Guernsey Company Registration

Guernsey Company Registration

Guernsey company registration is straightforward if you are familiar with the entire process. With Tetra Consultants at the wheel, you will be able to dedicate your time and resources to other more important business channels.

With our lean-and-mean mentality, you can rely on our team of experts to provide you with a seamless experience throughout the whole process to Guernsey company registration. Our ultimate goal is for your new Guernsey company to be operationally ready within the stipulated time frame.

Our service package includes everything you will require to set up business in Guernsey:

• Guernsey company registration with Guernsey Registrar of Companies

• Local company secretary and registered address

• Corporate bank account opening services

• License applications (if required)

• Annual accounting and tax services

Benefits of Guernsey company registration

• Tax-free for foreign nationals – Guernsey offers 0% corporation tax for all companies owned by non-residents, trading outside Guernsey, irrespective of profits. The only exception is for those companies conducting financial services, which are regulated by the Guernsey Federal Services Commission. They would need to pay tax on their net profits at 10%.

• Further tax benefits – For non-Guernsey residents, there are no capital gains, inheritance, capital transfer, VAT, or general withholding tax. There is also no stamp duty on the issue, transfer, or redemption of shares.

• Low capitalization – For Guernsey company formations there are no authorized capital or capital maintenance requirements. Companies can be incorporated with an unlimited number of shares at no par value for easy future transfer.

• No distinction between private and public companies – As there is no recognized difference between private and public companies, meaning any Guernsey company limited by shares may offer their securities to the public.

• Quick company incorporation – A new Guernsey company can be incorporated in around 2 weeks of submission.

How long does for Guernsey company registration and open a corporate bank account?

• Tetra Consultants will complete your Guernsey company registration within 2 weeks. After you provide us with basic KYC documents of directors and shareholders, Tetra Consultants will reserve your preferred company name with that.

• Throughout the Guernsey company registration process, you will not be required to travel overseas.

• Once your Guernsey company is incorporated, Tetra Consultants will send you the certificate of formation, memorandum, and articles of association as well as the register of directors and shareholders.

• Within 4 weeks of company registration, Tetra Consultants will open a corporate bank account with either a local or internationally reputable bank.

• Consequently, you can expect to start operations and issue invoices with your Guernsey company within 6 weeks.

• If you are keen to know more details on the registration process, Tetra Consultants has prepared a step-by-step guide for you.

Types of business structure available to register company in Guernsey

• An important factor when deciding which particular type of vehicle to use is the tax and regulatory treatment that will be applied to the company in a foreign country. It is therefore imperative that appropriate legal and tax advice be sought in all relevant jurisdictions to determine the type of corporate vehicle best suited to your circumstances.

• At the start of the engagement of  Guernsey company registartion, Tetra Consultants will fully understand your business activities and needs before recommending the most optimum business entity in Guernsey. Some considerations we take into account include the type of business activity, tax obligations, and nationalities of shareholders and directors. Our consultants will also offer more information on the requirements imposed to set up these entities.

Guernsey offers a variety of types of companies which fall into two categories:

Non-cellular Company

• A company limited by shares: the most familiar type of company, a company limited by shares has a share capital and the members (shareholders) have limited liability whereby any liability for the company’s debts is limited to the amount (if any) unpaid on the shares held.

• Acompany limited by guarantee (LBG): an LBG can, but does not have to, have a share capital. Liability for the LBG’s debts is also limited but in the case of an LBG, liability is limited to the guaranteed amount made by the guarantee members, i.e. the amount a guarantee member has agreed to contribute to the assets of the LBG in the event of the company’s winding up (which continues for one year after ceasing to be a member).

• An unlimited liability company: similar to an LBG, an unlimited liability company can have a share capital (but does not have to). The liability of the members is however unlimited both while a member of the company and for one year after ceasing to be a member.

• A mixed liability company: a mixed liability company gives the option of having a share capital (if preferred) and a variety of different types of members, eg guarantee members, unlimited members, and shareholders (if it has share capital). Members’ liability can be prescribed by the company’s memorandum and articles of incorporation or, in the absence of such, members’ liability will be joint and several to the maximum extent of their liability.

