Applying For a Licence to Conduct Investment Business
A licence is required by any persons who carry on one or more Restricted Activities in or from within the Bailiwick in connection with controlled investment business. Restricted Activities are defined in Schedule 2 to the Protection Of Investors (Bailiwick of Guernsey) Law, 1987, as amended ("The POI Law"). It is not the Commission's policy to licence institutions which are not carrying out controlled investment business and have no early plans to do so.
Initially, informal approaches may be made to the Commission, which may often include a preliminary meeting with the potential licensee. Completion of the New Promoter's Introductory Checklist will assist this process. A potential licensee who does not appear to meet the Commission's expectations will be discouraged from making a formal application.
The criteria under which applications are considered are set out in Schedule 4 of the POI Law.
Formal Application Should Comprise:
• A fully completed Form RA/1
• All the supporting documents requested on Form RA/1
• The non-refundable Application fee (Fee schedule available here)
The Form RA/1 should be completed in full, must be signed by two authorised signatories of the applicant and must be dated. The contents of the form and documents supplied are reviewed by the Commission, with all points of concern being addressed by letter.
In the case of new Principal Managers/General Partners, unless applying under the Fast Track Application Regime, formal application for a licence is not expected until the first fund they intend to manage has achieved at least "outline" authorisation. The licence will normally be granted on the same day that the fund achieves authorisation.
The following established Commission policies and expectations must be addressed:
• Selectivity. The applicant must be 'fit and proper', which embraces honesty, competence, and solvency. The Commission looks for evidence that an applicant, its intended directors and employees meet a high standard, not a minimum one.
• The specific nature of the proposed business should be compatible with the protection of the reputation of the Bailiwick.
• Due diligence checks should reveal nothing adverse about any parties involved.
• The structure of the applicant's group and the ultimate beneficial ownership of the applicant must be established.
• The applicant should be able to demonstrate an acceptable track record in the field in which it proposes to operate.
• At least one Guernsey-resident director will be required for any corporate entity which is Guernsey domiciled and seeks to be licensed. In some circumstances, the Commission will require at least two directors to be resident in Guernsey. The Commission would expect the appointment of individuals (regardless of place of residency or domicile) and not corporate entities to Guernsey licensed entities.
• The "four eyes" principle must be satisfied by having at least two competent professionals able to exercise real control over the day-to-day operations of the business in Guernsey. It is expected that the individuals will be either executive directors or persons granted executive powers.
• If the applicant proposes to delegate some responsibilities to existing licensees or other organisations, the arrangement must be acceptable to the Commission.
• The applicant (or its delegate) must have adequate human and physical resources to conduct its operations. This will include record-keeping, compliance, internal control and other systems. The Commission will consider the staffing requirement of an applicant new to the Bailiwick, particularly if it is envisaged that staff will be brought into the island.
• The applicable financial resources requirement must be satisfied, as set out in The Licensees (Capital Adequacy) Rules 2010
• The applicant's Restricted Activities should be conducted substantially within or from within the Bailiwick.
• The name of the Compliance Officer must be supplied. This may be a corporate entity with a named compliance officer of its own.
• The name of the Money Laundering Reporting Officer must be supplied. This must be an individual.
Documents to be provided by applicants (Form RA/1)
• Forms PQ, where required for directors or managers.
• Where management of a licensee has been delegated in total or in part, a copy of the relevant agreement(s).
• An 'organogram' showing the structure of the applicant's group, including its ultimate beneficial ownership and all subsidiaries. Where there is more than one owner of a group entity, the percentage split of ownership should be established.
• The most recent audited accounts of the applicant and its parent (in English). If these are more than six months old, the latest management accounts will also be required. If the applicant is yet to begin trading, a projected profit and loss account plus balance sheet will be required.
• Evidence of the paid up share capital of the applicant (in the form of a certified copy of a bank statement showing the maintenance of the relevant sum) together with a certified copy of a Board minute confirming that the share capital has been paid up. In the case of an applicant which falls within 2.2.4 of the Licensees (Capital Adequacy) Rules 2010, a letter from one of the directors confirming the matters required by this rule should also be provided.
• Details of insurance and indemnity policies.
• Copies of authorisation or incorporation certificates relating to the beneficial owners of the applicant may be requested.
• Note that for an overseas applicant, English translations must be provided of the accounts submitted as part of the application process.
• Any promotional literature produced by the applicant or the promoters. Copies of brochures or fund particulars of existing funds with which the applicant is connected may also be requested.
If the applicant, its parent or principals is already known to the Commission, or has received a positive response after submitting a New Promoter's Introductory Checklist, the amount of documentary evidence required in support of Form RA/1 (and the time taken for it to be processed) should be considerably reduced.
In the exceptional case of an applicant who wishes to become a designated person (designated manager or designated trustee/custodian), the Commission will undertake detailed discussions with the applicants which will encompass inter alia financial resources, staffing and compliance arrangements.
A Licence is issued by form of a letter, setting out the categories of investment business the new licensee may deal with and the restricted activities it may undertake in connection with that business. Conditions may be imposed on the licence by the Commission. Upon licensing, the annual licence fee becomes due, but is reduced pro rata in the first year. The licence letter will state the exact amount due.
The fee is payable by the licensee. Current fee scales are set out in the relevant Financial Services Commission (Fees) Regulations. Current fee schedule can be found here.