed debt funds.

We aim to differentiate ourselves by the quality of our relationship

management team and the service quality we provide our clients. We

are also continually investing in enhancing our products and services.

HSBC Securities Services has a global product team which drives our

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

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

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

offering to this important sector.The HSBC Group (HSBC) is also able to offer an integrated prime

services platform to our clients to provide them with seamless sup-

port for their custodial, nancing, trade execution and collateral man-

agement needs by combining the security of its custody proposition

with HSBCs Global Banking and Markets products.

What areas of growth are you currently focused on?

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

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

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

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

HSBCs global footprint has strength in both developed and emerg-

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

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

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

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

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

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

point to specic examples where we have been able to assist our clients

by facilitating access to our knowledge, experience and contacts in the

emerging markets to support their growth aspirations in this area.

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

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

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

which has shown that global assets in combined single manager and

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

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

How are the planned regulatory changes in Europe (i.e. AIFMD)

affecting your business?

The Alternative Investment Fund Manager Directive (AIFMD) in-

troduces the new concept of the depositary into the alternative fund

management world with responsibility for oversight of the fund, safe

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

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

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

placed to offer depositary expertise to our clientswith the strengthof HSBCs balance sheet, the security of our custody and global reach

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

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

funds migrate to service providers who are able to demonstrate those

capabilities.

What trends do you see in new fund launches?

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

managers are nding it much more difcult to raise capitalwe are

seeing more success from established managers with a demonstrable

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

HSBC, along with, for example, wealth management platforms lookingfor a strong custodian with trade execution capabilities.

With the situation in Europe deteriorating and the US debt

problems causing even more instability and loss of investor con-

dence, 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?

The macro-economic situation remains uncertain for the reasons

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

strong administrator and custodian as the transparency and security of

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

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

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

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

supporting their needs. With the demand for increased transparency

we are continuing to invest in our client information delivery platforms

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

and their investors demand.v

* HFMWeeks 16th Biannual Assets under Administration survey (see 26 May edition)

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

sey)Limited.



8/12

Inside Perspective: Mourant OzannesThe evolution of the Guernsey Funds Industry.

8

Guernseys funds industry goes back

over 30 years when the rst retail unit

trusts were established. At that time,

Jersey had already established a rm foot-

hold with these retail products. Lacking rst

mover advantage encouraged Guernsey to

nd alternative source of revenues from the

funds sector and thus the Island opened

its arms to alternative product types that

werent necessarily acceptable in Jersey.

From the late 1980s onwards, Guernsey be-gan to attract the then smaller closed ended

fund market and many smaller manage-

ment rms and start-up funds. By the time

that Jersey made a signicant attempt to at-

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

entrenched in Guernsey. The growth of the alternative funds market

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

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

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

and the rest more often than not will follow suit.

Another interesting development in Guernseys history is the birth-

ing of the private equity industry. In the 1980s and 1990s private equitywas considered to be in an alternative and start-up category. The Guern-

sey offering to administer these funds and host them as a business site

was assisted by the Guernsey Financial Services Commission adopting a

more open and pragmatic approach to these types of products. As Guern-

sey attracted more and more of these private equity products a body of

experience and expertise accumulated across the Island. This created a

signicant snowball effect, and Guernsey soon became a worldwide lead-

er amongst nancial centres for the private equity funds market and as a

home for the leading private equity fund administrators.

A key aspect of the private equity industry on the Island is the

number of high prole players who have established a physical pres-

ence within the Island, and who operate both the management and

administration of their products in Guernsey. The likes of Guy Hands

from Terra Firma, and John Moulton of Alchemy and then Better Capi-

tal, Apax Funds, and Primera Funds have all established their own ad-

ministration in Guernsey. What these management groups have all

found is a pool of experienced staff and a cost effective centre for op-

eration and interface with their investor base. It is attractive for them

to take direct control of administration, rather than be dependent

upon such functions being handled by third party administrators.

While Guernsey has maintained a large presence in alternative

funds and private equity funds, the Island has also been a dominant

player in the Fund of funds market. Fund of funds cover a wide spec-

trum of underlying funds where the main manager makes the selec-

tion of underlying funds to t the investment strategy of each par-ticular Fund of funds. While Guernsey is not a typical centre for hedge

funds, it is a major player in the Fund of hedge funds arena. Evidence

of this are Fund of funds managed by Thames River Capital, Aida and

the FRM stable of products. Because most of these funds are close

ended funds it means there are no liquidity requirements that would

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

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

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

dynamic infrastructure in Guernsey for the Fund of funds market and

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

marketing and services provided to these managers.

Guernsey, like many other jurisdictions, is currently facing many

challenges from legislative changes in both the EU and US. In the EU spe-

cically the Alternative Investment Fund Managers Directive (AIFMD)

has been met by most jurisdictions with levels of acceptance, but theEU Commission has allowed voices to be heard until the nal draft is

expected in November. Under the new regime, in the short term Guern-

sey funds will still be able to benet from the private placement regimes

within individual member states whilst those regimes continue. In the

longer term, it is anticipated that eventually Guernsey will look for ju-

risdictional recognition by the EU to allow for so called pass-porting

of Guernsey products into the EU. AIFMD is not expected to hinder the

funds industry over the long term and may in the short term encourage

more fund structures to be established in Guernsey.

