Guernsey - Acting as a director of a company with an “established place of business” know the rules and get registered (if applicable)

Acting as a director is a regulated activity in the Bailiwick of Guernsey and individuals who do so BY WAY OF BUSINESS

• BY WAY OF BUSINESS = Defined under the Fiduciaries Law as receiving any income, fee, emolument or other consideration in money or money's worth for acting as director.

And if a director is offering services BY WAY OF BUSINESS, they may be required to register with the Guernsey Financial Services Commission (“the Commission”) or apply for a licence.

The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2020 ("the Fiduciaries Law") PROVIDES STATUTORY EXEMPTIONS in certain circumstances,

• ONE OF WHICH IS AN EXEMPTION
• For acting as a director of a company “with an established place of business in the Bailiwick provided that no services consisting of, or comprising a regulated activity, are supplied to the company by the director”.

The Commission has now issued further clarification on the factors which should be taken into account when considering whether a company has an “established place of business” in the Bailiwick for the purposes of the Fiduciaries Law. This can be found

• In the FAQ here.https://www.gfsc.gg/industry-sectors/fiduciary/guidance/acting-director

Essentially, merely having a registered office or holding statutory documents in Guernsey sufficient to meet requirements under the Companies (Guernsey) Law, 2008 or the Companies (Alderney) Law, 1994 DOES NOT AMOUNT TO an established place of business.

Factors to be considered include, for example,

• Whether the company has premises and staff of its own in the Bailiwick, the nature of the company’s occupancy of its Bailiwick premises, what activities or services are carried out within the Bailiwick by the company, etc.
• In essence, this statutory exemption from licensing (under section 3(1)(b) of the Fiduciaries Law) is not intended for use by directors of companies which have no clear substantive business activities being carried out in the Bailiwick. 

FAQ

For the purposes of this FAQ section, companies are

• "COUNTED IN" if they count towards an individual's total of 6 directorships under section 3(1)(g) because no other exemption in section 3(1) covers them.

On the other hand,

• "COUNTED OUT" = where acting as a director of a company falls under any applicable exemptions under section 3(1), this will be "counted out".

FAQ

1. I am a director of a number of local trading companies in Guernsey. Do I need a licence or do I need to register?
   1. No. Section 3(1)(b) of the Fiduciaries Law provides an exemption for acting as a director of a company with an established place of business in the Bailiwick provided that no services consisting of, or comprising a regulated activity, are supplied to the company by the director. There is no requirement to register in this case.
   2. Established place of business ("EPB")
   3. Section 59 of the Fiduciaries Law defines EPB as being in relation to a body, and without limitation, does not include an office in the Bailiwick at which is transacted only such administrative business as is necessary to enable that body to comply with the requirements of the Companies (Guernsey) Law, 2008, the Companies (Alderney) Law, 1994, the Partnership (Guernsey) Law, 1995, the Limited Partnerships (Guernsey) Law, 1995, the Limited Liability Partnerships (Guernsey) Law, 2013, the Foundations (Guernsey) Law, 2012, or any corresponding legislation in force in any jurisdiction outside the Bailiwick.
   4. For the avoidance of doubt, merely having a registered office or holding statutory documents or administrative records in Guernsey sufficient to meet requirements under the afore-mentioned laws (such as by the premises containing the documents prescribed by law, or the company having the signage prescribed by law) does not amount to an EPB. In this regard, the following factors would be taken into account when considering whether a company has an EPB within the Bailiwick (the list is not exhaustive and the factors may be considered separately or cumulatively):
   5. Whether the company has premises and staff of its own in the Bailiwick;
   6. The nature of the company’s occupancy of its Bailiwick premises including whether the premises are reserved for the company’s exclusive use or, where it has non-exclusive use of premises, the nature of company’s relationship with the other companies sharing the premises and their activities. The Commission is likely to regard a company to have no EPB in the Bailiwick if it occupies premises alongside a number of unrelated companies in the absence of any other meaningful activities in the Bailiwick;
   7. What activities or services are carried out within the Bailiwick by the company. Its business should be substantively conducted from the Bailiwick. Decision making, having a bank account and/or generating income from sale of products or provision of services in the Bailiwick are non-exhaustive indicators for this factor.
   8. In essence, this statutory exemption from licensing (under section 3(1)(b)) is not intended for use by directors of companies which have no clear substantive business activities being carried out in the Bailiwick.
2. I moved to Guernsey but I'm still a director of a company which is listed on the London Stock Exchange which I know does not count. I'm also still on the board of 7 of the group’s subsidiaries and joint venture companies which themselves are not listed
   1. If the listed company controls the composition of the subsidiaries' and the joint venture companies' board of directors or holds more than half in nominal value of the subsidiaries' and the joint venture companies' equity share capital, then the individual can utilise the exemption available under section 3(1)(f) of the Fiduciaries Law and these directorships would be "counted out".
3. From Q2 above, can all 8 directorships (seven for subsidiaries and joint venture companies and one for the listed company) be deemed as one directorship if I am remunerated by the listed company for all of the directorship services under one contract?
   1. The directorships would not be deemed as one because the companies are structured as separate legal entities with individual legal personalities. In addition, it would not be possible to consider the seven appointments to be "unpaid" as you are remunerated for all of your directorship services. If an individual is a director of a listed company and up to 5 subsidiary companies or joint ventures which the listed company does not control in the manner described above, the appointments would be counted in for the purposes of the up to 6 directorships exemption. Should the individual hold one or more further appointments which do not fall under the other exemptions then the individual should contact the Commission to discuss an application for a personal fiduciary licence.
4. I am a director of a Jersey company which is registered in Jersey under their Collective Investment Funds (Jersey) Law. Is this considered to be counted out in Guernsey?
   1. Yes. This activity is exempt under section 3(1)(af) of the Fiduciaries Law, as the directorship is of a non-Bailiwick company undertaking investment activities supervised by a supervisory authority which is a signatory to the International Organisation of Securities Commissions' Multilateral Memorandum of Understanding (section 3(1)(af)).
5. I am a director of a Cayman company which is licensed in Cayman under their Mutual Funds Act. Is this considered to be counted out in Guernsey?
   1. Yes. This activity is exempt under section 3(1)(af) of the Fiduciaries Law, as the directorship is of a non-Bailiwick company undertaking investment activities supervised by a supervisory authority which is a signatory to the International Organisation of Securities Commissions' Multilateral Memorandum of Understanding (section 3(1)(af)).
6. I am a director of a Cayman company with not more than 15 investors which is considered an unregulated fund in Cayman. Is this considered to be counted out in Guernsey?
   1. No, it will be counted in. Directorship of an unsupervised fund would not qualify for the exemption under section 3(1)(af) as described in Q5 above.
7. I am a director of a Private Trust Company incorporated and regulated in Jersey. Is this counted out?
   1. No. In this case, it does not meet any of the statutory exemptions in the Fiduciaries Law.
8. I have been asked to be a director of a start up company by a friend. I am not receiving a director’s fee which I think makes this company not count in.
   1. If you are not receiving a director’s fee or any other income, fee or benefit from this appointment then the activity will not be regarded as a regulated activity as it is not “by way of business” and therefore “counted out”.
9. Does the status change if the founder offers me a small shareholding as compensation for acting as a director even though this shareholding currently has little or no value?
   1. This can fall under the exemption if you hold more than 50% of the total shares of the company. Otherwise, it will be “counted in” as you are actually paid “in kind” by receiving compensation in the form of a shareholding.
10. I am a director of an incorporated cell company (“ICC”) and its incorporated cells. Will this be counted as one directorship?
    1. If the ICC (including its incorporated cells) falls within the definition of a "supervised body", under the Fiduciaries Law, then exemption under section 3(1)(e) of the Fiduciaries Law will apply and there will be no requirement for a personal fiduciary licence or to be counted as in for purposes of the exemption for up to six directorships.
    2. A supervised body is:
       1. A body:
          1. Which is a licensee within the meaning of the Protection of Investors Law or which is exempt from licensing under section 44 of that Law; or
          2. Which holds an authorisation or registration under section 8 of that Law; or