Cellular Companies

• Guernsey was the first jurisdiction to legislate for the creation of protected cell companies (PCCs) and has since introduced legislation to allow the establishment of incorporated cell companies (ICCs).

• Cellular companies have become popular with the investment fund industry and with the insurance industry, particularly captive insurers. The name of a PCC must end with the words “Protected Cell Company” or PCC and the name of an ICC must end with the words “Incorporated Cell Company” or ICC:

Protected cell company with limited liability (PCC)

• PCC is a company that has a non-cellular core and separate cells. It is a single legal person, however, the protected cells (a cell) are not (although each cell must have its own name or designation and have its own cell capital).

• Assets in a PCC are either ‘cellular’, ie attributable to a particular cell, or ‘non-cellular’, that is core assets.

• Subject to certain exceptions, the assets of one cell are not available to shareholders or creditors of another cell, or to shareholders or creditors of the core. Assets held by the PCC which are not distinctly held by a particular cell are deemed to be assets of the core.

PCCs have a number of benefits:

• Avoidance of contagion risk.

• Lower cost of establishing new cells (as opposed to setting up an entirely new company).

• Faster regulatory consent for new cells established as investment funds (usually five working days).

• Integrated marketing of a variety of investment strategies in one corporate entity.

• Cost savings in the areas of corporate governance and company administration (for example, common board of directors and company secretary and only one set of articles).

• Considered a single legal entity for Guernsey tax purposes.

• Each cell can have appointed different service providers, such as investment advisers or managers.

• Cells can be converted into stand-alone companies under a specific statutory procedure.

Incorporated cell company with limited liability (ICC):

• ICC is a company with the ability to create their own incorporated cells (IC) as part of the corporate structure for the purpose of segregating and protecting the assets of the incorporated cells.

• An ICC is based on the same principles as a PCC in that an ICC may comprise any number of ICs however, unlike a protected cell of a PCC, an IC is a single legal person separate from its ICC with many of the attributes of a non-cellular company.

The advantages of an ICC are:

• Cells may enter into legal contractual obligations with one another (such as providing guarantees or loans or acting as feeder funds based on different currencies).

• Cells have a separate legal identity and can therefore contract with third parties in their own right. Reduced costs of audit fees and account preparation, annual return fees, and administration of separate boards and shareholder registers. Groups of companies can amalgamate into an ICC by producing a “transfer agreement” approved by the directors of the non-cellular company, and those of the ICC, by a special resolution of both companies, and the lodging of certain information with the Registrar.

• A conversion of a group of companies into an ICC may result in significant cost savings- for example, there would only be the need for a single set of accounts, annual validation, and share register.

• Each cell will continue to be a separate legal entity. This could be attractive for a corporate structure that needs the ability for the cells to contract freely with each other but also wants the cost benefits of a single cellular company.

• ICCs can also act as “nurseries” for new corporate vehicles, which might start out as cells of an ICC but, when certain economies of scale have been realized, be converted into separate non-cellular companies in their own right.

Conventional partnership

• A partnership exists where persons carry on business with a view to making a profit, in accordance with their agreement. The partners divide the profits and losses of the business between them.

• The major disadvantage of a partnership is unlimited liability for the debts of the partnership both jointly and severally i.e. all the partners may be liable for the acts or defaults of just one partner.

Limited partnership (LP)

• A limited partnership is a partnership between one or more general partners, who are solely responsible for managing the partnership, and one or more limited partners, who invest in the partnership, but do not take part in the management.

• A Guernsey LP is operated in accordance with a partnership agreement, and the Limited Partnerships (Guernsey) Law, 1995, as amended.

• Generally, an LP does not have a separate legal personality from the company’s partners, however, on registration, an LP can elect to register with a separate legal personality. There is no restriction on what type of business can be conducted through a limited partnership structure. LPs are very popular vehicles for private equity funds and property holding vehicles, but also have a wide variety of other uses.

