The Guernsey International Business Association (GIBA) has provided guidance on economic substance requirements and the COVID-19 pandemic as it is “becoming increasingly clear that [the virus] will have an impact on the way many companies operate”.
GIBA explained that in light of current restrictions, companies may struggle to comply with obligations under economic substance requirements.
On 11 March 2020, Jersey’s minister for treasury and resources issued a statement explaining that where companies have had to adjust their operating practices to compensate for the coronavirus outbreak, the Jersey Comptroller will not determine that they have failed the economic substance test.
This treatment will only apply to adjustments to the normal operating practices, and to the extent, they are required to mitigate the threats from the outbreak.
After a number of discussions between GIBA and the Guernsey Society of Chartered and Certified Accountants (GSCCA), the chief minister of Guernsey has agreed to endorse the same approach as Jersey.
GIBA advised companies to “maintain and retain relevant records that show what their policy was in respect of restrictions on travel for the company officers and the period of time for which that policy was in place”.
It said: “This will ensure that companies can demonstrate where COVID-19 restriction measures prohibited the company from holding an adequate number of board meetings in [Guernsey] or required meetings to temporarily be held virtually, such as conference calls or video conferencing, Skype or similar.”
“Businesses should also give consideration to the ability to appoint alternate directors on island who can attend meetings in Guernsey and thereby address any short-term practical difficulties arising from the COVID-19 and indeed other unforeseen eventualities,” GIBA added.