Jersey companies are proving increasingly popular with Chinese businesses considering listing in London. Ogier recently acted for Naibu, the 10th largest local sportswear brand in China, on its £68m listing on the AIM Market. Naibu Global International Company plc, incorporated in Jersey, joins a number of other high profile Jersey companies already listed on the London Stock Exchange. Naibu designs, manufactures and supplies Naibu branded clothing and accessories through 2,800 Naibu stores and sales outlets across China.
Jersey holding companies as listing vehicles
Jersey incorporated companies are attractive to both investors and the companies themselves for a number of reasons, not all of which are comparable in other jurisdictions.
Jersey is a politically stable jurisdiction with a global reputation as a first class international finance centre and has a proven track record for attracting investment from around the world. it was designated by the OECD as a 'white listed' jurisdiction and is an OECD issuer territory, which means a wider pool of investors can participate in IPOs and the highest standards of corporate governance can be achieved.
Chinese businesses with an international reach can derive a real advantage from their holding company being incorporated, managed and controlled in a tax neutral jurisdiction:
- In Jersey there is no corporation tax, no capital gains tax and no capital transfer tax.
- There is no requirement for a Jersey company to make any withholding or deduction on account of Jersey tax in respect of dividend or interest payments.
- No stamp duty or similar taxes are payable on the issue or transfer of a Jersey company's shares.
- A Jersey company may elect not to be resident for tax purposes and be exclusively tax resident elsewhere. The effective rate of taxation then will be dependent on the chosen jurisdiction.
In summary, companies formed as listing vehicles can expect to pay no income tax in Jersey, whether or not they are tax resident in Jersey.
Jersey company law
As well as offering a potentially extremely favourable tax environment, Jersey's corporate laws also appeal to businesses and investors alike:
- They are familiar: Jersey companies law is to a large extent modelled on English law.
- They are flexible: Jersey law is generally more flexible than its English counterpart. in addition, Jersey offers the following advantages in the context an IPO:
- The ability to list shares directly on the London stock exchange (as opposed to only depositary receipts, which adds to the cost of a structure) and to trade shares directly through CREST (the UK share settlement system).
- Jersey companies can use the letters 'PLC' at the end of their names - just like their UK counterparts.
- Jersey companies are eligible for inclusion in exchange indices, for example FTSE 100/250.
- Takeover Codes: The UK City Code on Takeovers and Mergers applies to companies listed on London's main market and to other Jersey public companies that are centrally managed and controlled in Jersey. This is a key shareholder protection.
Jersey is a tried and tested jurisdiction for IPOs on international exchanges around the world. We expect to see increasing demand for AIM listings for Chinese businesses following the Naibu example, particularly as AIM offers a cost-effective and often faster listing process than many other international exchanges.
We also anticipate growing demand for European 'trophy' assets seeking listings in the Far east to tap into strong consumer demand in those markets. Jersey is well placed as the jurisdiction of choice for incorporating the listing vehicle for such companies given its familiarity in Europe and the fact that it is acceptable to the leading international exchanges in Asia.
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.