Establishing a Jersey company is an excellent choice for Indian businesses wishing to set up a company outside India as a listed vehicle or a holding company for non-Indian assets, or to raise debt capital. Typically, an established group of companies will introduce a new listed Jersey parent company or finance company. Jersey companies are suitable for listing on the main board (FTSE) and AIM of the London Stock Exchange.
Why choose Jersey?
Jersey companies are popular for many reasons including the following:
- Unlike many offshore jurisdictions, Jersey shares settle through CREST, the UK's paperless securities settlement system. This removes the need for a depository receipt programme;
- Jersey corporate law is modelled on English corporate law but incorporates further flexibility, for example by providing a wider choice of entities and more flexible dividend, share issue and capital reduction regimes. There is no prohibition on financial assistance in Jersey;
- The City Code on Takeovers and Mergers applies to a Jersey company if it is centrally managed and controlled in the UK, the Channel Islands (including Jersey) or the Isle of Man;
- In relation to funds, the flexibility and speed of the Jersey regulatory regime and the availability of innovative structures make Jersey attractive;
- Jersey is located in the UK time zone, covering India's close of business and the USA's opening of business;
- In Jersey there is no Stamp Duty on share transfers, a standard 0% Corporate Tax rate, no Withholding Tax on dividends and no Capital Gains Tax. Jersey is outside the UK Value Added Tax network;
- Jersey law has been amended to permit the merger of a Jersey company with an Indian company;
- Jersey has excellent air links with London and other cities and has a wide choice of legal, accounting and other service providers.
Indian businesses using Jersey
- Yatra Capital Limited, an Indian property fund based in Jersey and listed on Euronext Amsterdam (that raised €100m at its launch in 2006), aims to create value for investors through the ownership, development and operation of high quality property on Indian commercial and retail markets;
- Vedanta, an Indian mining business, has used Jersey companies on a number of transactions, including the issue of US$725m convertible bonds in 2006, US$1.25bn convertible bonds in 2009 and US$805m convertible bonds in 2010;
- Essar Energy, an Indian energy business, recently used a Jersey company to issue US$550m bonds convertible into ordinary shares in its UK parent company.
The use of Jersey companies has served Indian business well and this trend is likely to continue as Indian businesses expand their activities and capital-raising into markets outside India.
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