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Guernsey helping Chinese funds sector

Guernsey’s expertise within the funds industry is being utilised by the Chinese Government and the country’s fund managers to enhance the way its own funds sector is operated and regulated.

Guernsey-headquartered International Administration Group (IAG), which formed a partnership with Exceedor in Shanghai last year, is at the centre of these discussions. IAG’s relationship with Exceedor allows it to offer onshore RMB denominated private equity fund administration services in China and follows on from the establishment of its Hong Kong office in early 2011.

Julian Carey, Managing Director of IAG’s Hong Kong office, says discussions were concentrated on enhancing the reporting and corporate governance standards in China.

“Our joint venture partner in China headed up by Yu Qi, has strong connections with the Shanghai Municipal Financial Services Office who have been tasked by Central Government to instigate an effective regulatory regime for private equity and hedge funds,” he says. “To this end, the Financial Services Office has been interested in the way that Guernsey regulates its funds sector and IAG has been instrumental in explaining to them how our system in Guernsey works.”

Ms Yu Qi is familiar with Guernsey as a jurisdiction and has visited the island on a number of occasions. On her most recent visit to Guernsey earlier this month she met with IAG staff and senior management at the firm’s St Peter Port offices, as well as other local bodies, including Guernsey Finance – the promotional body for the Island’s finance industry.

“We are so pleased that the Shanghai authorities have asked IAG to explain the Guernsey regulations. This reflects the widely held view of the Island as being a quality, well regulated jurisdiction,’ says Yu Qi.

Fiona Le Poidevin (pictured with Yu Qi), Deputy Chief Executive of Guernsey Finance, says it was encouraging to see IAG involved in discussions with the Shanghai Financial Services Office after it had become the first Guernsey fund administrator to set up in China to secure benefits from an opening up of the market to RMB investments both into and out of the country.

“The Shanghai Financial Services Office in many ways wants to replicate the systems we have in place in Guernsey to operate and regulate the funds sector,” she says. “Julian Carey of IAG has had meetings with them in order to go into greater detail and to explain more fully the workings of the funds sector in Guernsey. Guernsey Finance will be visiting its contacts from within the Shanghai Financial Services Office in October to progress matters.

“The Chinese funds sector in general is relatively young so the opportunity to work with the Chinese to help them better understand how our substantial funds sector operates is another chance to strengthen our links in a market we see as playing a big role in the Island’s future. The fact that IAG is pushing back these frontiers is good for Guernsey, while at the same time we are seeing similar moves by the Richmond Group in the fiduciary sector, which is making sure that Guernsey is very much in the minds of Chinese financial services firms when it comes to opportunities to use offshore centres like ourselves.”

Guernsey Finance – the promotional agency for the Island’s finance industry internationally, first established a representative office in Shanghai at the end of 2007. Since then, there have been delegations of politicians, regulatory officials and business representatives in both directions.

In 2010, Guernsey signed a Tax Information Exchange Agreement (TIEA) with the Chinese central government tax authorities and a Memorandum of Understanding (MoU) for exchange and cooperation with the Shanghai Financial Services Office.

The Island has also been given approval for companies incorporated in Guernsey to list on the Hong Kong Stock Exchange (HKEx).

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