Ultimate legislative authority over Guernsey vests in Parliament at Westminster although Guernsey has no representative. In practice such legislation would be with the consent of the Island. The official UK view is that there is no limit on Parliamentary legislation that may be imposed on the Islands, but at the same time it is accepted that such legislation is, by convention, not imposed where it would effect the internal affairs of the Island and its imposition is not consented to by the islanders.
When Britain decided to join the EU it was necessary to negotiate a special status for the Channel Islands and the Isle of Man. The Islands fall within both the common customs area and the common external tariff. No other EU provisions apply although citizens of the EU must be treated in the same way as those of the UK.
Guernsey company law is found in the Companies (Guernsey) Law 1994. Companies may be formed for any lawful purpose and general commercial objects may be one of the objects of the company. Any name is acceptable, provided it does not include references or allusions to the Crown or is otherwise sensitive (e.g. “Bank”, “Insurance”, “Investment Business”).The name must end with the word “Limited”.
Ready-made companies are not available in Guernsey as certain information regarding the company and its founders must be given to the Financial Services Commission prior to granting incorporation. A new Guernsey incorporation takes approximately 3 weeks. Specific information that the FSC requires prior to incorporation includes; full details of ultimate beneficial ownership, specific objects of the company, the reason for incorporation and whether any person will be enable to avoid any existing liability to UK tax.
The share capital may be denominated in any currency, there is a 0.5% duty payable on authorised share capital (with a minimum of £50 duty payable). There must be at least two shareholders, who may be of any nationality. Bearer shares are not allowed, but nominees can hold the shares to preserve the anonymity of beneficial owners.
There must be at least one director who may be an individual or a corporation. It is also usual to appoint a company secretary. The company must have a registered office in Guernsey and must maintain statutory registers including the register of directors, secretaries, members and charges along with the minutes of directors and shareholders meetings.
The company must hold an Annual General Meeting, although the meeting does not have to be held in Guernsey. Accounting records must be kept which sufficiently show and explain the company’s transactions. A company must appoint an auditor and have its annual accounts audited, unless it is categorised as a dormant or asset holding company in which case it may elect to dispense with the requirements of an audit. The audited accounts should be presented to the shareholders at the AGM, although the accounts of the company do not have to be filed in Guernsey.
An Annual Return must be lodged in January of each year, together with a filing fee. Failure to do so results in the imposition of a rising scale of fines and ultimately striking off.
A company resident in Guernsey is chargeable to income tax at the rate of 20% on its profits. However, a company which is ultimately owned by non-residents of Guernsey and does not trade in Guernsey can obtain exemption from tax upon payment of a fee, which is payable in January each year.