Joint ventures

• A joint venture involves cooperation on a project between two or more parties, where they may agree to share expenses and/or income from the project. This is not a partnership and legal implications need to be clearly understood by the parties concerned.

Trusts

• Trust is a concept recognized by many jurisdictions around the world, including Guernsey. A trust separates the legal ownership of an asset from the beneficial ownership (i.e. the enjoyment) of the asset. Trustees legally own the assets, but the beneficiaries may benefit from them. This has taxation implications and establishing trusts may result in substantial tax savings.

Foundations

• The foundations are similar to both companies and trusts. As a company, a foundation is a separate legal personality managed by a board known as a council. However, there is no share capital, shares, or shareholders.

• Like a trust, a foundation essentially holds assets for the benefit of others but unlike trusts, there is no distinction between legal and the beneficial title of assets.

• A foundation will own assets in its own right and the council is obliged to manage the assets under a charter and a set of rules.

Branches

• A branch of a foreign corporation is not required to file any documentation with the Guernsey Registrar of Companies, although consent will be required if any banking, trustee, investment, or insurance function is envisaged.

• A local branch trading in Guernsey will be liable to local taxation and must submit a return to the local tax office.

Requirements to Guernsey company registartion

Guernsey companies need to have:

• A registered office address in Guernsey

• At least one director, who need not be Guernsey-resident

• At least one shareholder, who need not be Guernsey-resident

• A resident agent who is either a company secretary, Guernsey-resident director of the company or a Corporate Service Provider.

How to register company in Guernsey?

• Tetra Consultants advises you to read through this guide to fully understand the steps required on how to incorporate a company and set up a bank account in Guernsey.

• By systematically following the 5 steps below, you can expect to start conducting business with your Guernsey company within 2 weeks.

What are the documents required to register company in Guernsey?

The exact set of documents required to register company in Guernsey may differ depending on the type of business structure chosen to register the company. But a general list of documents is herein listed below:

• The memorandum of incorporation, containing the provisions required under the Companies Law;

• Bespoke articles of incorporation, if required, otherwise the Registry’s standard set of articles will apply;

• A statement of the proposed first directors;

• A statement of the proposed address of the company’s registered office;

• The name and address of the founder member (there need only be one);

• In the case of a company with a share capital, a statement of the initial share capital;

• In the case of a company with a founder member who is a guarantee member, a statement of initial guarantee;

• In the case of a cell company, a copy of the requisite consent from the GFSC.

Company Structure

Directors

• A Guernsey company must have a minimum of one director. Director can be a resident of any country, either an individual or corporate body.

• A company shall keep a register of directors at the registered office. The register of directors must be open, during ordinary business hours, for the inspection of any member or director without charge, and any other person on payment of such fee as may be prescribed by the Department.

Secretary

A Guernsey company may, but need not, have a secretary. A director of a company may also be its secretary.

Where a company has a secretary, he/she shall take reasonable steps to ensure –

• That all registers and indexes are maintained in accordance with the provisions of this Law,

• That all notices and documents required to be filed or served upon the Registrar or other persons are duly so filed or served,

• That all resolutions, records (other than records of beneficial owners), and minutes of the company are properly kept,

• That copies of the memorandum and articles are kept fully up to date, and

• That the board of directors is aware of any obligations imposed by the memorandum and articles, and the rules of any stock exchange the company is listed on.

Shareholders

• All Guernsey limited companies by share must have at least one shareholder. Shareholders can be residents or non-residents, natural persons, or corporate bodies.

Share capital and Shares

• Share capital may be issued in any currency. There is no minimum authorized capital requirement. The minimum issued capital is 1 share. A share is issued when the name of the holder is entered on the register of members in respect of that share.

• Share certificates do not need to be issued, but the directors may elect to issue certificates. Issued certificates should bear the common signature, but there is no need to affix the common seal.

Economic Substance requirements

Guernsey has in place economic substance legislation to address the concerns of the EU Code of Conduct Group for Business Taxation that certain Guernsey tax resident companies may be used to artificially attract profits that are not commensurate with economic activities and substantial economic presence in Guernsey. The Income Tax (Substance Requirements) (Implementation) Regulations, 2018 (Regulations), require Guernsey tax resident companies carrying on specified activities in respect of accounting periods beginning after 31 December 2018 (and every following accounting period) to demonstrate that they have a substantive presence in Guernsey.

The relevant activities are banking, insurance, fund management, financing and leasing, shipping, intellectual property, headquartering, distribution and service centers, and holding companies (although holding companies are treated separately under the Regulations). The substance requirements vary for each key activity to reflect the different needs of the companies involved.

Essentially, such companies will have to demonstrate that they each have substance in Guernsey by:

• Being directed and managed in Guernsey,

• Having adequate people, premises, and expenditure in Guernsey, and

• Conducting core income-generating activities in Guernsey. Out-of-scope entities include foundations (by virtue of the Income Tax (Substance Requirements) (Implementation) (Amendment) Regulations, 2018) limited partnerships, limited liability partnerships, and trusts, although GPs and trustees that are themselves companies may be caught.

A failure to comply could result in substantial penalties and, ultimately, a strike-off. A complete discussion of Guernsey’s economic substance requirements is beyond the scope of this guide, please contact us if you wish to consider this further.

Accounting and tax obligations

• Accounting and tax considerations are important factors when incorporating your company. By outsourcing your Guernsey accounting and tax obligations to Tetra Consultants, you can be confident that you will be in the best hands. Our team of consultants will ensure that your firm’s financial statements, corporate tax returns, and audits are timely and completed without the need for you to travel.

• Additionally, outsourcing your accounting and tax needs to Tetra Consultants will allow you to reduce overhead costs while be ensured of timely reporting and filings. Before the start of the engagement, our accounting team will also keep you updated on all the required deadlines and expectations. Thereafter, we will prepare all required filings in advance to ensure that the stipulated deadlines are met.

Corporate Tax

• Generally, a Guernsey incorporated company is subject to Guernsey income tax at a 0% rate in respect of the taxable income.

• A 10% tax rate is applied to a company’s income which is derived from certain businesses including operating an investment exchange, certain types of banking business, domestic insurance business, insurance management and insurance intermediary business, custody services business, certain licensed fund administration businesses, investment management services (in relation to clients that are not funded and are not associated with funds), certain compliance activities, certain licensed fiduciaries and the Guernsey aviation registry.

• A 20% rate applies to the income of a resident utility company, income from the ownership of Guernsey land and buildings, income from certain Guernsey retail businesses (where taxable profits are above £500,000), income from certain medicinal licensed drug cultivation, production or use, income from certain licensed prescribed controlled drug production or use and income from the importation and/or supply of hydrocarbon oil and gas.

• Alternatively, certain Guernsey companies may qualify and apply for tax-exempt status.

Annual accounting requirements

• Guernsey companies are required to keep accounting records that are sufficient to (i) show and explain their transactions, (ii) disclose with reasonable accuracy the financial position of the company and (iii) enable the directors to ensure that any accounts for the company are properly prepared.

• The company’s accounting records can either be kept at the registered office in Guernsey or at such other place as the directors decide (provided that accounting records are also kept in Guernsey showing the financial position of the company at intervals of not more than 6 months)

• Only the directors, secretary, or other officers of a Guernsey company have a right to inspect the accounting records of the Company on any particular day.

• The directors of a Guernsey company must arrange for accounts to be prepared for each of the financial years of the company. Those accounts must include (i) a profit and loss account, and (ii) a balance sheet. The accounts must also be approved by the board of directors of the company and be signed by at least one of the directors. The company’s accounts, the directors’ report, and the auditor’s report (if prepared, see below) should be provided to each member of the company (i.e. the shareholders) within 12 months after the end of the financial year of the company to which they relate.

• A Guernsey company’s accounts can be exempted from requiring to be audited for each of its financial years. Guernsey Financial Services Commissions regulated companies and certain large companies are unable to obtain such an exemption. A company can obtain an exemption by passing an audit waiver resolution (which may be in respect of a particular financial year or which can be for an indefinite period).

