Channel Islands Guernsey 2008

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					172   Channel Islands: Guernsey

      Chamber of commerce:                               Professional body:
      Suite 3                                            The Guernsey Bar
      16 Glategny Esplanade                              Web:
      St Peter Port
      GY1 1WN Guernsey
      Tel:       +44 1481 727 483
      Fax:       +44 1481 710 755

      Recent legislative developments                       There have been two recent highlights in        Guernsey trust legislation
                                                        the establishment of Guernsey funds.                Recent changes to Guernsey trust law are
      Russell Clark and Ben Morgan                          A number of Guernsey funds took the             designed to create a more flexible framework
      Carey Olsen                                       opportunity to list under Chapter 14 of the         for the local trust industry and to ensure that
                                                        London listing rules (the so-called European        Guernsey remains competitive as a jurisdic-
      The Bailiwick of Guernsey comprises the           directive minimum route). This opportunity          tion for the establishment and administration
      islands of Guernsey Alderney and Sark, of         closes at the end of 2007 with the introduc-        of fiduciary structures, and at the forefront of
      which Guernsey is the largest by far, lying in    tion of a single platform for all funds, except     legislative developments across the globe.
      the Gulf of St Malo, 60 miles southwest of        those that plan to list on a proposed new               One of the most significant changes is the
      England and about 30 miles west of northern       Specialist Funds Market, details of which were      introduction of non-charitable purpose trusts.
      France.                                           announced in July. The Financial Services           Rather than bringing in a completely separate
          Guernsey enjoys full fiscal autonomy in tax    Authority’s announcement of this new market         regime for purpose trusts – a route preferred
      and regulatory matters and has its own judi-      is a significant move for the London Stock           by certain other jurisdictions such as the
      cial system. It is a British Crown Dependency     Exchange, as it looks to fill a perceived gap        Cayman Islands and the British Virgin Islands
      but is largely independent from the UK            between the main market for listed funds and        – Guernsey has simply revised the law remov-
      except in issues relating to external affairs.    the Alternative Investment Market.                  ing the requirement for there to be beneficia-
                                                            The new market will aim to provide flexi-        ries to a trust. One of the common uses for a
      Investment funds                                  bility for specialist fund vehicles such as hedge   purpose trust is to incorporate and be share-
      Guernsey continues to enjoy extraordinary         funds and private-equity vehicles. A London         holder of a private trust company (PTC)
      times in terms of the sheer volume and size of    listing will be a big plus for investors in terms   which in turn acts as trustee to a specific trust
      funds coming into the island with a record        of raising a fund’s profile, but also, ultimately,   (or group of trusts).
      value of over £140 billion under management       in providing liquidity. The principal benefi-            The new law also removes the limit on a
      and administration, recorded in May 2007 by       ciary of this new market, in terms of the           trust’s duration (previously 100 years) allow-
      the Guernsey Financial Services Commission.       fund’s domicile, is likely to be Guernsey, given    ing the creation of perpetual trusts. Under the
      The growth is largely due to innovative devel-    the current preference to establish offshore        revised legislation, assets can be decanted
      opments in Guernsey’s funds legislation by        London listed funds in Guernsey.                    from one trust to another even where the sec-
      the authorities, ensuring that the island             In February 2007 Guernsey introduced a          ond trust is of a longer duration than the first
      remains wholly competitive as a jurisdiction      fast-track approval process for all closed-         – finally ending the debate among practition-
      for funds.                                        ended funds, creating a new registered fund         ers as to whether this was allowed under the
          A significant number of new investment        regime. This has undoubtedly assisted in            1989 law.
      vehicles established in Guernsey are listed       maintaining Guernsey’s position as an attrac-           The revised law creates a non-possessory
      vehicles. A large proportion of the listed        tive jurisdiction for the domicile of funds, the    lien over trust assets in favour of the retiring
      funds have been high-profile, including the       clear advantage being that the new process          trustees and simplifies the ability of a previous
      launch of KKR’s limited partnership as a          ensures a fund’s launch within 72 hours.            trustee to enforce an indemnity given in its
      Euronext-listed vehicle, which recently won       Registered funds can be single or multi-class       favour where it is not a party to the indemni-
      the IFLR’s award for European private-equi-       unit trusts, investment companies, protected-       ty. This aims to facilitate changes of trustees
      ty deal of the year. Stock market conditions      cell companies or limited partnerships,             and to avoid the sometimes complex chain of
      permitting, the growth in listed funds is like-   whether listed or unlisted. The only investor       indemnities in cases where there have been
      ly to continue as a trend. A considerable         restriction is that the fund must not be offered    successive changes in trustee. The process can,
      number of the vehicles which have been            directly to the public in Guernsey. Plans are       at times, become laborious. The new regime is
      established in Guernsey have been trend-set-      also afoot to introduce a similar registered        intended to make the transfer process more
      ting. The herd mentality of the fund indus-       fund regime for open-ended vehicles in the          efficient for all concerned.
      try is such that when a new structure is          coming months. The majority of closed-                  The 2007 law has been redrafted so that
      launched in Guernsey it is replicated by          ended funds are now being established as reg-       the terms of the trust may expressly exclude
      other fund managers. Guernsey’s pioneering        istered funds. Given its success in relation to     discretionary beneficiaries’ rights to informa-
      approach in accommodating new structures          closed-ended funds, it is extremely likely that     tion, without denying the overriding right of
      and new ideas has undoubtedly benefited the       the regime will be every bit as successful for      any beneficiary to apply to the court for infor-
      island.                                           open-ended funds.                                   mation. The objective of this change is not to                                                                                                                     2008 EDITION
                                                    Financial and corporate | Channel Islands: Guernsey                                                  173

