Guernsey differs from many other jurisdictions and has a number of advantages to offer to funds and their service providers, according to Babbé, the law firm.
“Guernsey is a well-established jurisdiction with a positive regulatory environment that seeks to accommodate business innovation,” says Stuart Tyler (pictured), a partner at Babbé.
In addition it has a significant industry presence to support its finance industry, coupled with strong interaction with onshore jurisdictions. Its recently amended commercial laws in relation to corporate bodies, innovation in respect of protected cell companies and incorporated cell companies, and updated regulatory regime for collective investment schemes mean that it has modern laws and a practical regulatory regime.
“Having not suffered the criticism directed at other offshore jurisdictions regarding regulatory requirements, client due diligence and tax arbitrage, Guernsey is able to offer a safe and respectable domicile for investment vehicles at a level available in few other jurisdictions,” Tyler says.
As a result, growth has been positive, even in challenging economic conditions. “Recently there have been indications of collective investment schemes migrating to Guernsey for a variety of positive reasons,” says Tyler. This has been regarded as a seal of approval for the quality of the regulatory regime, and makes it an attractive jurisdiction for funds wanting to emphasise good regulation and respectability of their product. Real property investment is currently the most active area in the marketplace.
However, there are challenges ahead. Tyler says: “The greatest ones may come from EU measures seeking to undermine competitive jurisdictions utilising devices founded in corporate governance and consumer protection measures.” But the arguments for these actions will be difficult to impose on a well-regulated and transparent jurisdiction such as Guernsey, he believes.
“Our perception is that there will be a flight to quality for business and organisations, as a result both of the economic climate and the regulatory requirements of existing domiciles,” Tyler says. This will lead to opportunities in all investment products, including pensions, insurance and collective investment schemes.
The growth story is evident at Babbé too. Its investment funds practice has continued to grow over the last 12 months and at one stage this year it had listed more new funds than any other law firm on the island.
“Our pipeline of new enquiries for investment fund work remains buoyant and we are confident that much of this will be converted into new work over the next trading period as the market improves,” says Tyler. In recent weeks Babbé has received instructions for a new captive insurance PCC and to advise the funder of acquisition finance for a funds industry takeover. It is also advising on a shipping distressed debt workout and a finance vehicle for the warehousing of surplus freight capacity seeking to raise GBP500 million.
The team receives instructions from leading London law firms and London promoters as well as Guernsey-based sponsors. “Our strength lies in the flexible approach we can offer to the less commoditised and more interesting and innovative pieces of funds work,” Tyler says.
The firm also advises on many leading transactions in the market, particularly commercial property debt funding, acquisitions, debt restructuring and innovative uses for Guernsey corporate structures.
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