GUERNSEY Law and Practice Contributed by: Matthew Brehaut, Carey Olsen
1. Market Overview 1.1 State of the Market
2. Alternative Investment Funds 2.1 Fund Formation 2.1.1 Fund Structures The principal legal vehicles used to set up alter - native investment funds are as follows: • open-ended – most open-ended funds estab - lished in Guernsey are structured as limited companies, protected cell companies or incorporated cell companies; • closed-ended – most closed-ended funds established in Guernsey are structured as limited partnerships; and • unit trusts are also used for both open and closed-ended Guernsey funds. The Advantages and Disadvantages of Using Such Structures Companies All types of company: • offer limited liability to investors; • are managed by a board of directors; • are non-tax transparent; and • (unless they elect otherwise) are deemed Guernsey-resident for Guernsey tax pur - poses. A protected cell company provides (by way of statute) for the creation, within the single legal entity of that company, of separate pools of assets segregated from the other assets and liabilities of the company and its other cells, with creditors having recourse limited to the assets of a particular cell. An incorporated cell company takes this statu - tory segregation one step further such that each cell is a separately registered legal entity with:
Guernsey is frequently used by advisers and managers globally for the formation/domicil - ing of investment funds. Guernsey is one of the world’s largest offshore finance centres, with a thriving funds industry. As of 30 June 2024, over 1,340 investment funds and over 1,580 sub-funds were domiciled and/ or administered in the island. The most recent aggregate value of funds under management and administration in Guernsey is reported as over USD530 billion, of which USD344 billion is in closed-ended Guernsey funds. Guernsey attracts all types of fund sponsors/ managers – ie, sponsors/managers of: • private funds; • hedge funds; • listed funds; and • quasi-retail funds (although there is no UCITS equivalent offering in Guernsey). Additionally, the fund “types” include the full span of asset classes and strategies, such as: • alternatives (including private equity, debt, infrastructure, real estate, venture capital, growth, tech, etc); and • open-ended funds (again, with a broad range of asset classes). Closed-ended alternative/private funds are the most common fund type attracted to Guernsey as a funds domicile, with the remainder being Guernsey open-ended funds and non-Guernsey schemes.
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