Requirements for Individuals Acting as a Director

Overview

Acting as a director is a regulated activity in the Bailiwick of Guernsey and individuals who do so by way of business may be required to register with the Guernsey Financial Services Commission or apply for a licence.

Regulation of the provision of directorship services was first introduced in 2001 as part of broader provisions for the regulation of corporate and trust services. At the time such services were viewed as an important component of the finance industry as a whole and ensuring the competence, fitness and propriety of individuals involved was identified as key to the reputation of the Bailiwick.

The role of regulated Bailiwick directors as key gatekeepers to business in the jurisdiction remains just as important today.  Internationally there is also recognition of the significance of this role, with the Financial Action Task Force, the global anti-money laundering (AML), countering the financing of terrorism (CFT) and countering proliferation financing (CPF) standard setter, recommending that those who, as a business, act as a director are subject to regulatory and supervisory measures.

The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2020 ("the Fiduciaries Law")

Under 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. If a director does not live in the Bailiwick then the directorship activity will fall outside the scope of the Fiduciaries Law. If a directorship activity is not carried out by way of business (which is defined as receiving any income, fee, emolument or other consideration in money or money's worth for acting as director), which may be the case in certain charity related roles, then the activity would also fall outside the scope of the Fiduciaries Law.

If an individual is carrying on director activity by way of business in or from within the Bailiwick then this activity will fall into one of four categories:

  1. Activity exempt from licensing and registration;
  2. Activity exempt from licensing and registration but subject to AML/CFT/CPF obligations
  3. Activity exempt from licensing but requiring to be registered and subject to AML/CFT/CPF obligations; or
  4. Activity requiring a Personal Fiduciary Licence

Further guidance is provided in a flowchart which can be found here and each category above is considered further below:

1. Activity exempt from licensing and registration

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 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 and/or 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 (section 3(1)(e));
  • 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));
  • Acting as a director of a Non-Bailiwick supervised financial firm where those activities are supervised by a supervisory authority which is a signatory to the International Organisation of Securities Commissions' Multilateral Memorandum of Understanding (section 3(1)(af));
  • Acting as a director of a company connected to an Authorised or registered collective investment scheme – where the director also acts as director for the collective investment scheme (or its general partner) and both entities are administered by the same licensed administrator (section 3(1)(ag));
  • Acting as a director of a company wholly beneficially owned by the States of Guernsey, the States of Alderney or the Chief Pleas of Sark, or any committee thereof (section 3(1)(ad)).

Activity meeting any of the categories described above is exempt from licensing and registration (and not subject to AML/CFT/CPF obligations applicable to Specified Businesses under Schedule 3 to the Proceeds of Crime Law).

2. Activity exempt from licensing and registration but subject to AML/CFT/CPF obligations

Where an individual acts as director of up to 6 companies which do not fall into any of the categories of companies cited in section 1. above (section 3(1)(g)), where such companies are either:

  •  administered by a Bailiwick licensed fiduciary; or
  •  registered in the Register of Non Profit Organisations established under the Charities and Non Profit Organisations (Registration) (Guernsey) Law, 2008,

then such activity will be exempt from licensing and registration but the individual remains subject to the Criminal Justice (Proceeds of Crime)(Bailiwick of Guernsey) Law, 1999 (the “Proceeds of Crime Law”) 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. Guidance on the application of these requirements can be found here. 

3. Activity exempt from licensing but requiring to be registered and subject to AML/CFT/CPF obligations

Where an individual acts as director of up to 6 companies (which are not otherwise exempt under any of the categories described in section 1. above) but these companies are NOT:

  • administered by a Bailiwick licensed fiduciary; or
  • registered in the Register of Non Profit Organisations established under the Charities and Non Profit Organisations (Registration) (Guernsey) Law, 2008,

then such activity will be exempt from licensing but the director will be required to register with the Commission. Registration may be made by using the following link:

The individual remains subject to the Proceeds of Crime Law and is required to comply with the requirements in Schedule 3 to that Law and the rules in 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. Guidance on the application of these requirements can be found here. 

4. Activity requiring a Personal Fiduciary Licence

Where an individual acts as director of more than 6 companies (which are not otherwise exempt under any of the categories described in section 1. above) then he or she will be required to apply for a Personal Fiduciary Licence.

Details of how to apply for a fiduciary licence are set out in the New Applicants and the Fiduciary Application pages of the Commission’s website.

Holders of a Personal Fiduciary Licence are required to fulfil minimum criteria for licensing under the Fiduciaries Law and are subject to the Fiduciary Rules and Guidance 2021. A Personal Fiduciary Licensee is also required to comply with the requirements in Schedule 3 to the Proceeds of Crime Law and the rules in the Handbook, which can be found here.

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. Where this exemption is disapplied, an individual would not be permitted to carry out the directorship activity unless licensed.

FAQ

For the purposes of this FAQ section, 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 or do I need to register?

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, are supplied to the company by the director. There is no requirement to register in this case.

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?

Yes. This activity is exempt under section 3(1)(af) of the Fiduciaries Law, as the directorship is of a non-Bailiwick company undertaking investment activities supervised by a supervisory authority which is a signatory to the International Organisation of Securities Commissions' Multilateral Memorandum of Understanding (section 3(1)(af)).

