The Guernsey Financial Services Commission has announced new regulations which remove many of the restrictions governing the activities of protected cell companies (PCCs), in addition to new limited partnership rules designed to allow greater participation by retail investors in collective investment schemes.
The new regulations permit PCCs to carry out business other than in financial services – this could include the full range of commercial non-financial activities from simple asset holding to complex financial arrangements for sophisticated corporate customers.
Until now only collective investment funds, insurers and securitisation and other unregulated vehicles carrying on financial services activities could be established as PCC structures.
Noting that Guernsey pioneered the protected cell company concept in 1997, Peter Neville, Director General of the Commission, commented that: "the PCC structure has been extremely successful, combining innovation, customer protection and cost effectiveness. It is increasingly being copied by other jurisdictions."
He added that: "after eight years it has become clear that the PCC concept has stood the test of time and that protected cell companies should now be able to carry out unregulated activities as well as regulated activities. This new product may well prove to be of significant benefit to Guernsey.”
Bob Moore, Chairman of the Guernsey International Business Association, also welcomed the new regulations, predicting that use of PCCs in the trust and fund administration business areas is likely to increase significantly.
“The widening of the range of activities which Guernsey PCCs can undertake is a very positive development and enhances the solutions which we can offer to both institutional and private clients," he stated.
The Commission has also prepared new limited partnership regulations which have been made by the States Commerce and Employment Department.
Closed-ended funds structured as limited partnerships are primarily used by professional and institutional investors, rather than retail investors, and can be innovative and complex. The regulations offer scope, in appropriate circumstances, for reducing the audit requirements for funds used by such investors.
Mr Neville added that the new regulations will help give Guernsey the edge over other offshore jurisdictions.
“The changes to the limited partnership framework are another example of how the Commission and industry work together to reduce bureaucracy and to improve Guernsey’s competitiveness without harming the protections which customers expect," he noted.
The full text of the updated Protected Cell Companies Regulations can be found in the Tax News Resources section.
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