NB: Guernsey will introduce a '0/10' corporate tax regime from 2008 under which normal companies will pay no tax, and companies regulated by the Financial Services Commission will pay 10% tax. At that time, exempt status as described below will be abolished.

Private Company Limited by Shares

Guernsey private limited companies are governed by the Companies Laws 1994 - 1996. There is no distinction between private and public companies. It takes 1 to 2 weeks to incorporate a company in Guernsey, and approval is required from the Registrar for company names.

Share capital in usually £10,000 or above and a capital duty of 0.5% is payable, minimum £50. There need to be at least two shareholders and bearer shares are not permitted. There can be one or more directors, and there must be a company secretary; either can be incorporated and there are no residence restrictions. There must be a registered office. All of the details in this paragraph are available on the public file.

Limited companies must keep accounts and file them annually unless they are Exempt (see below). Annual returns are also required. There are no restrictions on the holding of meetings.

Guernsey companies may be incorporated under the laws of another jurisdiction under the Migration of Companies Ordinance 1997.

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Company Limited by Guarantee

Private companies limited by guarantee are otherwise similar to those limited by shares; this form is normally used for charities or other non-profit-making organizations.

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Exempt Private Company

Private Limited Companies can obtain exempt status under the Income Tax (Exempt Bodies) (Guernsey) Ordinances 1989 and 1992, and they are known as Category D bodies. This legislation was created within the exempt regime that had already existed for some time for Unit Trusts and Investment Funds, see below. Insurance companies and banks are also dealt with under separate legislation.

Guernsey residents may not have direct shareholdings in Exempt Companies. Exempt status must be applied for annually to the Administrator. Exempt Companies do not normally trade in the Bailiwick and must have declared local activity in previous years and paid tax on it; they must also disclose beneficial ownership to the Financial Services Commission. There is an annual fee of GBP600 for exempt status, and there is also a fee of GBP100 payable when dealing with an Application for Exempt Status and filing the Annual Return (in duplicate).

See Offshore Legal and Tax Regimes for details of the taxation of Exempt Companies.

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Exempt Investment Schemes

Legislation came into force in 1984 (later amended in Income Tax (Exempt Bodies) (Guernsey) Ordinances 1989 and 1992) offering exempt status to Guernsey unit trusts and investment companies (Guernsey or otherwise, and including foreign limited partnerships). They are known as Category A, B or C bodies. The main conditions are that Guernsey property or investments may not be held (other than bank accounts) and that a Guernsey resident must have been contracted to provide administrative services for an arm's-length fee; there are various information requirements.

The application for exempt status has to be renewed annually, and a fee of GBP600 is payable annually. See Offshore Tax and Legal Regimes for details of the taxation of Exempt Investment Schemes.

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Exempt Insurance Companies

The Income Tax (Exempt Bodies) (Guernsey) Ordinances 1989 and 1992 also cover insurance companies, called Category E bodies. Guernsey residents may not have direct shareholdings in Exempt Insurers, and the exemption does not apply to income originating in Guernsey (other than from bank deposits).

The application for exempt status has to be made annually, accompanied by various types of information, and the fee of £500. Tax due from previous years must have been paid. See Offshore Legal and Tax Regimes for details of the taxation of Exempt Insurers.

Registered insurance companies may take advantage of the Protected Cell (Guernsey) Ordinance 1997, under which multiple cells may exist within one company; the taxation basis of protected cell companies is equivalent to that of exempt companies. Protected cell company status under the 1997 Ordinance is generally reserved for authorised collective investment schemes, insurance companies and closed-ended investment companies.

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International Company

The International Company (IC) form was introduced by the Income Tax (International Bodies) (Guernsey) Law 1993 and applies to 'bodies of persons' whether or not incorporated. The IC must be taxable in Guernsey either through residence or a business presence on the island, must not trade with Guernsey residents (except other ICs), must be wholly owned by non-residents or other ICs, and must never have been a bank, insurer or exempt company.

Prior to granting IC status, the Administrator requires extensive information, and usually needs to discuss the applicant's existing or intended business. An appropriate taxation rate can then be negotiated between nil and 30%, allowing the IC to obtain double taxation treaty or withholding tax benefits in other countries.

IC status and the agreed taxation rate are granted for up to 5 years, and are then subject to review. ICs are typically used for group financing operations, captive insurance companies, industrial and commercial activities and overseas investment companies. Exempt companies, banks and some insurers do not qualify for IC status.

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Branch of Overseas Company

There are no registration or filing requirements for foreign companies as such if they do not trade on the island; and they are not taxed in Guernsey except to the extent that they earn profits there, or if they are managed and controlled from the island. Thus, it can often be attractive for a company to administer operations in other jurisdictions from Guernsey, stopping short of 'management and control'.

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General Partnership

Partnerships are governed by the Partnership Law 1995. Guernsey partnership law is very similar to English law. In general partnerships, a partner's liability in unlimited. Annual accounts have to be submitted to the Administrator, but there are no statutory audit requirements.

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Limited Partnership

Limited partnerships are governed by the Limited Partnerships (Guernsey) Law 1995. As usual, the general partner or partners are liable for all debts, but individual limited partners are liable only to the extent of their contributions. Limited Partnerships must obtain a Certificate of Registration from the Greffier, and must maintain a registered office in Guernsey. Limited partnerships carrying on or providing services in relation to the business of banking, insurance, investment, asset management or administration, trusteeship, company or trust formation and administration also produce audited accounts.

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Trusts

Guernsey trust law has a mixed English/Norman pedigree, but the Trust Law 1989, which mostly reflects English common law, clarified many points, on the whole giving extra protection to beneficiaries. Appeal is to the English Privy Council. There are no registration or filing requirements for Guernsey trusts. (NB Guernsey law does not formally apply in Alderney and Sark but has a substantial influence on proceedings.) The Financial Services Commission is engaged on a review of Guernsey's financial governance regime which may well tighten the regime for trusts, among other sectors.

Guernsey has ratified the Hague Convention, and has made specific provision for the non-recognition of foreign judgements and the exclusion of foreign inheritance laws. The maximum perpetuity period is 100 years. There is no specific provision for 'purpose' trusts or for asset protection trusts.

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International Trusts

It is possible to export a Guernsey trust replacing Guernsey trustees with non-resident trustees and changing the proper law of the trust; equally, a trust established in another jurisdiction may migrate to Guernsey by appointing Guernsey resident trustees. Trust accounts must be maintained although they do not require auditing and the trustees of a non-resident trust do not need to submit returns or provide trust accounts to the administrator of income tax.

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