As published on guernseypress.com, Friday 3 April, 2020.
The Guernsey Financial Services Commission has issued a statement regarding directors’ duties towards their own incorporated entity – regardless of whether it is a local business or forms part of a larger group – in what it described as ‘extraordinary times’.
The message from the financial sector regulator comes amid an environment of consolidation across the industry, particularly with what has been described as a ‘buy and build’ strategy in the fiduciary sector.
Concerns have been previously raised that Guernsey businesses may become ‘bolt-ons’ as part of a group headquartered in a different jurisdiction.
‘Directors of licensees will be mindful in these extraordinary times of their duties towards their own incorporated entity, regardless of whether it is a local business or forms part of a larger group of companies,’ said the GFSC.
‘Licensed entities are, of course, subject to the law, but holding a licence from the commission also adds various requirements laid down by the commission in rules, conditions or other forms.
‘Directors are specifically reminded of the requirements regarding financial resources, both capital and liquidity as required by various rules of the commission.
‘Further, the commission would expect directors in these challenging times to be acting appropriately before making decisions to issue dividends, upstream excess capital or liquidity, intercompany loans or any other decision that materially financially weakens the local business, being mindful that they may not be in a position to have full and perfect information coupled as well with their duties towards their own company.’