By joanne frearson Guernsey is gaining offshore business as a result of increased EU regulation, ...
By joanne frearson
Guernsey is gaining offshore business as a result of increased EU regulation, according to speakers at the Guernsey Funds Conference 2006, debating the need for an offshore industry.
Angela Knight, chief executive of the Association of Private Client Investment Managers (Apcims) said the impact of EU regulation has caused there to be a greater awareness of offshore centres.
She said: "Investors may wish to use places such as Guernsey because it falls outside the scope of EU regulation. The increase in financial regulation directives across Europe such as the Markets in Financial Instrument Directive (MiFID) may cause problems for the European-based investor.
"Although it is good to create a single market, the directive classifies investors and puts more onerous restrictions on the sale of sophisticated investment products. An investor can escape these classifications if they move their assets outside the EU."
The debate also focused on how the relaxed regulation environment of Guernsey is causing financial firms to set themselves up in the jurisdiction.
Bridget Barker, partner at MacFarlanes, said: "We are seeing interest from US companies to set up in the centre, because regulation is not as onerous in Guernsey compared to the UK. Recently, two private equity funds have been established in the jurisdiction by US firms.
"Other foreign investors interested in the centre because of regulation issues have been Middle Eastern. A lot of clients from this region are reluctant to buy funds from the UK because they do not want to have their name on a registrar list.
Richard Crowder, an independent director, said for interest to remain in Guernsey it comes down to attracting the best people.
He added: "A lot of good hedge funds names are starting to relocate to the region and are establishing funds. Having good products domiciled in the jurisdiction will only attract more managers to the centre."
Tax was another significant issue discussed at the debate. Jonathan Hooley, chairman at KPMG, explained some people cannot use double taxation treaties if they hold assets in London. He said: "Offshore centres such as Guernsey provide investors with tax exemptions, which they can not get onshore."
Tax is also an important part of fund structuring because Guernsey-domiciled products can provide tax breaks for investors, added Barker.
It was agreed by all speakers that Guernsey could only survive as long it continued to receive international recognition.
Crowder said: "Guernsey's ability to react to change creates opportunities for the jurisdiction. Tax neutrality as well as agility and competitiveness to be able to deal with the increased EU regulation have only helped the centre become internationally recognised. key points
Guernsey business increasing due to rise in EU regulation
Tax important consideration when choosing centre
Interest in Guernsey from US companies
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress