Guernsey: Another Vintage Year For The Guernsey Funds Industry

Last Updated: 15 May 2017
Article by Kate Storey

Most Read Contributor in Guernsey, December 2017

The last twelve months have seen the Guernsey funds industry show its strength and stability during a period of significant international political changes, writes Kate Storey, Funds Partner at Appleby, on behalf of the Guernsey Investment Fund Association.

The investment fund statistics for the fourth quarter of 2016 were very positive for Guernsey, building further on the previous five straight quarters of growth. For the year since 31 December 2015 total net asset value of funds under management and administration in Guernsey increased by 12.5%, bringing the total to £255.9 billion. There was also a year on year increase of 1.4% in the total number of closed-ended investment funds established in Guernsey.

To achieve this growth Guernsey has continued to focus on what it has done best for several decades, including pioneering the use of innovative new products and technologies, whilst meeting the highest international regulatory standards.

Highest regulatory standards


In July 2016, Guernsey's Alternative Investment Fund Managers Directive (AIFMD) compliant regime received its second unqualified positive assessment from the European Securities and Market Authority (ESMA). In making its assessment ESMA examined factors including investor protection, competition, market disruption and the monitoring of systemic risk, tax information exchange and anti-money laundering measures. The European Commission has not yet finalised its assessment of the ESMA advice on the extension of the AIFMD passport to third country jurisdictions, but Guernsey remains at the front of the queue for when the extension is granted. In the meantime, Guernsey alternative investment funds (AIFs) and fund managers continue to have access to the EU markets through the various national private placement regimes (NPPR); those regimes remain unchanged and are working well for Guernsey funds.

Guernsey has been a market leader in introducing a dual funds regime and products such as its Manager Led Product, so that it is prepared for AIFMD whilst giving optionality for non-AIFMD funds. In doing so, the Guernsey regime offers the funds market certainty now and in the future. Guernsey will continue to innovate and use its ability to legislate quickly to ensure that it is prepared for whatever the future environment is.

Base erosion and profit shifting (BEPS)

Guernsey is an OECD member through its relationship with the UK and is actively committed to the development and implementation of global standards in line with the OECD's BEPS Action Plans. It considers itself to be effectively, a 'BEPS-compliant jurisdiction' – due to Guernsey's finance sector model and regulatory framework, which through its focus on business substance prevents the Island being exploited significantly for BEPS and ensures equivalent outcomes to those that both the OECD and EU Commission are seeking to secure.

Guernsey's government has committed to signing the BEPS Multilateral Instrument in order to implement tax treaty-related measures to combat BEPS and has already put in place the implementing regulations for Country by Country Reporting.


20th anniversary of the PCC

Guernsey has a long history of innovation in financial services products. 2017 marks the twentieth anniversary of the protected cell company (PCC), a form of legal structure which Guernsey pioneered. In a PCC shares can be issued in separate cells to shareholders who may be different for each cell and different from the shareholders of the 'core' of the PCC. The assets and liabilities of each cell are legally segregated from those of the other cells and the core.

The PCC has great application in the funds industry, for example, using different cells for different strategies. There are clear cost and time savings in using a cell company rather than setting up multiple fund structures.

Cell companies can also be used as 'rent-a-cell' platforms to white label to multiple investment advisers who each take a separate cell or cells for their separate fund(s). This is more cost effective for investment advisers than setting up a standalone fund structure and helps new investment advisers build a track record in an already established investment vehicle.

Dual funds regime

Guernsey took the innovative approach of introducing a dual regime for AIFMD whereby Guernsey fund managers can opt in to an AIFMD equivalent regime in advance of the extension of the third country passport, or alternatively remain out of AIFMD compliance where an AIFMD fund is not required (when using NPPR or marketing outside Europe).

