The official language is English although French is still spoken and the legal system is based upon a mixture of English and French law.

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1 GUERNSEY FOUNDATION 1 Synopsis Guernsey is the second largest of the Channel Islands with Jersey being the largest. Guernsey lies in the English Channel off the north west coast of France. It covers 24 square miles and has a population of approximately 65,000 with the principal centre of business activity being St. Peter Port. The Channel Islands have a unique constitutional arrangement with the UK. The Islands are possessions of the English Crown as distinct from colonial and overseas dependencies of the United Kingdom and accordingly the locally elected legislative assemblies have the exclusive right to legislate on matters of domestic concern to the Islands (including taxation) whilst the United Kingdom Home Office is responsible for the external affairs of the Islands. The Islands are associated members of the European Community and as such are only subject to European law in so far as they specifically contract in to the European Community. Thus they have elected to become part of the common tariff and agricultural levy system but are not subject to European law in most other areas. The official language is English although French is still spoken and the legal system is based upon a mixture of English and French law. Guernsey has signed double taxation agreements which provide for the exchange of information with the United Kingdom so UK residents should carefully consider whether Guernsey is the correct place in which to set up an offshore structure. With the introduction of a new foundations law in January 2013, Guernsey is a modern and cutting edge jurisdiction for wealth planning. The Guernsey Foundation A Guernsey Foundation is a legal entity that comes into existence when an application made under The Foundations (Guernsey) Law, 2012 (the Law ) to the Registrar is approved and a Certificate of Registration is issued by the Registrar. The application must be made by the Founder or a Registered Agent and accompanied by the Constitution, details of the Enfranchised/Disenfranchised Beneficiaries, details of the Foundation Officials with correct consent to acts, the prescribed fees and a declaration by the Founder or Registered Agent. If the Application has been made in compliance with the Law, the Registrar will register the Foundation. Once registered, a Foundation acquires its own separate legal status or personality, which is separate to the founder, the council of members and its beneficiaries. The Foundation has limited liability. The Foundation can own assets, contract obligations and be part of administrative or judicial processes and its capacity is not limited by anything in the Foundation Rules or the act of any person appointed under the Rules. A Foundation is governed by its Constitution (Charter and Rules) and by the Law and any Regulations made thereunder.

2 2 A Foundation has the following characteristics:- Charter The Charter is a public document and the main constitutional document of the Foundation. It must be in English, set out the objects of the Foundation and specify the name of the Foundation. It must also specify the name(s) and address(es) of Council Members, Guardian and the Founder or Registered Agent. Rules The Rules of the Foundation prescribe to the Council how the Foundation assets should be used to carry out the purpose of the Foundation. The Rules are not a public document, although copies of the Rules must be provided to the Council Members, the Registered Agent, the Guardian (if applicable) and the Founder. The Rules can be a part of Charter should you so wish, however the Charter is a public document and can be obtained through the Guernsey Registry website. Purpose The purpose of the Foundation may be charitable, non-charitable or a mixture of both and may benefit a person or class of persons or be to carry out a specific purpose, or a mixture of both. The purpose must be reasonable, certain and possible and must not be unlawful, against public policy or immoral. A Foundation cannot directly engage in commercial trading not incidental to the attainment of its purpose. Initial Capital An initial Capital endowed to the Foundation is mandatory. Further Dedication of Assets Following registration, further assets may be dedicated to the Foundation, subject to any provision to the contrary in the Rules. REGISTERED AGENT A Foundation must appoint a licensed Registered Agent on the Island unless the Council is a licenced corporate body or individual based in Guernsey. The Rules govern the appointment, removal, retirement and remuneration of the Registered Agent. Founder The Founder is the person who causes the registration of the person or a body corporate. Foundation. The Founder can be a natural The reserved powers of the Founder may be set out in the Rules. The Rules can provide that the Founder s rights may be assigned. The Founder may be appointed Guardian and may also be a Council Member.

3 3 Council Members A Foundation must have Council Members (of which there must be at least one member if prescribed in the Rules) to administer the Foundation s assets and carry out its objects. The Council of Members can be compared with the board of directors of a normal company, their role being to help the Foundation to fulfil and achieve all of the Foundation s aims, objectives and purposes, as set out in the Charter or Rules. Council Members must adhere to the Rules, the Charter and the Law. They must act in good faith and in the best interests of the Foundation. Enfranchised Beneficiaries Enfranchised Beneficiaries are those with a right to receive certain information about the Foundation, as set out in the Rules. Disenfranchised Beneficiaries Disenfranchised Beneficiaries are those without rights to receive information about the Foundation. All beneficiaries must be named in the Constitution Guardian The Constitution may or may not require that the Foundation have a Guardian, to whom the Council is accountable. The role of a Guardian is comparable to that of the protector of a trust. The Guardian can be an individual or a company. Taxation A Foundation is treated as a body corporate for income tax purposes in Guernsey. Guernsey companies are subject to tax at 0% on profit in Guernsey, with the exception of income from banking and local property/ land, which is taxed at 10%. Annual Reporting The Foundation will have to file an Annual Validation to the Registrar together with the prescribed fee of 500, within one month of the Annual Validation date. Timescale Once the Registrar has received the Application and accompanying documents, the Registrar can establish a Foundation within twenty four hours. Restriction on Name and Activity Foundations can be established for all lawful objects and the name must end with the word Foundation. The Foundation cannot directly engage in commercial trading not incidental to the attainment of its purpose. There is no requirement to file accounts with the Registrar, but the Foundation must keep accurate and up to date accounting records.

4 4 Reporting Requirements The Foundation must notify the Registrar of changes to the Constitution within one month of those changes. Local Requirements The Registered Agent must have a Guernsey business address and be licensed as a Guernsey fiduciary. We would generally provide these services as part of the annual fees. Benefits The Founder can retain as much or as little control as he wishes. A Foundation is not subject to the rule against perpetuities and can therefore carry on indefinitely unless this is required by the Founder. There are no restrictions as to the assets or structures which can be held by the Foundation. The filing requirements are minimal and taxation is low or nil. It is therefore relatively cheap to set up. Dedications to the Foundation may be tax deductible for the person dedicating the assets. A foundation represents an alternative tax planning and wealth management structure to the traditional trust, which may be more attractive to clients from civil law jurisdictions. Schedule of Fee Establishment Fee and assistance with preparing Application Form 2,000 (to include provision of the Charter, Rules and declaration of Registered Agent if required) Opening of bank account 650 Courier fee 50 Annually Annual Domiciliary and Management Fees to include business address 3,000 Registered agent if required, council members and r services Deposit against minimum accounting fees 500 Disbursement of Filing Fees 500 TOTAL UP FRONT FEES 6,700 SECOND AND SUBSEQUENT YEARS FEES 4,000 PLEASE NOTE that specialist drafting of the Constitution and Rules may be required so additional fees, charged on a time spent basis, will be incurred for this service. Accounting, audit fees and time-spent throughout the year will be payable in addition to the above.

5 OPTIONAL SERVICES 5 Bank Accounts We can assist with the opening of bank accounts for the foundation in most places in the world and our fees for attending to the account opening procedures would be from 650 plus the costs of preparing any additional notarised documentation which a particular bank may require. R ing, Fax, Tel. and Office Facilities As part of the domiciliary services package we provide a registered office address in the jurisdiction of the registration of your Foundation in order to meet the local statutory requirement. An additional service is the provision of an address, telephone and fax number to receive correspondence which can be the same as the registered office address or another of our Group offices addresses. When we receive communications we will deal with them according to your wishes. Fees for the provision of this service are included above plus handling charges ( 2 per item plus disbursements). Dedicated Telephone Lines For those foundations which are particularly active or wish to have a higher profile or more substance we can arrange the immediate allocation of a dedicated telephone line answered with the name of your foundation. Additional costs apply to this service. DISCLAIMER The Sovereign Group 2014 Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, this information does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error or omission.

Guernsey Foundations. by Peter Stahelin Advocate

Guernsey Foundations. by Peter Stahelin Advocate by Peter Stahelin Advocate Guernsey Foundations On 25 July 2012 Guernsey's legislature approved The Foundations (Guernsey) Law, 2012 (the "Law"), which came into force on 7 January 2013, with the Registry