Clearly, the Commerce and Employment Department and the Companies Registry (“Registry”) have had a busy time of late. Since July, there have been three new regulations passed which alter the fees payable by Guernsey companies to the Registry for filing an annual validation (and which therefore are required to be paid in order for the company to continue to be registered as a Guernsey company).

In essence, the three regulations are three different attempts at improving the distinction drawn in the regulations between “non-regulated companies” and “financial product companies”. Most companies incorporated in Guernsey (although by no means all) fall within these descriptions. Lower fees are currently charged for non-regulated companies (being £250, as opposed to £500 for financial product companies) but the distinction between the two has previously been difficult to apply, and (on the bright side) the new regulations provide welcome additional clarity.

Unfortunately, the new-found clarity will mean that many Guernsey companies (and particularly those administered by local corporate services providers) will end up paying £500, rather than £250, for their annual validation. In view of the changes, we would therefore recommend that all Guernsey corporate services providers review their list of companies on their books to ensure that they are paying the correct annual validation amount.

There has also been some guidance provided about the charging of annual validation fees where companies are in voluntary liquidation or are in the process of being voluntarily struck-off.

“Non-regulated companies” versus “Financial product companies” : the new position

Under the Companies (Registrar) (Fees) (Amendment) (No. 3) Regulations, 2010 (the “Regulations”) the distinction between a non-regulated company and a financial product company now largely depends on whether the resident agent of the company is an individual director, or a corporate services provider.

The new “rule of thumb” is that, if a company’s resident agent is an individual director, the company will be treated as a non-regulated company and will pay £250 in annual validation fees. If the resident agent is a corporate services provider, the company will be treated as a financial product company and will pay £500. The Regulations complicate this picture by making exceptions where the individual resident agent holds a personal fiduciary licence, and where individuals are directors in breach of the Fiduciaries Law. There are also higher fees set out in the Regulations for companies that hold regulatory licences, but the basic position set out above will cover the vast majority of cases.

One important change arising from the clarification is that it will no longer be possible for companies that are administered by a corporate services provider to pay the lower fee, regardless of whether they are local trading companies or not (which was the language previously used in the regulations). It is important that all corporate services providers check their lists of companies to see whether there are any companies which they administer that have previously paid £250 in annual validation fees, as this will no longer be applicable.

It will also be important for such providers to assess whether it would be appropriate to transfer the resident agent from the corporate services provider to one of the individual directors. Typically, this will only apply where the company has been incorporated by a corporate service provider, and the company has an individual director resident in Guernsey who does not hold a fiduciary law licence (or who does hold such a licence, but is acting as a director in respect of a company that he or she owns).

Clarification regarding the Registry’s policy for companies that are voluntarily winding-up or are being struck-off

The Registry has provided guidance in relation to companies that are in the process of being voluntarily struck-off, or which have passed a resolution for a voluntary winding-up but have not been removed from the register by 1 January 2011.

Voluntary strike-off

The Registry will allow companies to elect to be voluntarily struck-off without having to pay an annual validation fee for 2011 if they submit a voluntary strike-off application by 31 October 2010. Companies that do so after this date will be required to pay the relevant annual validation charge for 2011.

Voluntary winding-up

If a company has filed the shareholder resolution resolving to wind-up and to appoint a liquidator by 30 November 2010, but the liquidation is not complete by 31 December 2010, the Registry has clarified that it is necessary for that company to file an annual validation, but that it will not be charged annual validation fees for doing so. Companies which file the resolution appointing the liquidator after this date will be required to both submit an annual validation and pay annual validation fees in 2011. Accordingly, it is important that liquidators make proper provision for these fees if the winding-up resolution is filed on or after 1 December 2010.

For companies where the winding-up process is nearing completion, liquidators have until 31 December 2010 to file the requisite notice to the Registrar of the final meeting. If this is filed after 31 December 2010, it will be necessary to submit an annual validation by 31 January 2011.