Although HM Treasury recently withdrew its controversial proposals for the taxation of foreign profits of UK companies, there are continuing concerns that revised proposals will be introduced which may have the effect of damaging the competitiveness of UK multinationals.

Recent decisions by Shire Pharmaceuticals Group plc ("Shire") and United Business Media plc ("UBM") to migrate their tax domicile from the UK to the Republic of Ireland are indicative of such a perception. In the case of UBM, the reasons it gave for its decision to relocate its holding company were the significant compliance costs in managing the interaction between the UK tax system and the tax systems of the countries in which it operates.

The restructuring of Shire and UBM each involved establishing a new Jersey incorporated holding company which is tax resident in the Republic of Ireland through a scheme of arrangement pursuant to Part 26 of the UK Companies Act 2006. Hiscox, Colt Telecom and Experian have also undertaken corporate redomiciliations and a number of other UK corporate groups, including Henderson Group, Aberdeen Asset Management and Brit Insurance, are thought to be considering similar restructurings.

Until HM Treasury clarifies its policy objectives in relation to the taxation of companies' foreign profits, the location of the tax residence of many UK groups is likely to remain on the corporate agenda. This briefing identifies some of the main benefits of using a Jersey Holdco for a corporate restructuring.


There are potentially substantial benefits for UK multinational groups which have significant overseas profits in establishing their corporate headquarters outside the United Kingdom. Increasingly complex tax legislation, compliance costs and lack of long-term predictability have all contributed to UK multinationals reviewing the tax residency of their UK corporate holding company.


A new Jersey company is set up to act as the holding company of the existing UK incorporated holdco. As noted above, this is usually effected by a scheme of arrangement under Part 26 of the UK Companies Act 2006. Both Shire and UBM used a Jersey incorporated holding company, tax resident in Ireland, for these purposes.



A zero rate of income tax will apply to all eligible companies incorporated in Jersey after 3 June 2008.

Under Jersey law there is no stamp duty or stamp duty reserve tax payable on the issue or transfer of shares in Jersey companies and the share registers of Jersey companies listed on the LSE or another recognised stock exchange can be maintained offshore. In addition, there is no capital gains tax in Jersey.

Accordingly, using a Jersey incorporated holding company should provide stamp duty saving opportunities as well as facilitating a reduced aggregate tax burden through the acquisition of an Irish corporate tax base.

Corporate Law

Corporate law in Jersey is to a large extent modelled on, and uses many of the same concepts as, English law. This is important for investors since an offshore listing vehicle will generally "look and feel" very much like its English-incorporated counterparts with which investors will be familiar.

However, just as importantly, Jersey corporate law, whilst robust, offers a degree of flexibility not afforded by English law. Some examples of this flexibility are considered below.


New legislation in Jersey enables a Jersey company to make a distribution out of any source, including capital (other than the nominal capital account or the capital redemption reserve) provided that the directors can confirm that a cash-flow solvency test is met.

The Shire and UBM transactions included proposals to reduce Jersey Holdco's capital shortly after the UK scheme has become effective in order to create distributable reserves. However, the new legislation which permits distributions out of capital should now avoid the need to create distributable reserves by way of a court approved reduction of capital.

Repurchase and Redemption of Shares

Jersey companies may repurchase or redeem shares from any source provided that the directors can confirm that a cash-flow solvency test is met.

Financial Assistance

Jersey company law historically prohibited a company from giving financial assistance in respect of the acquisition of its own shares. This prohibition has now been removed and the amendments make clear that any previous common law prohibition on financial assistance is not revived by virtue of the removal of the statutory prohibition.


From an investor perception point of view, it is frequently advantageous for elements of an offshore listed issuer to resemble its English counterparts. This is particularly the case in terms of investor protection and corporate governance.

Pre-emption rights

There are no statutory pre-emption rights under Jersey law. Directors of Jersey incorporated companies will generally have the power, subject to there being sufficient authorised but unissued share capital, to issue new shares on a non pre-emptive basis. However, in order to meet general investor expectations the articles of association of an offshore company seeking to list on the LSE are usually amended so as to require the directors to offer new shares on a pre-emptive basis to the existing shareholders.

Shareholder disclosure

The articles of a Jersey company whose shares are listed on the LSE will incorporate the provisions of DTR5 and section 793 of the UK's Companies Act 2006 (enabling a company to serve a notice requiring the disclosure of interests in its shares) by reference. This can be supported by additional provisions in the articles allowing the company to withhold dividends, suspend voting rights and prohibit transfers of shares held by a person who has not complied with these disclosure obligations.

Uncertificated Shares

It is almost always necessary for the shares in a company applying to list on a stock market to be capable of being traded in uncertificated form.

In Jersey, there is specific legislation permitting securities to be uncertificated and corresponding provisions are usually included in the company's articles of association, enabling the directors to resolve that the shares be uncertificated.

As regards trading, LSE listed shares in Jersey companies are capable of being held in dematerialised form through CREST.

City Code on Takeovers and Mergers

Consistent with a desire for Jersey companies to conform to international standards of investor regulation, the UK's City Code on Takeovers and Mergers will apply to Jersey companies listed on the LSE.

Recent Deals

Ogier have advised on a number of corporate restructurings, including the UBM transaction.

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.