Guernsey Geography
The Bailiwick of Guernsey includes the inhabited
islands of Guernsey, Alderney, Sark, Herm,
Jethou, Brecqou and Lihou. Guernsey itself
is the second largest of the Channel Islands
and is roughly triangular in shape. It
is situated in the Gulf of St Malo 130
kilometres south of England and only 48
kilometres west of Normandy, France. The
island has a land area of 65 sq. km.
Guernsey rises in steps from a plateau in
the north to ragged cliffs about 90 metres
above sea level. It is drained mainly
by northward-flowing streams into deeply-incised
valleys. In the low-lying north, the soil
is made up of blown sand, raised beach
deposits and the fill of old lagoons.
Guernsey enjoys a maritime climate; snow
and severe frost are rare. Annual rainfall
is between 75 and 90 centimetres, but
water on the island is sometimes in short
supply, being supplemented by seawater
distillation.
The main town is St Peter Port, which has
the character of a traditional fishing
village, and is overlooked by the mediaeval
Castle Cornet.
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Guernsey Population, Language and Culture
The population of Guernsey is 65,570 (July, 2007, est).
English is the main and official language,
although French is widely spoken, and
a Norman patois is used in the countryside.
In the 11th century the Channel Islands,
including Guernsey, belonged to the Duchy
of Normandy, and formed part of the combined
kingdom of England and Normandy after
the Battle of Hastings. When in 1204 King
John of England lost Normandy to the French,
the Channel Islands remained part of the
British Isles, and have done so ever since
despite numerous attempts by the French
to regain them. The islands were occupied
by the Germans during the Second World
War.
Culturally, the Channel Islands owe far more
to England than to any other source, although
there are traces of French culture, and
the legal and administrative systems are
a hybrid of Anglo-Saxon and Continental
forms.
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Guernsey Relationship with
the EU
Guernsey is not a member of the EU. Protocol
No 3 of the UK's Treaty of Accession to
the EU excludes the island from most of
the effects of the Treaty, other than
those concerning trade in goods.
There is free movement of industrial and
agricultural goods between the island
and the the UK ; and between the island
and EU and EEA countries. The island applies
the external common customs tariff of
the EU.
Guernsey does not impose Value Added Tax,
and does not form part of the fiscal area
of the EU, although it has been obliged
to apply the EU's Savings Tax Directive,
which came into force in July 2005.
The Guernsey's constitutional position in
relation to the EU cannot be changed without
unanimous agreement of the member states,
including of course the UK. Along with
its neighbour, Jersey, the island sees
its current relationship with the EU as
beneficial, and does not seek to change
it.
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Guernsey Government
Guernsey is a self-governing British Crown
dependency. The Queen of England, as Duke
of Normandy, is Head of State, and she
is represented on the Island by the Lieutenant
Governor, who is appointed by the Crown
for a five year term. The Government of
the United Kingdom is responsible for
the conduct of the external relations
and defence of the Island.
Internal affairs of Guernsey are governed
by the island's parliament, The States
of Deliberation. The States, as it is
usually referred to, is both the legislative
and executive body, and has 45 seats.
The nearby islands of Alderney and Sark
have their own parliaments. The virtual
absence of party politics encourages a
high degree of consensus and contributes
to political and economic stability.
The island has its own courts. Historically,
the legal system has continental (Civil
Code) origins, but over time English common
law has come to have greater influence.
Commercial and business law is mostly
Anglo-Saxon in nature, and English precedents
are often followed. Some UK legislation
is adopted as such by Guernsey by agreement
with the British Government. The ultimate
court of appeal is the English Privy Council.
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Guernsey The Edwards
Report
In 1998 the British Government announced
that there would be a review of financial
regulation and structure in Jersey, Guernsey
and the Isle of Man. The review was carried
out by Anthony Edwards, a former senior
Treasury civil servant, and was published
in November, 1998. Saying that 'the islands
are in the top division of offshore centres'
Mr Edwards gave the islands a generally
satisfactory report, making a number of
recommendations that applied to Guernsey.
The great majority of these covered matters
that were already in the legislative pipeline
or were readily agreed to by the administration.
Some recommendations however were more
contentious for the island. It is fair
to say that Mr Edwards himself did not
expect all recommendations to be accepted.
His report concluded (in part):
"They (the islands) have infrastructures
of legislation, judiciary, prosecution,
regulation and law enforcement, mostly
based on UK models, which for the most
part are extremely good for such relatively
small jurisdictions. In many areas they
have co-operated well, sometimes remarkably
so, with the authorities of other countries
in the pursuit of crime and regulatory
breaches."
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Guernsey Economy and Currency
Guernsey's economy is stable, with an expanding
financial services sector that now accounts
for 55% of the island's total income.
Unemployment is very low (0.9%, 2006); inflation is
slightly above that of the UK at 3.4%
in 2006.
Outside the financial arena, the main business
sectors are manufacturing, tourism and
agriculture, although their relative importance
has declined in the face of a booming
financial sector. Income derived outside
Guernsey by wealthy immigrants also makes
a substantial contribution to the island's
economy.