routinely deny beneficiaries information, but         Carey Olsen used an identical model when      bank Landsbanki, a deal which was lead by
where a settlor is genuinely concerned that      it acted on the $1.5 billion Apollo Alternative   partner David Moore.
certain information should be kept confiden-      Assets listing on Euronext in August 2006.            On the funds side, the firm advised on the
tial from beneficiaries until, for example, they  Graham Hall leads the investment funds team       establishment of a closed-ended fund for
have demonstrated an ability to provide for      and is praised by rivals for being “very com-     Babcock and Brown Public Partners and cre-
themselves, the facility is available.           mercial, very practical and having a sound and    ated three new cells of a structured derivatives
                                                 fundamental understanding of law”.                platform     for     Harewood       Structured
                                                     The firm also acted for private-equity firm     Investment.
                                                 Permira on three notable deals: the launch of
                                                 the 11 billion Permira IV fund, the acquisi-      Leading lawyers
Financial and corporate                          tion of the Swiss JET Aviation Group by           Gavin Farrell
                                                 Permira Europe III and the acquisition of         Peter Harwood
 Recommended firms                                Birds Eye Frozen Foods from Unilever.             David Moore
 Tier 1                                              The commercial and banking team is
 Carey Olsen                                     headed up by Nigel Carey, who one peer
 Ozannes                                         praised as being one of the few lawyers who       Collas Day
                                                 can cover both Guernsey domestic and inter-       Collas Day had a bumpy year internally, with
 Tier 2                                          national work.                                    its litigation team departing in March 2007
 Collas Day                                          Carey Olsen’s commercial highlights           and partner John Lewis moving across to
 Ogier                                           include acting for Propinvest and JPMorgan        Mourant’s Jersey office in June 2007.
                                                 in relation to a series of £100 million proper-       In spite of the turbulence, peers still see the
 Tier 3                                          ty acquisitions and disposals, advising ING on    firm as strong on a range of domestic and
 Babbé                                           the acquisition of Jersey Property Unit Trusts    international corporate and commercial deals.
                                                 and issuing various classes of commercial             Collas Day boasts a strong M&A practice,
Without a doubt the biggest event in the mortgage-backed floating rate notes for                   which recently advised on Barclays’s purchase
Guernsey market this year was the $5 billion Société Générale in a £1.12 billion loan secu-        of fiduciary services company the Walbrook
listing of KKR Private Equity Investors’ per- ritization.                                          Group and guided Alternative Investment
manent capital vehicle on Euronext in                                                              Market (Aim)-listed Ekay’s purchase of
Amsterdam which was awarded the IFLR Leading lawyers                                               Wallace Barnaby, a Channel Islands advertis-
European Equity Deal of the Year award for Nigel Carey                                             ing agency.
2007. The listing brought Guernsey onto the Graham Hall                                                The firm were also active in financing, act-
US radar, with one firm remarking that with-                                                        ing on RGI International’s $180 million Aim
in hours of the deal’s completion 20 private                                                       listing and subsequent share offering in
equity firms were on the phone wanting to do Ozannes                                                December 2006.
copycat deals. “The amount of work it gener- Ozannes, one of the two largest firms in                   In addition, Collas Day acted as Guernsey
ated was enormous,” said another Guernsey Guernsey, had another busy year on the cor-              counsel for a consortium of high-profile banks
partner.                                         porate and commercial front. Team head Peter      in relation to an SKr865 million ( 93.5 mil-
    Other significant developments this year Harwood continues to attract praise from all           lion) banking facility for the Capio
have included the implementation of the reg- corners. “He’s experienced and always delivers        Healthcare Group.
istered closed-end fund and incorporated cell – he really stands out,” said an opposition              Other highlights for the year included
company structures, which allow Guernsey to partner. One client said Harwood’s 20 years of         Fortis Bank’s £49 million purchase of CI
be more competitive as an offshore jurisdic- experience was a significant factor in appoint-        Traders’ Guernsey offices and completing the
tion.                                            ing Ozannes.                                      first listing and registration of a Guernsey
    “There’s a great deal of variety and innova-     There were a number of personnel move-        incorporated cell company.
tion in the corporate and commercial sphere ments at Ozannes this year, with three associ-             A client described the firm as “very flexible
in terms of structure, reliability and combina- ates arriving from Australia and New Zealand       in terms of scheduling and delivery time
tions of vehicles and jurisdictions,” said one and two senior associates departing to rival        scales”, adding: “When there are issues with
partner. “There’s no such thing as a standard firms. Christopher Anderson left to become a          clients, they are good at helping work through
transaction any more.”                           partner at Bedell Cristin’s fledgling Guernsey     the problems.”
                                                 office, while Caroline Chan moved across to            The “very practical and commercial” Ian
                                                 Ogier.                                            Kirk is singled out for praise from rival firms
Carey Olsen                                          Ozannes’s headline deal was acting as         and clients alike, while Sean Chong was
“Carey Olsen had a storming year,” one rival Barclays Capital’s Channel Islands adviser in a       described by one client as “exceptional at
remarked. “They did the deal that got £1 billion refinancing transaction in August                  keeping a complicated project on plan”.
Guernsey noticed.” The firm represented the 2006. This involved repackaging debt facili-
$5 billion KKR Private Equity Investors per- ties to create a bespoke product and was com-         Leading lawyers
manent capital vehicle listing on Euronext on pleted in only four weeks. The deal was sig-         Sean Cheong
the issuer side, cementing its position in the nificant for Ozannes as it was the first time the     Ian Kirk
top tier in the process. The fund was estab- firm had worked with its Jersey office on a
lished as a Guernsey limited partnership and large transaction.
listed on Euronext – one of a handful of             The practice also won a role advising on
exchanges that allow the listing of limited the £21 million sale of Cheshire Building
partnership structures.                          Society’s Guernsey operation to Icelandic

