This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.  

Guernsey Foundations Explored In London

Wednesday, November 21, 2012

Nerine Group of Fiduciaries and law firm Mourant Ozannes have jointly hosted a seminar on the new Guernsey foundations law for a select group of leading private client lawyers and barristers in London.

Chaired by Nerine Fiduciaries chairman Keith Corbin, the event included briefings from St John Robilliard and Giles Corbin, Mourant Ozannes' joint heads of the firm's International Trusts & Private Client practice in Guernsey and Jersey.

Nick Jacob, a partner at Lawrence Graham and a key member of the Society of Trust and Estate Practitioners (STEP) executive committee, joined the speakers for a lively panel discussion concerning the attractiveness of foundations for the Asian market and how the UK tax authority, HM Revenue and Customs, might treat foundations.

Robilliard explained that the draft Guernsey foundations law was approved by the island's government in July 2012 and is pending final approval from the Privy Council. He anticipated that the law would come into force in early 2013.

"Guernsey's motivation for bringing in foundations is similar to Jersey's. Clients have often struggled with the fact that a trust is an expression of a relationship based on property law rather than being a separate legal entity. Foundations address this challenge," said Robilliard.

"The founder of a foundation under Guernsey law will have no right, in his capacity as founder, to foundation property. There will be no concerns over foundation assets reverting to the founder as you might find with a trust. Guernsey's registration process involves a combination of public and private registration: the public register will be sufficient to demonstrate that a particular foundation exists while a private register is needed to allow regulatory and anti-money laundering oversight," he added.

He pointed out that, unlike a Jersey foundation, the founder must make an initial endowment and there is no requirement for the council of members to contain a Guernsey resident and licensed fiduciary, but in that situation a Guernsey licensed fiduciary would have to act as resident agent.

"The resident agent will have the right, but not the obligation, to obtain information in respect of the foundation from the council. Beneficiaries under Guernsey foundations will either be enfranchised beneficiaries, with a right to information, or disenfranchised beneficiaries who will have no right whatsoever to information."

"While Guernsey has implemented reservation of powers to the founder, similar to those in the trust law and in Jersey's equivalent foundations law, there is a distinction. Certain powers can only be reserved during the founder's lifetime and if the founder is a corporate entity such powers can only be reserved for 50 years."

"Given difficult experiences that have arisen in other jurisdictions, foundations in Jersey and Guernsey may well be regarded by clients and their advisors as familiar civil law-accepted vehicles established in well-regulated jurisdictions that are able to address the challenges of providing services in an ever more compliant global environment whilst still preserving the privacy that sophisticated private clients desire."

Giles Corbin, who set out the features of the Jersey foundation offering to the audience, was part of the working group which developed and drafted Jersey's Foundations Law.

"There are some 77 civil law countries in the world, including three out of the four BRIC countries (Brazil, Russia, India and China) with vast potential workflows. Because, for instance, the trust concept is regarded as 'repugnant' to Russian law, a foundation, as a civil law construct, represents a much more attractive option where Russian law issues are likely to be in play," said Corbin.

"Foundations are also attractive to Middle East clients," he added. "Given the vast wealth in the region and the suitability of foundations for the Middle East market, it is not surprising that a number of the foundations established for Middle Eastern clients have been of significant size - in excess of USD100m."

He explained that foundations removed some of the uncertainties associated with trusts: they are less susceptible to sham attack; give confidence to the founder as the assets were owned by the foundation itself; a distinct legal entity; and they gave a multiplicity of control retention mechanisms over key decisions for the founder while offering a higher level of confidentiality than trusts.

Corbin went on to give examples of where foundations had been used in practice including for a Swiss resident who wanted to establish a philanthropic infinite duration vehicle to preserve tracts of rainforest, a Luxembourg fund promoter who wanted an orphan manager and a Russian family who wanted a vehicle to hold property in Moscow, Egypt and London.

"It's an important addition to Jersey - and now Guernsey's - range of tools in the wealth management space," he said. "It is clear there is a wealth of expertise in both Channel Islands that will make each island's foundation law compelling to many in civil law jurisdictions. This level of expertise, and the islands' willingness to evolve quickly and with skill to cater to the demands of the private client sector, stand the Channel Islands in very good stead for future work."

Mailing List

Click here to manage your mailing list preferences, or view our privacy statement.

The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions


Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation


Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees


Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees


Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax


Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision


Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment


Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations


Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations


Madeira: Legal Framework and Formation Rules and Fees


Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004


Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment


Monaco: Legal Framework and Formation Rules and Fees


Nevis: Legal Framework and Formation Rules and Fees


Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama


Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance


Vanuatu Legal Framework and Formation Rules and Fees

Latest News

BVI Financial Firms Need To Develop New Niches
BVI Finance, the financial services industry promotional agency, has said the industry must actively adapt to target new opportunities and promote new offerings internationally.

ADGM Revises Pooled Fund Capital Req's
Abu Dhabi Global Market, the low-tax international financial center, has revised the capital requirements applicable to managers of collective investment funds, with effect from April 10, 2017.

ADGM Consults On Allowing REITs
Abu Dhabi Global Market, the low-tax international financial center, is consulting stakeholders on plans to allow the establishment of private real estate investment trusts.

Gibraltar To Offer Foundations
Gibraltar's Parliament recently passed a bill permitting the establishment of Private Foundations.

Gibraltar Acts To Preserve QROPS Status
Gibraltar has made new pension regulations to maintain its attractiveness as a jurisdiction from which to transfer UK pensions.

Australia Consults On Taxation Of Stapled Structures
The Australian Treasury has launched a consultation on the tax consequences of the re-characterization of trading income derived through the use of stapled structures.

Australian DPT Legislation Passes Senate
The Australian Senate has passed legislation to introduce a diverted profits tax from July 1, 2017.

Guernsey Funds Sector Grew In 2016
The total value of funds business in Guernsey grew by more than GBP28bn (USD32.5bn) last year.

New Zealand Explains Foreign Trust Disclosure Changes
New Zealand has published guidance on the increased disclosure requirements for foreign trusts with New Zealand-resident trustees.

Canadian Budget Focuses On 'Tax Fairness'
The tax measures contained in Canadian Finance Minister Bill Morneau's second Budget are focused on closing loopholes, cracking down on tax evasion and improving tax reliefs for the "middle class."

Jersey Regulator Issues AML/CTF Funds Guidance
Jersey's financial services regulator, the Jersey Financial Services Commission, has issued new anti-money laundering and countering the financing of terrorism guidance for Funds and Fund Operators.

More Tax Hikes For UK Taxpayers In 2017 Budget
The UK Budget, released on March 9, 2017, featured tax measures to, among other things, hike taxes on self-employed workers, further close avenues for legal avoidance, and defer mandatory digital tax reporting until April 2019.

ACOSS Submits Recommendations For Australian Budget
The Australian Council of Social Services has urged that the Government abolish ineffective tax concessions, introduce a sugary drinks tax, and scrap its company tax proposals.

MEPs Call For Wider Access To Beneficial Ownership Data
EU citizens would be able to view information in registers of beneficial ownership without having to demonstrate a "legitimate interest," under proposed amendments the Anti-Money Laundering Directive.

New Zealand Tax Changes Enter Into Force
A Bill including provisions to simplify New Zealand's tax processes, reduce compliance costs for smaller businesses, and tighten foreign trust disclosure rules received Royal Assent on February 21.