The economic cycle in Guernsey tends to mirror
that of the UK. GDP has risen more than
300% since 1965, and in 1998 topped GBP1
bn for the first time. GDP stood at an
estimated US$2.7 bn in 2005 with GDP per head
of US$44,600 at purchasing power
parity.
The government of Guernsey has consistently
favoured development of the island's offshore
sector, but the island's economic success
puts pressure on internal resources, so
that the administration operates a highly
selective immigration policy for both
individuals and businesses. For the same
reason, the island offers no incentives,
grants or exemptions to inward investors.
The island's currency is the British pound;
there are no exchange controls.
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Guernsey Entry and Residence
Nationals of European Union member states
have free right of movement in Guernsey
for the purposes of work and establishment.
Non EU nationals must apply to the States
Defense Committee of the Aliens Office
for permission to reside or work in Guernsey.
Generally a work permit will be granted
only if no suitably qualified local exists.
Preference is given to UK and other European
Union nationals. Long-term residency in
Guernsey is carefully controlled; with
certain exceptions consent for residency
will be given only to a person owning
a residence, and in turn the purchase
of a residence is subject to consent,
which is given in only a limited number
of cases, usually involving a luxury dwelling
or an individual who is clearly going
to contribute significantly to the island
through payment of local taxes.
On the other hand, consent is usually granted
quite readily for commercial property
transactions.
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Guernsey Business
Environment
With a stable economy, low taxes, good communications,
excellent professional services and a
convenient location near the EU, Guernsey
is an attractive destination for offshore
businesses.
The development of the island as a centre
for financial services in the last 25
years owes much to the care taken by the
administration to admit only reputable
businesses. In the early days selection
was exercised informally, but in the last
15 years a formal regulatory structure
has been put in place, culminating in
the formation of the Financial Services
Commission. Partly as a continuation of
this process, and partly in response to
the Edwards Report, the administration
conducted a three-year programme to introduce
additional regulation affecting almost
all types of offshore activity. With the
new laws in place, the island now offers
a level of regulatory control and protection
at least equal to that in the world's
leading economies.
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Guernsey Import of Foreign
Capital
There is no exchange control in Guernsey.
Guernsey companies may be freely incorporated
with a share capital denominated in any
currency and there are no restrictions
on inward or outward investment or on
the repatriation of dividends, interest
and profits. Bank interest on deposit
payable to non-residents is exempt from
Jersey income tax. Royalties are treated
for the purposes of tax in the same way
as interest. However, under the EU's Savings
Tax Directive, from 1st July, 2005, Guernsey
was obliged to deduct withholding tax,
initially at 15%, from returns on savings
paid to citizens of EU Member States.
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Guernsey The Channel Islands
Stock Exchange
The Channel Islands Stock Exchange ("CISX")
commenced operations on 27 October, 1998
with 23 founder members. Its aim is to
provide trading and listing of investment
funds, debt instruments and shares in
companies and to bring the expertise available
in the Channel Islands to the expanding
network of international businesses requiring
expert offshore financial services in
the European time-zone. Ownership of the
CISX lies in the hands of its listing
members, who have to be established in
the Channel Islands. Management and control
are vested in a board of directors who
are elected. Based in St Peter Port, Guernsey,
the CISX provides a listing facility and
screen-based trading. Trading members
do not have to be established in the Channel
Islands, but must be licensed, regulated
or supervised by a regulatory body in
a jurisdiction recognised by the CISX.
The CISX's screen-based trading platform
is based on Reuter's Triarch network installed
at the Exchange's St Peter Port offices.
Reuters has been involved with the financial
markets in The Channel Islands for over
20 years, with offices in Guernsey and
Jersey in 1984. Reuters was chosen by
the CISX because it offers a first class
system for the delivery and management
of the Exchange's market data. There is
also the opportunity to access the considerable
communications network and range of information
services available from Reuters.
Trading in the shares of local companies
may be settled via Crest or Crest Residual.
International debt issues, and other eligible
issues, may be settled through either
Cedel Bank or EuroClear unless otherwise
agreed, by the parties to the transaction,
at the time of trade.
Since commencing operations, the CISX has
grown rapidly, reaching a total of 2,000
listings in May, 2007,
with total market capitalisation in excess
of US$17 billion. The exchange
prides itself on a personalised approach
and fast track processing of listing applications
within a highly regulated and innovative
marketplace
In September, 2002, the US Securities and
Exchange Commission's awarded the Channel
Islands Stock Exchange (CISX) designated
offshore securities market status. In
December, 2003, the CISX gained approval
by the UK Financial Services Authority
as a Designated Investment Exchange.
Although the CISX is as open to listings
from Jersey as from within Guernsey, in
practice the Exchange trades four times
as many Guernsey-domiciled securities
as those from Jersey. The exchange said
in 2004 that it was trying to remedy this
imbalance; it is also promoting several
new product areas, including eurobonds,
floating property funds, open and closed-ended
investment funds, debt, securities and
special purpose vehicles. The exchange
is also attracting interest from alternative
investment funds, and plans the listing
and trading of products such as insurance
related instruments.
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