What is meant by "migration" of a company?
In essence, migration is the process by which a company changes its place of incorporation from one legal jurisdiction to another.
Jersey legislation dealing with migration
Under the Companies (Jersey) Law 1991, as amended, (Companies Law) the migration process is referred to as "continuance". The Companies Law sets out the process by which a Jersey incorporated company can "continue" as a corporate body in another jurisdiction.
Effect of Migration
Once a Jersey company has completed the migration process it will cease to be incorporated under Jersey law and will become a body incorporated under the laws of its new chosen legal jurisdiction.
Following that change, the Companies Law ceases to govern the operation of the company as a corporate entity. Instead the company will, in that regard, be subject to the relevant laws of the new jurisdiction.
Approval from authorities in Jersey and the new jurisdiction
A Jersey company wishing to migrate to a new jurisdiction will need to obtain prior approval from the Jersey Financial Services Commission (Commission) and from the relevant authorities in the jurisdiction to which it is migrating.
Procedural requirements of the new jurisdiction
The requirements of the company's proposed new place of incorporation will differ from jurisdiction to jurisdiction and we advise that an understanding of these requirements is established at an early stage so as to ensure continuity in progressing the migration in Jersey and that new jurisdiction.
Jersey procedural requirements
The company's application to the Commission for approval of the migration must be in the prescribed form (Form C101) issued by the Commission. An application fee, ordinarily a flat fee of £500, is payable to the Commission.
In addition to that application the Companies Law requires:
- approval of the company's migration by special resolution of its members
- written notice from the company to all its creditors informing them of the migration
- that notice of the migration is advertised in the Jersey gazette
- statements in relation to the company's affairs from its directors, including a solvency statement
- statements in relation to the company's affairs from those who will be its directors after the migration
- confirmation as to the legal effect of migration under the laws of the new jurisdiction, (usually taking the form of a legal opinion from a lawyer qualified in the new jurisdiction)
The Companies Law sets out time periods (30 / 31 days) from the date of the members' special resolution approving the company's migration, and the date the creditor notices have been given / advertised, that must expire before the company can make its application to the Commission. This aims to ensure that any members / creditors who object to the migration taking place have time to make an application to the Jersey courts to prevent it.
Certain other documents and information may be required by the Commission in respect of a company's application.
What happens once the Commission has approved the migration?
If the Commission approves the company's migration it will issue a written conditional consent.
However, the company cannot yet be deregistered as a Jersey company. The condition attaching to the Commission's consent is that the company must first be registered as a corporate body in the new jurisdiction.
Once the Commission has received satisfactory confirmation that the company has been registered as a corporate body in the new jurisdiction, the Jersey Companies Registrar will issue the company with a certificate confirming its deregistration as a Jersey incorporated company, and the Jersey Register of Companies will be amended to reflect that.
Protections in connection with migration
To ensure the interests of a company's members and creditors will not be unfairly prejudiced by its migration, the Companies Law sets out a formal process by which those members and / or creditors may bring an objection to the proposed migration before the Jersey courts.
In addition, the Companies Law only allows a company to migrate to a new jurisdiction if the Commission receives satisfactory evidence:
- that the laws of the new jurisdiction allow the company's continuance there as a body corporate;
- that laws of the new jurisdiction provide that upon the
continuance of the company as a body corporate in that jurisdiction
- all property and rights of the company will become the property and rights of the body corporate,
- the body corporate will become subject to all criminal and civil liabilities, and all contracts, debts and other obligations, to which the company is subject, and
- all actions and other legal proceedings which are pending by or against the company may be continued by or against the body corporate.
Knowingly or recklessly providing false, misleading or deceptive information to the Commission in connection with a migration application is an offence under the Companies Law.
Circumstances that would prevent a Company's migration overseas
The Companies Law sets out certain circumstances which, if affecting a company, would prevent its migration. Essentially, if the company is in liquidation or the subject of any actions or procedures indicative of bankruptcy.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.