Manager Led Product

Building on the interest generated by the dual funds regime in locating fund managers in Guernsey, in May last year the Guernsey regulator (GFSC) introduced the Manager Led Product. This may be used by Guernsey-based managers that are considered AIFMs under the Guernsey AIFMD Rules (rules which are equivalent to the AIFMD regime) and are seeking to market an AIF into a host country under the NPPR. Once licensed by the GFSC the manager is able to launch new fund structures by simple notification to the GFSC, which will be registered by the GFSC within one business day of receipt. No regulatory rules are applied to the fund structures, only to the manager, which must comply with the Guernsey AIFMD Rules. Capital may be concentrated at the manager level. The manager may request derogations from the AIFMD Rules if acceptable to the host country and the reporting requirements are maintained to the required standard.

The product therefore offers a proportionate risk based level of regulation, maintaining reporting requirements to AIFMD standards. It enables the fast track establishment of fund structures without duplication of regulatory requirements over several entities.

Private Investment Fund

In November 2016 the GFSC launched a new product termed a 'Private Investment Fund' or 'PIF'. The philosophy of a PIF is a close relationship between investors and the licensed manager, who will be responsible for providing warranties on the ability of the investors to assume loss. The number of investors is restricted to no more than 50 legal or natural persons, however, an investment manager acting as agent for a wider group of stakeholders can count as one investor.

The key benefits of a PIF are:

  • No information particulars required, significantly reducing cost and processing time;
  • Licensing of manager and registration of PIF within one business day;
  • No rules applied against licensed manager;
  • No custodian required, including for open-ended funds;
  • No limit on number of investors to whom PIF may be marketed (in contrast to comparable regimes of other jurisdictions);
  • No requirement for PIF to be sub-threshold product for AIFMD.


Guernsey was recently involved in the first commercial deployment of blockchain technology, which is being used in the management and administration of a private equity fund managed by Unigestion and administered by Northern Trust in Guernsey. Blockchain technology allows the fund to transfer ownership stakes and be managed, serviced and audited throughout the investment lifecycle on a transparent platform, accessed via secure means.



Guernsey remains the number one offshore jurisdiction through which to set up funds for listing on the London Stock Exchange markets, offering a proven and expert platform from which to launch into the City.


Earlier this year the Channel Islands Securities Exchange rebranded as The International Stock Exchange (TISE), to reflect its international client base of issuers. As the Channel Islands are outside of the EU, the EU's Market Abuse Regulation does not apply to securities listed on TISE, which applies its own market abuse rules proportionately to the type of listed product.

Over the last year TISE listed the first regulated bitcoin fund to be listed on an exchange globally, and has seen a resurgence of real estate investment trusts (REITs), reflecting the growing interest in UK real estate since Brexit. As at January this year, more than a quarter of all UK REITs were listed on TISE.

In April this year TISE received recognition from BaFin, the German regulator, meaning that German UCITS can now invest into securities listed on TISE. This demonstrates that the German financial services authorities recognise the role that the British Crown Dependencies play in the flow of global capital.

Look ahead

Items on the GFSC's agenda for 2017 include:

- development of a manager-led product for managers targeting markets excluding Europe;

- giving guidance on products which are not funds and fall outside regulation in Guernsey. This includes, for example, structures with a single investor or which are closely held or where the investors are closely associated; and single asset structures;

- revising the Guernsey regulatory laws to address MiFID II.

Aside from Brexit there is current international focus on the two quite conflicting areas of data protection and public registers of beneficial ownership. Guernsey is responding to ensure appropriate legislation is put in place addressing both, albeit Guernsey funds will not be subject to its proposed Beneficial Ownership of Legal Persons (Guernsey) Law, as they are appropriately covered by the existing framework of disclosure by and to regulatory, tax and police authorities.

Outgoing Chairman of the Guernsey Investment Fund Association, Andrew Whittaker, recently noted, "Guernsey has put in place building blocks post-Brexit and has the skills and nimbleness to exploit opportunities as they arise". Testament to this is the quality of the fund managers who continue to use Guernsey, such as Permira – whose latest fund recently closed at EUR7.5 billion – Apax and Cinven.

Whatever the future holds, the pedigree of Guernsey's funds industry puts it in good stead to take advantage of the ever-changing global market.

For more information about Guernsey's finance industry please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions