Acting as a director – Do I need a personal fiduciary licence?

Overview

Under the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2020 ("the Fiduciaries Law"), acting as a director in or from within the Bailiwick of any company or unincorporated body whether incorporated, registered or established in or under the laws of the Bailiwick or elsewhere by way of business is a regulated activity. For the avoidance of doubt, "in or from within the Bailiwick" includes in or from within Guernsey, Alderney and Sark.

The Fiduciaries Law provides a number of exemptions from the requirement to hold a fiduciary licence. Section 3 of the Fiduciaries Law sets out these exemptions which include:

  • Acting as a director of a company (provided that no other services consisting of a regulated activity such as nominee shareholder is provided by the director) with an established place of business in the Bailiwick (section 3(1)(b));
  • Acting as a director of a company listed on a recognised stock exchange (section 3(1)(c));
  • Acting as a director of a company in the majority ownership of that director of his/ her close family (section 3(1)(d));
  • Acting as a director of a supervised body which includes an entity licensed by one of the regulatory laws, an authorised fund and a registered fund; and
  • Acting as a director of a company which is a subsidiary of a company that meets one of the requirements set out in the preceding bullet points (section 3(1)(f)).

There is one further exemption at section 3(1)(g) which permits an individual to hold directorships of up to 6 companies which do not fall into any of the categories of companies cited in the above bullet points.

AML/CFT obligations

While an individual utilising the exemption under section 3(1)(g) of the Fiduciaries Law does not require a personal fiduciary licence, he/she remains subject to the Criminal Justice (Proceeds of Crime)(Bailiwick of Guernsey) Law, 1999 and is required to comply with the requirements in Schedule 3 to that Law and the rules in the Handbook on Countering Financial Crime and Terrorist Financing ("the Handbook"), which can be found here.

This means that those individuals acting as director under this exemption must, among other things, undertake due diligence on the beneficial owners of the companies on which they serve.

Disapplication of the Six Directorship Exemption

The Commission has the power to disapply the exemption under section 3(1)(g) of the Fiduciaries Law if it determines that, in having regard to the minimum criteria for licensing under Schedule 1 to the Fiduciaries Law, an individual is not fit and proper to be a director of a company. This may include, but is not limited to, instances where the individual has failed to comply with any of the anti-money laundering and counter terrorism financing legislation and the rules of the Handbook.

FAQ

For the purposes of this FAQ, companies are "counted in" if they count towards an individual's total of 6 directorships under section 3(1)(g) because no other exemption in section 3(1) covers them. On the other hand, where acting as a director of a company falls under any applicable exemptions under section 3(1), this will be "counted out".

1. I am a director of a number of local trading companies in Guernsey. Do I need a licence?

No. Section 3(1)(b) of the Fiduciaries Law provides an exemption for acting as a director of a company with an established place of business in the Bailiwick provided that no services consisting of, or comprising a regulated activity such as acting as a nominee shareholder, are supplied to the company by the director.

Established place of business ("EPB")

Section 59 of the Fiduciaries Law defines EPB as being in relation to a body, and without limitation, does not include an office in the Bailiwick at which is transacted only such administrative business as is necessary to enable that body to comply with the requirements of the Companies (Guernsey) Law, 2008, the Companies (Alderney) Law, 1994, the Partnership (Guernsey) Law, 1995, the Limited Partnerships (Guernsey) Law, 1995, the Limited Liability Partnerships (Guernsey) Law, 2013, the Foundations (Guernsey) Law, 2012, or any corresponding legislation in force in any jurisdiction outside the Bailiwick.

For the avoidance of doubt, merely having a registered office or holding statutory documents or administrative records in Guernsey sufficient to meet Alderney or Guernsey company law requirements does not amount to an EPB. The Commission considers a company will be seen to have an EPB in the Bailiwick if they have premises and staff of their own in the Bailiwick.

2. I moved to Guernsey but I'm still a director of a company which is listed on the London Stock Exchange which I know does not count. I'm also still on the board of 7 of the group’s subsidiaries and joint venture companies which themselves are not listed

If the listed company controls the composition of the subsidiaries' and the joint venture companies' board of directors or holds more than half in nominal value of the subsidiaries' and the joint venture companies' equity share capital, then the individual can utilise the exemption available under section 3(1)(f) of the Fiduciaries Law and these directorships would be "counted out".

3. From Q2 above, can all 8 directorships (seven for subsidiaries and joint venture companies and one for the listed company) be deemed as one directorship if I am remunerated by the listed company for all of the directorship services under one contract?

