22 June 2015
The Companies (Guernsey) Law, 2008 (Amendment) Ordinance, 2015
On 29 July 2015, the States of Guernsey are expected to approve long anticipated amendments to the Companies (Guernsey) Law, 2008 (the “Companies Law”). The changes are set out in the Companies (Guernsey) Law, 2008 Amendment Ordinance, 2015 (the “Ordinance”) published on the 19 June 2015. Directors and company administrators should be alert to the effect of these changes on corporate transactions, memoranda and articles and board and shareholder meetings.
This note summarises the main impact of the Ordinance on Guernsey companies. For a more detailed briefing note on all of the changes please contact. If approved, the Ordinance will commence on a date to be set in a separate regulation. Certain provisions of the Ordinance, such as those affecting the memorandum and articles of companies formed under the old Companies (Guernsey) 1994 Law, will not come into effect until 31 December 2016 by which time the Companies (Transitional Provisions) Regulations, 2008 as recently amended will have expired. Other Ordinance provisions refer to further implementing regulations the details of which have yet to be issued.
Company administrators may now wish to update memoranda and articles, board minutes and review their advice to directors as the Ordinance has clarified and streamlined several key administrative procedures. For example, the directors of a company with multiple share classes will now have the power to issue shares subject to any restrictions the company approves by ordinary resolution or as set out in its memorandum or articles. A director disclosing his interest in transactions with the company will no longer have to determine the monetary value of that interest and will still be required to disclose the nature of his interest. It will become more straightforward to delineate clearer duties, and corresponding liabilities for a company secretary in the articles. Further, a company's articles will be able to set specific time limits on the deemed receipt of notices sent to shareholders by post or e-mails. This should make communications with shareholders and timetables for corporate actions more efficient. Administratively, certain non-regulated companies will be able to take advantage of a new waiver resolution to exempt directors from producing a directors' report. Companies will also be able to adopt and reserve an 'alternative name' in non-Roman script which may be of particular interest to those clients in the Middle East and Asia.
Directors and shareholders will be interested by the amendments accelerating the timetable for amalgamations, migrations, and takeovers. Advisers and their clients used to takeovers on the public equity markets of London and elsewhere will recognise the new amended squeeze out provisions. These will be more closely aligned with the provisions which apply in the other jurisdictions which fall within the scope of The City Code on Takeovers and Mergers (the "Takeover Code") and will be easier to apply in practice. A detailed briefing note on these changes will be issued in due course.
In relation to winding up a company, liquidators and directors may wish to note the new duties to alert the Guernsey Financial Services Commission and the new court procedures for obtaining a liquidator's release upon completion of the winding up.
The amendments above are only a selection of the changes introduced by the Ordinance.