The key to Guernseys fund industry is to attract a new business

line early so that London and other jurisdictions gain a certain level of

comfort with the service providers and level of expertise. This is borne

out of the experience of the way that the funds industry has devel-

oped in Guernsey and Jersey along different product lines. If you think

of securitisation productsJersey took the lead; if you think of prop-

erty holding vehiclesJersey would also tend to be the jurisdiction of

choice. However if your interest is in private equity, Funds of funds,

and UK listed close ended products, Guernsey would most probably be

your rst choice. So very often it is a herd mentality and rst mover

jurisdictional advantage, purely and simply that leads fund product

development; once you know the legal and regulatory framework of a

jurisdiction, and the infrastructure that is in place, why reinvent the

wheel in another jurisdiction? The number of promotional trips taking

place involving various government ministers and the private indus-

try is immense. No one is resting on their laurels and no one thinksthe golden egg will keep hatching for decades. As the funds indus-

try in Guernsey has done in the past, it will continue to innovate and

build new long term relationships.v

By Gavin Farrell, Partner, Mourant Ozannes


I

I

I

I

I

By Gavin FarrellPartner,Mourant Ozannes


9/12

Local expertise.International reputation.

Mourant Ozannes has more top tier legal

directory* rankings than any other oshore

law frm. *CHAMBERS, IFLR, LEGAL 500

To fnd out more visit mourantozannes.com

CAYMAN GUERNSEY JERSEY


10/12

Guernsey The Smart Choice for

Global Marine ServicesArdel Group provides a holistic approach for a Global Clientele.

10

Ardel Group, formerly The Bach-

mann Group was formed in 1974 by

Peter Bachmann. The company origi-

nally sold motorboats before expanding

into nancial services, initially adminis-

tering structures related only to the Ma-

rine industry. As Guernseys nancial sec-

tor burgeoned over the last few decades,subsequently the Group developed sub-

stantially along with many other nancial

services organisations on the Island.

Ardel has come a long way from its

humble beginnings to become one of

the largest independent duciary ser-

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

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

company administration services, including duciary structures for

both corporate and individual clients and international pension man-

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

ministers a wide range of investment fund structures including closedand open ended funds, unit trusts and limited partnerships.

Being true to its roots, Ardels Marine division still constitutes an

important part of the Groups operation today. The division and its ac-

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

ongoing popularity of super yachts, owners are increasingly looking to

Ardel for our expertise and solution provision.

Super yachts are generally owned through a limited liability com-

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

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

enhanced condentiality for the client, potential tax mitigation with

the appropriate structuring, and the simplication of estate planning.

Each individuals unique situation, intended use of his vessel and the

proposed cruising area will all be carefully considered before deciding

on the most suitable jurisdiction for the entitys incorporation.

Ardels marine client base is predominantly European. The num-

ber of clients has remained steady however the type of activity un-

dertaken on their behalf has increased. Despite the difcult economic

climate in which the world has found itself in the past few years,

the company has been successful in maintaining its market position

through developing its product and service offering. Payroll admin-

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

amples of assistance which todays super yacht owner requires.

Looking ahead, order books for new-builds looking healthier. The

Far East and South America and other emerging markets in those re-

gions such as Brazil and China have increasing spending power andwill be seeking options for disposing of some of their fortunes. Owning

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

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

look for future growth.

Guernsey is a member of the Red

Ensign Group, the worlds leading ag,

and Ardel predominantly registers its

yachts throughout the member juris-

dictions, but also in territories includ-

ing Malta, The Marshall Islands and The

Cook Islands.The Red Ensign Group is comprised

of the UK, Crown DependenciesIsle of

Man, Jersey, Guernsey and UK overseas

Territories, all of which operate ship-

ping registers. Some registers place dif-

fering restrictions on the size and type

of vessel they will admit. Guernseys register does not currently allow

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

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

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

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

in commercially activity.Guernseys enviable position sitting outside the EU and VAT re-

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

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

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

VAT is a complex and highly specialised area and, perhaps surpris-

ingly, the interpretation and application of VAT restrictions and regu-

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

qualied VAT planning experts to offer clients the specialist advice they

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

ly known as leasing or charter arrangements from a wide spectrum

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

arrangement that is recognised within the respective jurisdiction.

An area of particular interest and growth has been as a result of

recent changes in the application of EU Social Security legislation. Us-

ing Guernsey registered companies to employ yacht crews can offer

savings of up to 12.8% for the owner in social securities dues.

One Stop Shop

Ardel administers approximately 2,500 entities holding a wide

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

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

that often restrict investments to more traditional asset classes. The

company develops bespoke arrangements for each client depending

on their personal circumstances.

For many of their marine clients, the yacht-owning entity will be oneof several managed by Ardel as part of a larger wealth management and

planning structure. With expertise right across the duciary eld this

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


Gary Le Cras,

ManagerArdel Marine

Gerry Williams,Chief ExecutiveArdel Group

email: [email protected] ardelholdings.com


11/12

Freedom.Trust, Company and Fund Administration rom a leader in the feld.

Founded in 1974, Ardel is a leading independent duciary. With a strong belief in buildinglasting relationships our experienced practitioners work closely with private and corporateclients and their advisers to provide rst class administration services for trusts, companymanagement, marine, funds and pension products.

For further information contact Ian Rouget on +44 (0) 1481 723573, [email protected] or visit www.ardelholdings.comArdel Trust Company (Guernsey) Limited, PO Box 175, Frances House, Sir William Place, St Peter Port, Guernsey GY1 4HQ.

The company advises all clients to consult their own professional advisor on all legal, tax and scal matters as necessary.Regulated by the Guernsey Financial Services Commission in accordance with The Regulation of Fiduciaries, AdministrationBusinesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2000 as amended 2008. Company registration number: 5487.

Guernsey / London / Switzerland / New Zealand


12/12

where?

If youre looking for aninnovative financialsolution theres oneplace you should look

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: [email protected]

BANKING FIDUCIARY FUNDS INSURANCE ASSET MANAGEMENT

guernseyfinance.com

Documents

Business in Guernsey 2011