The directorships would not be deemed as one because the companies are structured as separate legal entities with individual legal personalities. In addition, it would not be possible to consider the seven appointments to be "unpaid" as you are remunerated for all of your directorship services. If an individual is a director of a listed company and up to 5 subsidiary companies or joint ventures which the listed company does not control in the manner described above, the appointments would be counted in for the purposes of the up to 6 directorships exemption. Should the individual hold one or more further appointments which do not fall under the other exemptions then the individual should contact the Commission to discuss an application for a personal fiduciary licence.

4. I am a director of a Jersey company which is registered in Jersey under their Collective Investment Funds (Jersey) Law. Is this considered to be counted out in Guernsey?

No – it will be counted in. Currently, under the Fiduciaries Law, acting as a director of a fund is an exempted activity only if the fund holds an authorisation or registration under section 8 of The Protection of Investors (Bailiwick of Guernsey) Law, 2020. So acting as a director of a Jersey fund will not be exempt under the Fiduciaries Law.

5. I am a director of a Cayman company which is registered in Cayman under their Mutual Funds Act. Is this considered to be counted out in Guernsey?

No - it will be counted in. See answer to Q 4 above.

6. I am a director of a Cayman company with less than 15 investors which is considered an unregulated fund in Cayman. I presume this is counted in?

Yes - See answer to Q 4 above.

7. I have been asked to join the board of a new Guernsey Company which was incorporated last week and which will apply to be an authorised fund under the POI Law. Until the application is successful is this company “counted in”.

Yes.

8. I am a director of a Private Trust Company incorporated and regulated in Jersey. Is this counted in?

Yes. In this case, it does not meet any of the statutory exemptions in the Fiduciaries Law.

9. I have been asked to be a director of a start up company by a friend. I am not receiving a director’s fee which I think makes this company not count in.

If you are not receiving a director’s fee or any other income, fee or benefit from this appointment then the activity will not be regarded as a regulated activity as it is not “by way of business” and therefore “counted out”.

9.1. Does the status change if the founder offers me a small shareholding as compensation for acting as a director even though this shareholding currently has little or no value?

This can fall under the exemption if you hold more than 50% of the total shares of the company. Otherwise, it will be “counted in” as you are actually paid “in kind” by receiving compensation in the form of a shareholding.

10. I am a director of an incorporated cell company (“ICC”) and its incorporated cells. Will this be counted as one directorship?

If the ICC (including its incorporated cells) falls within the definition of a "supervised body", under the Fiduciaries Law, then acting as a director of an ICC and its incorporated cells will allow you to take advantage of the exemption available under section 3(1)(e) of the Fiduciaries Law and will not trigger the requirement for a personal fiduciary licence or be counted as in for purposes of the exemption for up to six directorships.

A supervised body is:

  1. A body:
    1. which is a licensee within the meaning of the Protection of Investors Law or which is exempt from licensing under section 44 of that Law; or
    2. which holds an authorisation or registration under section 8 of that Law; or
  2. A body which is a licensee within the meaning of the Insurance Business Law;
  3. A body which is a licensee within the meaning of the Insurance Managers and Intermediaries Law;
  4. A body which is a licensed banking institution; or
  5. A body which is of any other class or description prescribed for the purposes of the Fiduciaries Law by regulations of the Committee.

In a rare occurrence where the ICC is not a supervised body, the directorship of the ICC and its incorporated cells will be counted separately as each incorporated cells has its own legal identity which is also distinct from the ICC. Accordingly, this ICC and its cells will be “counted in”. If the total numbers of directorship held are not greater than six, then this may fall under the exemption under section 3(1)(g) of the Fiduciaries Law. If the total number of directorship is more than six, then the individual in this scenario should contact the Commission to discuss making an application for a personal fiduciary licence.

11. I am a director of a Guernsey company which is a “registered fund” under the Protection of Investors (Bailiwick of Guernsey) Law, 2020 (“the POI Law”). Is this counted in towards my 6 directorships allowed under section 3(1)(g)?

No, the directorship will not be counted within the “up to 6 directorships”. The activity of acting as a director of a registered fund is exempted under section 3(1)(e) of the Fiduciaries Law as a registered fund is regarded as “a supervised body” under the Law.

12. Following question 11. above, this company has 10 special purpose companies owning properties around the world all of which are 100% owned by the registered fund. Are all of these companies counted out?

Yes, acting as director of those companies is exempted under section 3(1)(f) of the Fiduciaries Law as they are a subsidiary of a registered fund which is exempt under section 3(1)(e) of the Law.

Disclaimer

Whilst the Commission has taken all reasonable steps to ensure that the information set out herein is accurate the Commission does not accept any responsibility for errors or inaccuracies and notes sections 22 and 23 of the Financial Services Commission (Bailiwick of Guernsey) Law, 1987, and the Financial Services Commission (Limitation of Liability) Ordinance, 1990.

The materials in this note do not constitute financial or other professional advice. You should consult your professional adviser if you require advice.