       2. A body which is a licensee within the meaning of the Insurance Business Law;
       3. A body which is a licensee within the meaning of the Insurance Managers and Intermediaries Law;
       4. A body which is a licensee within the meaning of the Lending, Credit and Finance Law;
       5. A body which is a licensed banking institution; or
       6. A body which is of any other class or description prescribed for the purposes of the Fiduciaries Law by regulations of the Committee.
    3. In a rare occurrence where the ICC is not a supervised body, the directorship of the ICC and its incorporated cells will be counted separately as each incorporated cells has its own legal identity which is also distinct from the ICC. Accordingly, this ICC and its cells will be “counted in”. If the total number of directorships held is not greater than six, then this may fall under the exemption under section 3(1)(g) of the Fiduciaries Law. If the total number of directorships is more than six, then the individual in this scenario should contact the Commission to discuss making an application for a personal fiduciary licence.
11. I am a director of a Guernsey company which is a “registered fund” under the Protection of Investors (Bailiwick of Guernsey) Law, 2020 (“the POI Law”). Is this counted out from my 6 directorships allowed under section 3(1)(g)?
    1. Yes, the directorship will not be counted within the “up to 6 directorships”. The activity of acting as a director of a registered fund is exempted under section 3(1)(e) of the Fiduciaries Law as a registered fund is regarded as “a supervised body” under the Law.
12. Following question 10. above, this company has 10 special purpose companies owning properties around the world all of which are 100% owned by the registered fund. Are all of these companies counted out?
    1. Yes, acting as director of those companies is exempted under section 3(1)(f) of the Fiduciaries Law as they are a subsidiary of a registered fund which is exempt under section 3(1)(e) of the Law.
13. I am a director of a listed company. Is this directorship counted out?
    1. This depends on the listing exchange. Acting as director of a company which is quoted on a stock exchange recognised by the Commission is an activity exempt from the requirement to hold a licence under the Fiduciaries Law (s.3(1)(c) of the Fiduciaries Law). Stock exchanges listed under the Beneficial Ownership (Definition) Regulations, 2017 (link here) are stock exchanges recognised by the Commission for the purposes of this exemption.
14. I act as an executive director of a UK-based manufacturing company. I work remotely from my office in Guernsey, my full time role is as head of marketing but I am also appointed to the company’s board. Is this directorship counted out?
    1. This directorship may be exempted under section 3(1)(w) of the Fiduciaries Law if it is incidental to the carrying on of the primary executive role, if no separate or additional remuneration is taken for the directorship role and if the directorship role were to cease there would be no reduction in the individual’s remuneration in respect of the executive role.
15. I act as a director of a general partner of a Guernsey registered collective investment scheme and also as a director of the general partner of a carry vehicle with an interest in this collective investment scheme. Both companies are administered by the same licensed administrator. Is this directorship counted out?
    1. Yes. The directorship of the general partner of the carry vehicle is exempted under section 3(1)(ag) of the Fiduciaries Law and would be counted out.
16. For the purposes of exemption under section 3(1)(ag) of the Fiduciaries Law, are vehicles such as co-investment companies or carried interest companies “connected” to a collective investment scheme where they are either part of the ownership structure of the management entity or team or for its carry?
    1. A director of the general partner of a carry vehicle or co-investment company to a Guernsey registered or authorised collective investment scheme is exempted under section 3(1)(ag) of the Fiduciaries Law where the director is also a director of the collective investment scheme’s general partner and both companies are administered by the same licensed administrator.
17. For the purposes of exemption under section 3(1)(ag) of the Fiduciaries Law, is a company connected to a collective investment scheme if it is owned by the same holding company as the general partner or within the same group as the collective investment scheme?
    1. Simply being part of the same group is insufficient grounds to establish connection for the purposes of section 3(1)(ag) but a directorship of a group company may be exempt under section 3(1)(ag) where the criteria referenced in the answer to question 15 above are met.
18. For the purposes of exemption under section 3(1)(ag) of the Fiduciaries Law, is a special purpose vehicle or underlying holding company of a collective investment scheme regarded as “connected”?
    1. Directorship of a company which is a subsidiary of a Guernsey authorised or registered collective investment scheme is exempt under section 3(1)(f) of the Fiduciaries Law.
    2. The general partner of an underlying partnership forming part of a collective investment scheme’s investments would be deemed to be connected for the purposes of section 3(1)(ag) of the Fiduciaries Law. Where the director of this general partner is also a director of the collective investment scheme’s general partner and both companies are administered by the same licensed administrator, then the directorship is exempt.
19. I am a director of a Guernsey company which acts as general partner of a partnership which is a private investment vehicle for an individual investor. The partnership is administered by a Guernsey licensed administrator but is not a registered or authorised collective investment scheme. Is this directorship counted out?
    1. This directorship is not of, and is not connected to, an authorised or registered collective investment scheme. This directorship would be counted in.
20. I am a Bailiwick-resident director of 6 companies all of which are administered by a Bailiwick licensed fiduciary. None of the directorships qualify for a specific statutory exemption but I have relied upon the up to 6 exemption under section 3(1)(g)
    1. If 6 directorships are held then the individual will be exempt from licensing under the Fiduciaries Law.
    2. If all the companies are administered by a licensed fiduciary then the individual will not be required to register with the Commission.
    3. If a seventh directorship is taken up, and no other specific statutory exemption is available, then section 3(1)(g) may no longer by relied upon and the individual will be required to hold a Personal Fiduciary Licence. A holder of a Personal Fiduciary Licence is outside the scope of the director registration regime.

Disclaimer

Whilst the Commission FAQ ABOVE has taken all reasonable steps to ensure that the information set out herein is accurate, the Commission (NOR COMSURE IN REPRODUCING IT) does not accept any responsibility for errors or inaccuracies. The materials in this note do not constitute financial or other professional advice. You should consult your professional adviser if you require advice.

Source

https://www.gfsc.gg/news/acting-director-company-established-place-business-bailiwick

https://www.gfsc.gg/industry-sectors/fiduciary/guidance/acting-director