Companies - Legal Person
A company is a legal person which means it is a legal entity in its own right, separate and distinct from its members (owners). It has the power to own assets in its own name, to borrow and/or lend money, to enter into contracts and to sue and be sued in its own name.
A company comes into existence upon incorporation (see "How do I incorporate a company") and continues until it is removed from the Register of Companies.
A company must have at least one director. Directors are appointed by members of a company to manage its business and affairs.
The legal framework for establishing and operating a company is set out in the Companies (Guernsey) Law, 2008.
In Guernsey, in respect of the liability of its members, a company can be limited (by shares or by guarantee), unlimited, or mixed liability.
Where a company is a "limited" company, the members of the company have limited liability, which means that a member will only be liable for the company's debts up to the amount unpaid on shares they hold, in the case of a company limited by shares, or up to the amount they have agreed to contribute to the company's assets if it is wound up, in the case of a company limited by guarantee.
In Guernsey it is also possible to incorporate protected cell companies and incorporated cell companies. These are largely used by the insurance and investment sectors of our finance industry. A company cannot be incorporated as a cell company unless it has the written consent of the Guernsey Financial Services Commission (the "GFSC").
Protected Cell Company (PCC)
A company cannot be a PCC unless it is, or will be:-
- declared by the GFSC to be an authorised or registered collective investment scheme under section 8 of the Protection of Investors (Bailiwick of Guernsey) Law, 1987 (the "POI Law"),
- licensed to carry on controlled investment business within the meaning of the POI Law,
- a closed ended investment company,
- a licensee within the meaning of the Insurance Business (Bailiwick of Guernsey) Law, 2002,
- along with its affairs, administered by a GFSC licensed person with a place of business in Guernsey, provided it will not be a licence holder of within the meaning of the Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law 2002, or the Banking Supervision (Bailiwick of Guernsey) Law 1994, or a licensed fiduciary within the meaning of the Regulation of Fiduciaries, Administration Businesses and Company Directors etc. (Bailiwick of Guernsey) Law 2000 or a company licensed to carry on controlled investment business within the meaning of the POI Law.
- a company of any other class or description prescribed by the GFSC.
A PCC is a single legal person. The creation by a PCC of a cell of that protected cell company does not create, in respect of that cell, a legal person separate from the PCC.
A PCC may create one or more cells for the purpose of segregating and protecting cellular and core assets. The core of a PCC is the PCC excluding its cells.
The assets of a PCC are either cellular assets or core assets. Cellular assets of a PCC comprise the assets attributable to the cells of the PCC. The core assets of a PCC comprise the assets attributable to the core of that PCC.
A PCC may, in respect of its cells, create and issue shares (cell shares) the proceeds of which shall comprise the cellular assets attributable to the cell in respect of which the cell shares were issued.
The proceeds of the issue of shares, other than cell shares, created and issued by a PCC shall comprise the cores assets of the PCC.
It is the duty of the directors of a PCC to keep cellular assets separate and separately identifiable from core assets and to keep cellular assets attributable to each cell separate and separately identifiable from cellular assets attributable to other cells.
A PCC shall inform any person with whom it transacts that it is a PCC, and for the purposes of that transaction identity or specify the cell in respect of which that person is transacting or that they are transacting with the core, as the case may be.
Incorporated Cell Company (ICC)
A company cannot be an ICC unless it is, or will be:-
- declared by the GFSC to be an authorised collective investment scheme under section 8 of the Protection of Investors (Bailiwick of Guernsey) Law, 1987 (the "POI Law"),
- licensed to carry on controlled investment business within the meaning of the POI Law,
- a closed ended investment company,
- a licensee within the meaning of the Insurance Business (Bailiwick of Guernsey) Law, 2002,
- along with its affairs, administered by a GFSC licensed person with a place of business in Guernsey, provided it will not be a licence holder of within the meaning of the Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law 2002, or the Banking Supervision (Bailiwick of Guernsey) Law 1994, or a licensed fiduciary within the meaning of the Regulation of Fiduciaries, Administration Businesses and Company Directors etc. (Bailiwick of Guernsey) Law 2000 or a company licensed to carry on controlled investment business within the meaning of the POI Law.
- a company of any other class or description prescribed by the GFSC.
An ICC is a single legal person.
An incorporated cell (IC) is a single legal person separate from its ICC. An IC is not a subsidiary of its ICC.
An IC cannot be an ICC or a PCC, nor can an IC be a member of its ICC but it may be a member of another IC of its ICC (unless the contrary intention appears in its memorandum or articles).
An IC must have the same registered office address as its ICC.
At least one of the directors of an IC shall also be a director of its ICC. It is the duty of the directors of an ICC and its ICs to keep the assets and liabilities of the ICC separate and separately identifiable from the assets and liabilities of its ICs, and to the keep the assets and liabilities of each IC separate and separately identifiable from the assets and liabilities of the other ICs of the ICC.
An ICC has no power, by virtue of its position as an ICC, to enter into transactions on behalf of any of its ICs. An IC has no power, by virtue of its position as an IC, to enter into transactions on behalf of its ICC or any other ICs of its ICC.
When entering into transactions it is the duty of the directors and officers of an ICC and its ICs to ensure that it is stated whether the transaction is entered into by the ICC or by an IC and, if it is an IC, to clearly identify which IC.
Company limited by shares:-
A company limited by shares shall have a share capital.
A company limited by shares shall have members (also known as shareholders) whose liability for the company's debts is limited to the amount (if any) unpaid on the shares held by them and there shall be no other type of member.
Company limited by guarantee:-
A company limited by guarantee may have a share capital.
A company limited by guarantee shall have members whose liability for the company's debts is limited to the amount that member undertakes to contribute to the assets of the company in the event of it being wound up and may, where the company has a share capital, have shareholders and shall have no other type of member.
Guarantee members may have differing guarantee amounts but this does not alter their interest in the company.
Unlimited Liability Company:-
An unlimited company may have a share capital.
An unlimited company shall have members whose liability for the company's debts is unlimited while they are members, or within a period of one year after they cease to be members.
Where the company has a share capital it may also have shareholders.
There shall be no other type of member.
The memorandum or articles may require a member of an unlimited company to also be a shareholder, or they may prohibit a member from also being a shareholder.
Mixed Liability Company:-
A mixed liability company may have a share capital.
A mixed liability company may have a mix of all the following member types: members guaranteeing the company's liabilities to an agreed amount, members with unlimited liability for the company's debts and shareholders (where the company has a share capital).
The memorandum or articles may require a member of one type to also be a member of any other type, or they may prohibit a member of one type being a member of any other type.
The memorandum and articles may make provision as to the liabilities of members to the company. If no such provision is made the liability of members shall be joint and several to the maximum extent of their liability.
All forms of companies registered in Guernsey must have a registered office address situated in Guernsey, at all times, to which all communications and notices may be addressed.
A Guernsey registered company shall have at least one founder member and may have more than one. A member can be a natural person or a body corporate.
A Guernsey registered company must have at least one director. A director can be a natural person or a body corporate.
A Guernsey registered company must have a resident agent, unless exempt. A resident agent must be an individual resident in Guernsey, or a corporate services provider.
A Guernsey registered company may, but need not, have a secretary. A director of a company may also be its secretary.
In each calendar year before the last day of February every company incorporated before 1st December in the previous year shall complete and deliver an annual validation, containing information current on 31st December in that previous year, to the Registrar.