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

Yes. This activity is exempt under section 3(1)(af) of the Fiduciaries Law, as the directorship is of a non-Bailiwick company undertaking investment activities supervised by a supervisory authority which is a signatory to the International Organisation of Securities Commissions' Multilateral Memorandum of Understanding (section 3(1)(af)).

6. I am a director of a Cayman company with not more than 15 investors which is considered an unregulated fund in Cayman. Is this considered to be counted out in Guernsey?

No, it will be counted in. Directorship of an unsupervised fund would not qualify for the exemption under section 3(1)(af) as described in Q5 above.

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

No. In this case, it does not meet any of the statutory exemptions in the Fiduciaries Law.

8. 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”.

8.1. 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.

9. 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 exemption under section 3(1)(e) of the Fiduciaries Law will apply and there will be no requirement for a personal fiduciary licence or to 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 licensee within the meaning of the Lending, Credit and Finance Law;
  5. A body which is a licensed banking institution; or
  6. 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 number of directorships held is 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 directorships is more than six, then the individual in this scenario should contact the Commission to discuss making an application for a personal fiduciary licence.

10. 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 out from my 6 directorships allowed under section 3(1)(g)?

Yes, 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.

11. Following question 10. 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.

12. I am a director of a listed company. Is this directorship counted out?

This depends on the listing exchange. Acting as director of a company which is quoted on a stock exchange recognised by the Commission is an activity exempt from the requirement to hold a licence under the Fiduciaries Law (s.3(1)(c) of the Fiduciaries Law). Stock exchanges listed under the Beneficial Ownership (Definition) Regulations, 2017 (link here) are stock exchanges recognised by the Commission for the purposes of this exemption. 

13. I act as an executive director of a UK-based manufacturing company. I work remotely from my office in Guernsey, my full time role is as head of marketing but I am also appointed to the company’s board. Is this directorship counted out?

This directorship may be exempted under section 3(1)(w) of the Fiduciaries Law if it is incidental to the carrying on of the primary executive role, if no separate or additional remuneration is taken for the directorship role and if the directorship role were to cease there would be no reduction in the individual’s remuneration in respect of the executive role.

14. I act as a director of a general partner of a Guernsey registered collective investment scheme and also as a director of the general partner of a carry vehicle with an interest in this collective investment scheme. Both companies are administered by the same licensed administrator. Is this directorship counted out?

Yes. The directorship of the general partner of the carry vehicle is exempted under section 3(1)(ag) of the Fiduciaries Law and would be counted out.

15. For the purposes of exemption under section 3(1)(ag) of the Fiduciaries Law, are vehicles such as co-investment companies or carried interest companies “connected” to a collective investment scheme where they are either part of the ownership structure of the management entity or team or for its carry?

A director of the general partner of a carry vehicle or co-investment company to a Guernsey registered or authorised collective investment scheme is exempted under section 3(1)(ag) of the Fiduciaries Law where the director is also a director of the collective investment scheme’s general partner and both companies are administered by the same licensed administrator.

16. For the purposes of exemption under section 3(1)(ag) of the Fiduciaries Law, is a company connected to a collective investment scheme if it is owned by the same holding company as the general partner or within the same group as the collective investment scheme?

Simply being part of the same group is insufficient grounds to establish connection for the purposes of section 3(1)(ag) but a directorship of a group company may be exempt under section 3(1)(ag) where the criteria referenced in the answer to question 15 above are met.

17. For the purposes of exemption under section 3(1)(ag) of the Fiduciaries Law, is a special purpose vehicle or underlying holding company of a collective investment scheme regarded as “connected”?

Directorship of a company which is a subsidiary of a Guernsey authorised or registered collective investment scheme is exempt under section 3(1)(f) of the Fiduciaries Law.

The general partner of an underlying partnership forming part of a collective investment scheme’s investments would be deemed to be connected for the purposes of section 3(1)(ag) of the Fiduciaries Law. Where the director of this general partner is also a director of the collective investment scheme’s general partner and both companies are administered by the same licensed administrator, then the directorship is exempt.

18. I am a director of a Guernsey company which acts as general partner of a partnership which is a private investment vehicle for an individual investor. The partnership is administered by a Guernsey licensed administrator but is not a registered or authorised collective investment scheme. Is this directorship counted out?

This directorship is not of, and is not connected to, an authorised or registered collective investment scheme. This directorship would be counted in.

19. I am a Bailiwick-resident director of 6 companies all of which are administered by a Bailiwick licensed fiduciary. None of the directorships qualify for a specific statutory exemption but I have relied upon the up to 6 exemption under section 3(1)(g)

If 6 directorships are held then the individual will be exempt from licensing under the Fiduciaries Law. If all the companies are administered by a licensed fiduciary then the individual will not be required to register with the Commission. If a seventh directorship is taken up, and no other specific statutory exemption is available, then section 3(1)(g) may no longer by relied upon and the individual will be required to hold a Personal Fiduciary Licence. A holder of a Personal Fiduciary Licence is outside the scope of the director registration regime.

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. It further 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.