• Guernsey currently has no value-added tax (VAT) or goods and services tax (GST). There are indirect taxes on consumables such as tobacco, alcohol, and petrol.

• Guernsey has double taxation agreements with a number of countries/jurisdictions, providing either exemptions from tax in one jurisdiction or relief from double taxation by way of credit.

Personal Income tax

• In Finland Taxation of an individual’s income is progressive. In other words, the higher the income, the higher the tax rate. In 2019, the income tax rate (national tax) for an individual is between 0 % and 31.25 %. In addition to the national tax, individuals also pay a municipal tax of around 20 %.

Why register company in Guernsey?

Political

• Guernsey has a long history of financial and political stability. The size and structure of the Government make it accessible and the decision-makers easy to reach. The business environment is supported by a robust financial and professional infrastructure.

• Taking into consideration things like the ease of establishing and doing business, convenient time zone, no language barrier, truly world-class service providers, and an accessible and pragmatic regulator, there are few high-ranking financial centers other than Guernsey that come to mind for small to medium companies wishing to establish an international presence and do business globally.

Legal

• Guernsey prides itself on the quality of the internationally recognized regulatory system, which is both proportionate and responsive to the demands of a global economy. Over the last 50 years, Guernsey has established a reputation as a leading specialist Finance Centre providing a wide range of products and services to a global client base at the very highest standards.

• The roots of Guernsey law lie in Norman (French) customary law, which has evolved over the centuries. In recent years, the law has become more statute-based, which has brought in a number of concepts and precedents from the UK statute and common law.

Technology

• The Island is equipped with the vital infrastructure to allow access to global markets and customers; a new £1 billion data center is being developed on the Island, seven fiber optic cables connect Guernsey with the UK and France and two new cables are currently underway. In addition, faster 4G mobile technology is already being implemented and a smartphone mobile payments system is soon to be established.

• The Island’s telecommunications sector provides resilient, reliable high capacity links to global networks and high-speed internet connectivity via fiber optic cable. English is the native language and given the Island’s close proximity to the European mainland, the main European languages are also well represented.

Social

• Guernsey is the second largest of the channel islands and the largest of the islands that make up the Bailiwick of Guernsey, which includes Alderney, Herm, and Sark.

• Guernsey’s unique history and heritage, fascinating Sister Islands, and a wide variety of activities and attractions are just a few of the reasons that well over 300,000 people visit the Island each year. Many festivals and events, such as The Channel Island Heritage Festival, held in collaboration with Jersey, help to drive a healthy tourism industry throughout the year.

Economy

• Guernsey’s finance industry is the mainstay of the economy. The Island plays host to several hundred financial services businesses offering banking, insurance, investment, and trust services. Businesses range from global institutions to small independent operations providing niche services. Finance is the most profitable and largest earning economic sector, in terms of remuneration and profits, and employs around 24% of the Island’s workforce.

• Manufacturing has not in recent years been a significant sector of the island’s economy. However, it has been recognized by the government that, although finance has greater potential to generate revenue for the exchequer, a light industrial base is also needed in order to maintain a balance within the economy. To this end, land has been zoned for industrial use and various electronic equipment fabricators and other technology-based industries have been attracted to the island.

Environment

• Guernsey, already a leading funds jurisdiction, is developing the position as a center for green and impact investment. Guernsey has additionally identified the development of green investment products as a priority as part of the development of its financial services strategy, unveiled earlier in the year 2021.

• In 2021 the island launched the world’s first regulated Green Fund product with its Green Fund Rules to assure investors that their portfolio is helping mitigate environmental damage and climate change, a significant step for the local fund’s industry and one that helps clients navigate an increasingly complex area.

• A target of “net-zero” greenhouse gas emissions by 2050 will be written into law in Guernsey, as part of an action plan to combat climate change.

• The Climate Change Policy and Action Plan was approved by the States of Guernsey and lay the Committee for Environment and Infrastructure’s (E&I) framework for achieving the goal.

Looking to register company in Guernsey?

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