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News

Company/Commercial- Guernsey

 

Background

There has long been an awareness of the need for a comprehensive overhaul of company law that would integrate and consolidate all existing amendments as well as ensuring the highest international standards. Proposals have been put forward to revise completely Guernsey's company law.

An initial report to the States (Parliament) of Guernsey in 2005 was followed by a consultation process whereby submissions were received from a cross-section of finance and business. It is proposed that the new legislation will come into force no earlier than mid-2008.

Major Changes Proposed

The most significant changes that have been proposed are as follows:

  • The incorporation of companies will no longer require a court application;
  • A new registrar of companies will be created (and under the new legislation, regulated company formation agents will liaise with the registrar for company formation);
  • A new solvency test model will be introduced as a sole test to be used for everything from dividend distribution to a reduction of share capital; and
  • The existing legislation will be consolidated.

 

As highlighted above, it is proposed to consolidate the many separate laws and ordinances governing company law. These disparate pieces of legislation have all arisen in response to the developing needs of business and commerce. However, it has become increasingly difficult to utilize legislation from so many different sources.

Other Changes Proposed

There are also many other proposed changes. These include proposals to:

  • make it possible to create single member companies;
  • extend the range of companies that may be incorporated to include unlimited liability companies and mixed liability companies;
  • simplify incorporation by the creation of standardized articles of incorporation;
  • make migrations of companies to and from Guernsey easier and cheaper by turning migration into an administrative procedure operated through the registrar rather than a court-based procedure;
  • hold that the default position of a company should be that it has unlimited objects unless it specifically limits its objects;
  • facilitate greater use of electronic media in terms of both storing information about a company and communicating that information to the registrar, to its members and to other interested parties;
  • remove the requirement for companies to send annual returns of members' details to the registrar but to expand slightly on other administrative matters to be included in the annual return;
  • waive the requirement that companies, where the members so resolve, must always hold an annual general meeting;
  • allow changes to company law to be made by ordinances which are approved by the States and not the Privy Council;
  • allow for a codification of directors' duties;
  • require every company to have a company secretary (who may also be a director) and that the minimum duties of company secretaries be set out in statute; and
  • increase auditors' powers and duties.

Comment

The proposals contained in this report are the result of a significant and widespread consultation within both the public and private sectors, alongside consideration of the best points of other jurisdictions. It is widely accepted that these changes are necessary to maintain and improve Guernsey's reputation as a responsible and attractive international centre for corporate affairs.

 

ILO