2008 EDITION                                                                                                        
174   Channel Islands: Guernsey | Financial and corporate
      Ogier                                               Leading lawyers
      Ogier is “dynamic and up-and-coming with a          Geoff Allez
      great international focus”, according to a rival    Simon Howitt
      partner. “They’re knocking on the door of tier      Andrew Laws
          The firm has grown again this year,
      appointing seven associates including senior        Other notable firms
      associate Caroline Chan from Ozannes’               Mourant opened its Guernsey office in
      Guernsey office. The firm has moved to new            January 2006 and has made an impressive
      premises to accommodate its expected growth.        entrance to the market. Headed by Darren
          Partner Marcus Leese is described by a rival    Bacon, the firm hired John Lewis from Collas
      firm as “a complete workaholic who keeps             Day in June 2007 and focuses on the funds
      clients happy”, while a client describes partner    and finance business.
      Roger Le Tissier as having a “good practical            Among Mourant’s highlights, the firm
      approach”.                                          acted on the formation of Volta Finance’s
          Ogier had a very busy year on the corporate     closed-ended fund and its subsequent listing
      front. One highlight was winning a role as          on Euronext, provided Guernsey guidance for
      Guernsey legal advisor for the vendor in BNP        private-equity group Doughty Hanson and
      Paribas’s £30 billion acquisition of RBS            Carlyle’s launch of a range of permanent cap-
      International Securities. Another deal saw the      ital vehicles, and provided cross-jurisdictional
      firm act as Guernsey advisor to Citigroup on its     advice to the Royal Bank of Scotland on the
      purchase of Quilter Holdings, the British           £572 million Epic (Barchester) commercial
      wealth management arm of Morgan Stanley.            mortgage-backed security issue.
          The firm advised Macquarie Bank on the               Other significant clients include Abbey
      formation on a Guernsey-based joint venture         National, HSH Nordbank, Allied Irish Bank,
      vehicle in its £8 billion purchase of Thames        Eurohypo and Citibank.
      Water, and provided guidance on a £450 mil-             Bedell Cristin is also a new entrant to the
      lion refinancing of the bank facilities of two       market, opening its doors in April 2007 with
      cells within Dominion Funding Limited.              ex-Babbé partner Mark Helyar.
          On the financial side, one highlight saw             Helyar was followed in May 2007 by
      Ogier provide Guernsey advice on Tetragon           Ozannes senior associate Christopher
      Financial Group’s $1 billion listing on the         Anderson, who promoted to partnership.
      Euronext exchange in the Netherlands.               Peers predict the firm will accelerate up the
          Ogier also acted as the Guernsey adviser        rankings within the next few years if it can
      during the formation of a number of closed-         continue to attract talent.
      ended funds, including the Coller                       On the deal front, Bedell’s highlight for
      International Partners V Fund, EQT V Fund           the year was working on the first conversion
      and Cazenove Absolute Equity.                       of a mutual fund from a protected to an incor-
          Other noteworthy transactions saw Ogier         porated cell company for a subsidiary of First
      provide guidance on the establishment of cells      Rand.
      within AHL Strategies and advise on a $440              “They have the backup of a strong practice
      million share issue by Dexion Capital.              in Jersey, so watch this space,” said one lawyer.

      Leading lawyers
      Roger Le Tissier
      Marcus Leese
      William Simpson

      Formerly known as Babbé Le Pelley Tostevin,
      the firm has hired former banking and asset
      finance group partner Stuart Tyler from
      London firm Stephenson Harwood but the
      shadow of Mark Helyar’s departure still hangs
      over the firm.
          Noted by a peer for its abilities in interna-
      tional domestic financial work, Babbé repre-
      sented the purchasers in the £63 million sale of
      Trafalgar Court, Guernsey’s largest-ever proper-
      ty sale.                                                                                         2008 EDITION