Company Formation and Management
Set up a company in Guernsey
Choosing the Right Company Type
An important factor when deciding which particular type of vehicle to use is the tax and regulatory treatment that will be applied to the company in a foreign country. It is therefore imperative that appropriate legal and tax advice be sought in all relevant jurisdictions to determine the type of corporate vehicle best suited to your circumstances.
Limited Liability Company
A Guernsey Limited Liability Company is the most common type of company in Guernsey and can be used for a variety of purposes, ranging from single asset holding companies to active trading companies.
Shareholder liability for the company debts is limited to any amount unpaid in the shares held by them.
Unlimited Liability Company
A Guernsey Unlimited Liability Company may have limited and unlimited shares. Unlimited members’ liability for the company’s debts is unlimited while they are members, or within a period of one year after they cease to be unlimited members.
This type of company would be used where the company is required to hold contracts that are underwritten by the members.
Mixed Liability Company (Hybrid Company)
A Guernsey Mixed Liability Company may have guarantor members, unlimited members and, where the company has share capital, shareholders with limited liability.
The nature of this type of company lends itself to international tax planning or assets protection structures.
Protected Cell Company (PCC)
A Guernsey Protected Cell Company is a company that is a single legal entity with separate and distinct cells. Each cell can, if required, issue its own shares and pay dividends in relation to the assets and liabilities it holds which are segregated by law from those in the other cells.
The PCC itself (the core) is a single legal entity but the cells of the PCC do not have separate legal personality. It is therefore the core that will contract on behalf of a cell. A PCC has a single registered office and one board of directors.
Incorporated Cell Company (ICC)
A Guernsey Incorporated Cell Company (the core) is a single legal person but, unlike a PCC cell, the cell of an ICC is also a separate legal person. The cell is not a subsidiary of its core. The registered office of each cell must be the same as its core. Each incorporated cell will have its own board of directors and memorandum and articles of incorporation, however the identity of the core board of directors must be the same as that of each cell.
Company Limited by Guarantee
A Guernsey Company Limited by Guarantee may have share capital and shareholders, but its key feature is that each guarantor member undertakes to contribute a guaranteed amount in the event of the company being wound up.
Guarantor members may have differing guarantee amounts but this does not alter their interest in the company.
A Guernsey Limited Partnership must be established with at least one general partner and one limited partner; however more than one general and limited partner is permitted.
General partners are jointly and severally liable for all of the debts of the partnership without limitation, whereas limited partners contribute or agree to contribute a specified amount in accordance with the partnership agreement, which is the limit of their liability.
A Guernsey Limited Liability Partnership (LLP) is in many ways the same as a general partnership, with the fundamental difference that the members of an LLP are not liable for any debts of the LLP (or any other member); their liability is limited to whatever each member has agreed with the LLP or other members, as set out in the Members Agreement on incorporation.
This limited liability is possible because, like a company, an LLP has a legal personality that is separate from its members. An LLP can do anything commercially that a natural person can do. It has the ability to enter into contracts, own assets and will continue in existence in spite of any change in membership. However an LLP is taxed like a partnership. Profits are only taxed in the hands of the members, so if a member is a non-Guernsey entity and does not trade in Guernsey, no Guernsey tax should be payable. An LLP must maintain a registered office in Guernsey where its register of members, accounting records and minutes must be kept. The LLP must also have a Resident Agent based in Guernsey. The LLP must file an Annual Validation and Declaration of Compliance with the Registry each year.
A Guernsey Family Limited Partnership is a limited partnership that is formed under the Limited Partnerships (Guernsey) Law. There are many variations but, typically, a Guernsey company will also be formed to act as the general partner with responsibility for managing the FLP. The other partners – often family members who wish to benefit from the assets but have no responsibility for managing, and no liabilities in relation to, the partnership – would be the limited partners.
The general partner has unlimited liability for the debts of the FLP but as the partner is a limited company, this liability is limited. If family assets are transferred into an FLP, it allows the head of family to retain control whilst passing the value in those assets to other family members in a controlled and orderly manner that is without tax consequence.