This note is designed to provide you with some basic information about Jersey companies, the types of companies available in Jersey and some key advantages of using Jersey companies.
A Jersey company is commonly used for investing in property, securities and other assets and acting as a group holding company.
As Jersey is a tax neutral jurisdiction and the use of a Jersey company as part of an investment opportunity or for the structuring or restructuring of financial transactions or assets has proven to be very popular. In the majority of cases a Jersey company is subject to tax in Jersey at the rate of 0% (zero).
The main legislation, by which a Jersey company is governed, is the Companies (Jersey) Law 1991 (the "Law"). The Law covers all aspects of the formation and administration of companies in Jersey. The Jersey Financial Services Commission is the regulator responsible for the regulation of all Jersey registered companies.
Types Of Jersey Companies
The main type of companies available in Jersey are:
Company Limited by Shares
This is the most popular form of company in Jersey and can be set up as a public, private, par value, or no par value company. A member's liability is limited to the amount unpaid on their respective shares.
Company Limited by Guarantee
A company where the liability of a member is determined by the guarantee provided by such member.
Unlimited Liability Company
For the members of an unlimited liability company, the liability of each member when the company is wound up is unlimited.
Limited Life Company
A limited life company has a set period of existence. The end of the company's life is usually triggered by a "specified external event", such as the death of a shareholder. However, the company's articles of association may also (but do not have to) refer to a fixed period of time after which the company shall be wound up.
Limited Duration Company
Like a limited life company, a company incorporated as a limited duration company shall have a set period of existence. After a specified fixed period of time the company is wound up..
Incorporated Cell Company
A company incorporated as a cell company has the ability to create cells separately from itself, in which each may hold its own separate assets and be responsible for its own liabilities.
Protected Cell Company
The protected cells of the protected cell company do not have a separate legal personality. Protected cells are registered in Jersey whereas cells of an incorporated cell company are incorporated in their own right.
Formalities Of A Jersey Company
For a private company, there must be a minimum of one director, whereas for a public company, there must be a minimum of two. There is also the possibility for a Jersey company to appoint corporate directors, subject to certain conditions.
There is no formal requirement for the directors of a Jersey company to be resident in Jersey. Furthermore, directors' meetings are not necessarily required to be held in Jersey.
A private Jersey company is allowed a minimum of one shareholder, whereas a public company must have a minimum of two.
The registered office of a Jersey company must be located in Jersey.
Annual Filing costs
The minimum annual government fees for a Jersey company are £150. There is also an additional £150 payable if the company is incorporated as a protected cell company, which pays this fee on its additional cells.
The company's annual return must be submitted prior to the end of February each year, and must provide details of its share capital.
An auditor must only be appointed if the company is a public company, the articles of association provide for it, or a resolution of a meeting requires this.
Can be in any denomination and the details of the shareholders may be available for public review. Confidentially can be assured through the use of nominees.
Types of Shares
A Jersey company can be incorporated with a wide variety of shares, including registered shares, ordinary shares, preference shares, redeemable shares, non-redeemable shares and shares with or without voting rights.
A Jersey company is either treated as tax resident in Jersey but subject to a general zero rate of corporate tax, or treated as not tax resident in Jersey (and therefore not subject to Jersey income tax) if it is centrally managed and controlled outside Jersey, in a country or territory where the highest rate at which any company may be charged to tax on any parts of its income is 20% or higher, and the company is resident for tax purposes in that country or territory.
Key Advantages Of A Jersey Company
Some of the main advantages of using a Jersey company are:
- A Jersey company provides tax neutrality at a holding company level.
- No stamp duty is payable on the transfer of shares in Jersey companies.
- The Law is based on English companies law, but tends to be more flexible.
- Shares in a Jersey company may be held and traded in an uncertificated form.
- For timings and costs of incorporation, the standard time of incorporation is 1-2 days, at a cost of £200. Fast track incorporation is available which will take approximately 4 hours at a cost of £400.
- Worldwide investors consider Jersey as a well-regulated international finance centre.
- The City Code of Takeovers and Mergers (the "Code") applies in Jersey. This is advantageous because the code helps to ensure that shareholders in target companies are treated fairly and are not denied an opportunity to decide on the merits of a takeover.
Why choose Jersey?
Some of the main advantages for choosing Jersey to incorporate a company are:
- A flexible, independently endorsed regulatory framework.
- Long term economic and political stability.
- Tax neutrality.
- Integrity and reputation - Jersey is a recognised jurisdiction for the purposes of the Financial Action Task Force ("FATF") for its anti money laundering legislation. This provides comfort to investors and may be important, in particular, for institutional investors and government organisations.
- Competitive Position - In 2010, Jersey was the only offshore jurisdiction in the top 20 financial centres ranked by the Global Financial Centres Index, published by the City of London and was ranked in 18th position overall.
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.