GUERNSEY CONTINUES TO STAND STRONG
Oliver Godwin is an experienced corporate lawyer at Bedell Cristin. He specialises in the structuring, establishment and operation of offshore investment vehicles including cellular and noncellular companies, trusts, limited partnerships and limited liability partnerships. Having acted as legal counsel to a wide variety of regulated and unregulated offshore companies in multiple jurisdictions he has a detailed knowledge of the legal and regulatory frameworks underpinning the operation and management of such structures.
OLIVER GODWIN OF BEDELL GROUP EXAMINES THE FUND LANDSCAPE OF GUERNSEY
HFMWeek (HFM): Over the last 12 months, what achieve its reputation. A key contributing factor to this
regulatory changes have been of the most significance success has been a willingness to engage with external au-
to Guernsey and why?
thorities, for instance the UK and the EU, to give a level
Oliver Godwin (OG): Regulation is constantly chang- of transparency that provides a truly comfortable envi-
ing, not only within Europe, but worldwide. This ever- ronment. Additionally, Guernsey is keen to work with
evolving process creates an air of uncertainty for many other jurisdictions to ensure that it is transparent from
jurisdictions, although, Guernsey continues to more a tax perspective.
than just meet its regulatory obligations on the local and Guernsey has traditionally listened to, and imple-
mented, all of the requirements and rules raised by inter-
The proof of this is evidenced by Esma recommending national organisations such as the OECD and FATF. It
that Guernsey be given the third country passport under has been a conscious movement of ours to comply with
AIFMD. This recommendation highlights that Guernsey the highest levels of transparency available so, in rela-
is receiving recognition for its hard work in having a re- tion to the Base Erosion and Profit Shifting (Beps) and
gime that meets the requirements of the AIFMD rules, tax transparency, Guernsey is tax transparent and has tax
being OECD compliant for tax transparency and having neutral structures. Ultimately, we hope to be seen as the
appropriate AML laws in place.
epitome of dependability by both onshore and offshore
Other developments have come
jurisdictions. This reputation, in
in the form of the manager led
conjunction with a strong regu-
product (MLP), which is aimed at
latory system and a very knowl-
AIFMs establishing themselves in
edgeable regulator, acts as an
Guernsey to market AIFs into the EU under the applicable national
impressive attraction for those considering Guernsey.
private placement regime. It ensures a proportionate risk-based
STRONG PRESENCE IN
HFM: How does Guernsey in-
level of regulation by placing the regulations on the AIFM only,
novate to differentiate from other jurisdictions?
avoiding duplication of regulatory requirements over several entities.
AND HAS FIRMLY
OG: The island has always been an innovator. Guernsey has con-
Within 24 hours of receipt of a
sistently been at the epicentre
notification the GFSC will license CEMENTED ITSELF IN THE of the launch of new products,
open-ended or closed-ended funds, as well as general partners
for example, we were pioneers of the protected cell company
or managers formed solely for the purpose of such funds.
Guernsey committed itself to the adoption of the global Com-
(PCC) structure, which is now being copied all around the world in various forms. The PCC has been an incredibly
mon Reporting Standard on Automatic Exchange of In- popular product which has allowed Guernsey to ex-
formation (CRS) with effect from the beginning of this plore different markets, i.e. the funds market and the
year, with first reporting taking place in 2017. Guernsey insurance market.
is one of approximately 60 jurisdictions working to this Additionally, Guernsey's industry always works hard
implementation timetable, including all EU member with the local regulator to ensure that there is flexibility
states (with the exception of Austria, which will have an in our regulatory framework. This typifies our business-
extra year before implementation of the CRS).
friendly attitude. Despite being relatively small in size,
Guernsey uses its stature in its favour, allowing for the
HFM: Guernsey is well known for its high standard of utmost in versatility and enabling a speed of conducting
transparency, how did it achieve this reputation and affairs that is second to none.
how will it maintain it?
Our history speaks for itself and works as our best at-
OG: Guernsey has strong presence in international fi- traction. Guernsey boasts an amalgamation of flexible
nance and has firmly cemented itself in the funds market. structures and regulators, laws, courts and experienced
With over 50 years' experience of being an international professionals who can come together to push the indus-
financial centre, Guernsey has worked extremely hard to try forward.
H F M W E E K . C O M 15
HFM: Which fund structures are the most popular in Guernsey, how much variety is there? OG: The popularity of the structure corresponds to the type of business. One of the structures more commonly used is the limited partnership structure, which is utilised for private equity funds and cleantech funds. Guernsey is used as a tax neutral jurisdiction which allows pension funds and internationally-based investors to really enhance their return. The Class B funds regime, which is an open-ended fund regime, is also quite prevalent.
The PCC structure is widely used for fund platforms and insurance products because it permits the segregation of assets and liabilities. In a similar vein, we have the incorporated cell companies where each cell is its own separate legal entity, under an umbrella. Ultimately, there is a vast variety of structures in place. Furthermore, Guernsey has just started consulting on very private funds, which is almost like a club deal and will require less regulation, thus will be quicker to get to the market.
HFM: How is Guernsey's relationship with the London Stock Exchange? OG: Our relationship with the London Stock Exchange (LSE) is deeply ingrained. We have something resembling an `open mic' relationship with them, and are in constant contact, directly and through lead counsel in London. The listing of Guernsey structures on the AIM market of the LSE, where Guernsey is a market leader, is a key driver in the relationship.
HFM: What other crucial components attract managers and institutions to Guernsey?
16 HFMWEEK .COM
OG: A key attraction is our very strong legal system which has its roots in Norman-French law, but is clearly recognisable to those used to common-law jurisdictions. Another huge factor is our position as a tax neutral and tax transparent jurisdiction. It all adds up to a solid and reliable offering for international investors who don't want to be onshore.
HFM: What key industry trends will impact Guernsey the most over the next 18 months? OG: The main obstacle that is perhaps of the most importance, and is certainly the most pressing, is that of a `Brexit', which is ultimately more than just an "in" or "out" choice. There are two fundamentally different paths which the UK could follow and at the helm of this decision are the British public. I think that in the short-term there will be disruption whatever the outcome, and as polls continue to see fluctuations in potential voting patterns and the outcome continues to remain uncertain, everyone is on the edge of their seat. Despite things looking slightly uncertain now, Guernsey is well-placed to react to either outcome. Much work has already been done by the States of Guernsey to understand the impact on Guernsey should the UK decide to leave the EU, and how to mitigate that impact. Indeed, Guernsey's States Assembly has been told that the island is `well placed' to deal with any challenges that occur, in the event of the UK voting to leave the EU and the potential change for Guernsey will be `less substantial' than the potential change for the UK given that the Crown Dependencies are relatively stable in respect of their EU relationship, compared to the UK. Q