Contact:
enquiries@guernseyregistry.com
2008 is a year of dramatic change for Guernsey Registry. Company formation and administration has been unchanged on the Island for 125 years. With a new law (the Companies (Guernsey) Law 2008) and a brand new Registry, the service offered to local businesses, the finance sector and international clients will be cutting edge, using the latest web-based technology.
Since 1883, company formation has been carried out by local advocates through the Royal Court. In recent years the Guernsey Financial Services Commission has also been involved in the process. Companies have been registered by a small company registry team based in the judicial Greffe. The process has been entirely paper-based, and as a result both expensive and time-consuming. It could take up to two weeks for the whole formation process to be completed. Thereafter any changes to the information had to be submitted in paper format.
Guernsey has a history of providing innovative, business friendly, commercial laws such as its Protected Cell Company legislation which was a world first. Continuing that tradition of innovation, the Island has completely revised its Companies law to enable the Island to provide a 21st century company registry and a flexible and modern system of company administration. The new law establishes an administrative companies registry under the auspices of the appointment of an independent Registrar of Companies. In addition to the new law, investment has been made in the highest quality front and back office systems and in new modern premises.
As a result, from 1 July 2008, companies will be incorporated in less than 24 hours, with 2 hour incorporations possible. From October, 15 minute incorporations will be available for certain types of company, which sets a world class benchmark. It will, in effect, be quicker and less expensive to incorporate a Guernsey company than in any competitor jurisdiction.
On-line searches and on-line filing submissions will be the norm. Company profiles (the equivalent of a certificates of incumbency) will be available cheaply on-line, as will scans of physical documents and other Registry certificates. Directors, who will be issued with electronic signatures, will be notified automatically of all events at the Registry which affect their company. The cumbersome annual returns process will be replaced by an annual validation whereby companies simply validate the information held on them at the Registry once a year.
There are many other innovative services available. Companies can be pre-incorporated to start on a certain date; company names can be reserved for three months; voluntary strike-offs are possible, allowing dormant companies to be removed from the register by the Directors at no cost.
Despite the use of technology and the provision of on-line services, the Guernsey Registry believes absolutely that the quality of individual customer service is of paramount importance. The project to establish the new Registry has, therefore, worked intensely to ensure that high-calibre staff are employed by the Registry in order to deliver the level of service the Registry aspires to.
The benefits of these changes are potentially immense. For the first time, company incorporations will be applied for by Corporate Service Providers (“CSPs”). CSPs are licensed by Guernsey Financial Services Commission to carry out company incorporation services with the Registry. It can be expected that important revenue streams and opportunities for new business will exist for CSPs. For local trading companies, the main differences are speed and cost allowing these companies to focus on their core trading activities. Audit exemptions for small companies and the ability for sole traders to become companies are good examples of this. Internationally, clients will be able to review their company details on-line and be notified automatically of any changes to their companies.
Taking a more broad view, the new Registry opens up significant opportunities for the Island. The Registry will become a member of the European Commerce Registries Forum (“ECRF”). This important organisation brings many European registries together to share information and develop the registry product at a European level. Projects such as the Business Register Interoperability Throughout Europe (“BRITE”), an EU sponsored project, and the European Business Register (“EBR”), a one-stop on-line access to multiple European Registries are both opportunities for Guernsey to participate in. Already in 2008, the Island has been represented at the Corporate Registers Forum, a global gathering of registries held in Vancouver, and continues to meet and maintain contact regularly with closely connected jurisdictions, such as the UK, Ireland, the Isle of Man, Gibraltar and Jersey.
Guernsey offers choice and flexibility with regard to the type of corporate entity best suited to a particular business model. Guernsey was the first jurisdiction to introduce legislation with respect to protected cell companies (PCCs) in 1997. Incorporated cell companies (ICCs) were introduced in 2006. The provisions for both PCCs and ICCs were made in the revision of the new companies law 2008. The benefit of the cellular structure is the ability to segregate and manage risk – a feature which has made the use of these structures popular with the investment and insurance industries. The ICC provides additional inter-cell security in the event of insolvency and unlike the PCC, permits each cell of the ICC to contract with each other.
The standard non-cellular company is also available and this remains the incorporation vehicle of choice for most standard companies.
In respect of liability of its members, a company can be either:
The options available and the ability under the new companies law to convert, amalgamate and migrate companies provide the means to manage corporate structures in a dynamic and changing global environment. The new law allows companies to quickly and effectively convert from one type of company to another in a single process, a service that is not available in many jurisdictions.
There are many changes from the previous companies law in the Companies (Guernsey) Law 2008. Some of the key changes are in the area of corporate governance and the responsibilities of Directors – perhaps the most significant is the solvency test.
Under the former companies law the distribution of profits and payment to shareholders was restricted by complex and antiquated rules that were formed in Victorian times. The rules were designed to protected creditors under a business model which was based on capital maintenance.
Using the successful experience of New Zealand, the British Virgin Islands, the Isle of Man and Bermuda, Guernsey has adopted a solvency test for distributions doing away with the complex, expensive and restrictive provisions associated with capital maintenance. Under the solvency model, provided the company satisfies the solvency test it may make distributions and pay dividends as it sees fit. The solvency test requires the directors to ensure that:
The solvency test provides greater commercial flexibility to manage company finances in the 21st century trading environment and provides far greater creditor protection.
Another significant area of change in the level of compliance expected is that of company strike-offs. Given that voluntary strike-offs are available on-line and for free, it will simply not be acceptable for a company not to file an annual validation and then expect to be struck off by the Registrar without further sanction.
The new law allows greater flexibility for companies to operate in a modern environment, but at the same time places real responsibility and accountability on company Directors which is beneficial in terms of consumer protection and ensures high standards of corporate governance. Guernsey is rightly regarded as a high quality offshore jurisdiction that adheres to international standards. The new companies law and new Registry are further strong steps towards enhancing that reputation.
The new Registry is just a starting point. Initially, as well as companies, limited partnerships will be administered by the Registry. The Intellectual Property Office is also based at the Registry, and will be integrated to the Registry systems by the end of 2008. Limited Liability Partnerships are in the pipeline, as are Foundations, subject to government approval. Beyond that, the Guernsey Registry will continue to research new areas of business efficiency for the island, to look for opportunities for new, related registry operations and to co-operate and learn from registries internationally. The Guernsey Registry is a self-funding business enabler, for local and international businesses alike and the long-term strategy is to be at the forefront of technology, to be internationally aware and well represented, to support local businesses and to enhance the reputation of the island as a dynamic, innovative jurisdiction.
2008 is an exciting year for the Guernsey Registry. It is also a challenging year for businesses as the new law is enacted and the way of working with the Registry is revolutionalised. Above all, though, it is a year which sees Guernsey rise to the top in terms of quality and innovation of company registry service provision, measured by truly international standards, which is some achievement for this jurisdiction.