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Guernsey Funds Offer Strong 'Substance' Proposition

by Jason Gorringe, Lowtax.net, London
22 August, 2016

Substance in the fund management sector is of increasing importance, a newly published white paper from Guernsey Finance says, noting recent international regulatory initiatives.

The report draws particular attention to two regulatory projects: the EU's Alternative Investment Fund Managers Directive (AIFMD), and the OECD's Base Erosion and Profit Shifting (BEPS) initiative.

The Guernsey Finance white paper – Investment funds - why substance is key – written by funds journalist Kirstie Brewer, says the need to prove that an offshore fund manager has the necessary "substance" to its business dealings and functionality has never been more acute. The white paper looks specifically at what substance is, where the notion came from, and how to get enough of it.

Commenting on the report, Guernsey Finance Chief Executive Dominic Wheatley said it is clear that substance requirements are going to be of the "utmost importance in the years ahead, particularly with the growing raft of regulation and international policy initiatives."

He added that "the recent recommendation from the European Securities and Markets Authority (ESMA) that Guernsey should be granted a 'third country' passport under AIFMD is further proof that the Island is ready to meet those requirements."

Gavin Farrell, Partner at Mourant Ozannes in Guernsey, added: "From a Guernsey regulatory and structural perspective we provide the substance that is required for the management and running of the Guernsey entities, both the products and their management companies. Not only because we have all the service providers in Guernsey – custodians, administrators, lawyers, banks, and accountants – who provide live services to those entities but also because the individuals appointed at the board level are very credible individuals and under a regulatory burden and scrutiny to exercise their managerial and fiduciary duties."


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