Ashton on Company Law

Company legislation is of fundamental importance in any jurisdiction with economic life based on the western capitalist model. It is a core part of a locomotive engine designed to generate economic growth. Importantly it can be structured to meet a wide variety of commercial needs. Invariably there is also a range of complementary principal or secondary legislation in the form of rules, regulations and codes.

The need for company legislation was recognised in England, early in the 19th century. In those days most of Guernsey’s economic life centred on trade with England hence companies legislation was enacted in Guernsey broadly mirroring large sections of prevailing English legislation. Suffice it to emphasise that Guernsey’s companies legislation in 1893 and 1908 was not identical to prevailing English legislation. Companies legislation based on English companies law was drafted to meet what was perceived to be Guernsey’s more limited needs at the time. So the legislation was economical in size. It was thus deemed important to look to English law notwithstanding that the Island’s customary law base was the ancient law of Normandy. Until 1920 Guernsey legislation was enacted in the French language so the texts of the 1893 and 1908 legislation were translated into French and in some instances, sections borrowed from English legislation were inaccurately translated into French. Nevertheless French was the authoritative text, although authorised English versions were published.

Guernsey began its significant international finance development fitfully in the late 1940s and 1950s and persistently in the decades that followed. Ten pieces of legislation amending or supplementing the 1908 Law (as amended) were enacted. Legislation became a patchwork of the original French texts supplemented with English legislation enacted after 1920.
Reflecting Guernsey’s persistent expansion as an important international financial centre and the development of a plethora of financial services delivered by professionally qualified practitioners it became increasingly apparent that a root and branch reform of Guernsey’s companies legislation was not merely desirable but essential.

Industry bodies and government participated in an ongoing review. All contributors kept an eye on developments in other jurisdictions. It soon became apparent that provisions of a new law would have to be far reaching, and in some instances revolutionary. Some of the new law would be fundamentally different from the prevailing legislation in order to respond to the continued expansion of financial services in Guernsey and other offshore jurisdictions. Of prime importance would be the need for clarity, certainty, coherence and competitive flexibility.

Guernsey’s government recognised, even before the review and consultation had been completed, that a new comprehensive law, once enacted would within a few years be subject to amendments because experience demonstrated that the commercial world is ever changing and innovative. As a consequence new legislation should persistently be kept under review. Furthermore law reform in

Guernsey would be inevitable because companies legislation would remain a key part of Guernsey’s economy and international competitive offering.

After an exhaustive review and wide consultation proposals for law reform were put forward to Guernsey’s Parliament in 2008. The Companies (Guernsey) Law came into force on 1st July 2008. There have already been amendments since then. There will be more.

Dr. Ashton’s comprehensive guide to the 2008 law as amended will be a useful aid to those interested in company formation, obligations, duties and responsibilities from formation to dissolution and so much more.

I commend this book ,which will prove to be an excellent and respected resource, to all professional advisors, including lawyers, accountants, insolvency practitioners, directors, company secretary and administrators and also students.

It is to be hoped that professionals, particularly in tax, law and accountancy, will from time to time work together and recommend beneficial changes to prevailing companies legislation whether what is proposed is evolutionary or revolutionary. That is what their predecessors did and Guernsey’s economy has benefited immensely.
Long may Guernsey economy flourish. Economic growth is essential.

Thank you Dr. Ashton for your important contribution.