Anyone that holds shares in a Guernsey company incorporated before July 2008, acts as an administer of such a company or acts as its registered agent, director or secretary must review the memorandum and articles of the company to ensure that they fully comply with the Companies (Guernsey) Law 2008.
When the Companies (Guernsey) Law was enacted, special temporary transitional rules were also enacted which allowed pre-existing Guernsey companies to retain their pre-2008 memorandum and articles and not comply with all of the provisions of the Companies (Guernsey) Law.
Those transitional rules ended on December 31 2016. Accordingly, all Guernsey companies, whenever they were incorporated, must now comply with all of the Companies (Guernsey) Law.
In addition to complying with the law, if memorandum and articles have not been updated, the company may be subject to unnecessary and outdated restrictions and be missing out on opportunities which the Companies (Guernsey) Law allows (eg, much greater ease to distribute assets to shareholders).
Many companies have yet to update their memorandum and articles despite the change in the law. These companies are urged to check their position without delay.
In addition, this issue is a good example of a more general point that goes far beyond Guernsey. Irrespective of the jurisdiction of the company that the aforementioned persons deal with, when was the last time that its constitutional documents were reviewed? Laws change – do those constitutional documents still comply with relevant local laws? Do they still represent best market practice? Do they take advantage of all relevant opportunities and allow the company to pursue its goals?
Regular document reviews of existing structures is a valuable and increasingly necessary investment of time to ensure continued legal and regulatory compliance.
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