The Guernsey investment funds industry is “more competitively placed” after going through European and Organisation for Economic Co-operation and Development economic substance requirements, according to speaker at a Guernsey Finance Funds Masterclass event in London.
Guernsey received confirmation in March from the EU Council’s Code of Conduct Group and the European Council of Finance Ministers that it satisfied legal substance requirements for entities operating in or through the jurisdiction.
Frank Ochsenfeld, partner at Coller Capital, said that it was “crucial” for Guernsey to have “embraced this issue head on” and that the substance principles adopted by the island offered “practical guidance and certainty” for both managers and investors.
Other panellists at the event agreed that achieving substance has become an increasingly important issue in jurisdictional choice for general and limited partners and that Guernsey was now more strongly positioned in the market.
In addition, Christopher Crozier, chief risk officer and managing director at Permira, said that his company had already taken “significant steps” to developing substance through the EU’s Alternative Investment Fund Managers Directive process earlier in the decade.
He said: “A Guernsey licensee will have quite good substance already—it is very hard to object to the principles—and we have always operated in a way which focused our decision-making in Guernsey and will continue to do so. Much of this is just about being able to demonstrate that you are doing what you should be doing, and, in our case, what we’ve told our investors we’re going to do.”
Elena Rowlands, tax partner at Travers Smith highlighted the strength of Guernsey infrastructure, particularly for the private equity sector. She described the Guernsey substance rules as “really helpful” and said it was a “huge advantage” for Guernsey to have secured a white-listing from Europe.
She added: “When we listed all the factors as to why, anti-money laundering record, substance rules, it really gives Guernsey credibility and I think it’s a huge advantage. If you had a choice, why wouldn’t you go for Guernsey?”
Dominic Wheatley, chief executive at Guernsey Finance, said: “Economic substance has emerged in the past year or so as a key industry issue. Substance is clearly becoming a differentiator in the market, which is now positioning Guernsey at a significant advantage over many of our competitors.”
He added: “We are seeing that firms and managers are increasingly looking to jurisdictions which can and have met the new global standards, which is just another reason to select Guernsey for investment funds.”
