The Companies (Amendment No. 11) (Jersey) Law 2014 (the
Amendment Law) came into force on 1 August 2014
and amended the Companies (Jersey) Law 1991 (the Companies
Law). One of many improvements made by the Amendment Law
was to provide Jersey companies with the ability to carry out a
reduction of capital without needing to obtain court approval.
This briefing provides a summary of the new out of court
procedure for reductions of capital by limited companies in
The New Procedure
Prior to the Amendment Law, reductions of capital by Jersey
limited companies required confirmation by the Royal Court of
Such a reduction of capital no longer requires court
confirmation where any such reduction is supported by a solvency
statement filed with the Companies Registry. There are
certain other documents which are required including:
a shareholder approval by way of a special resolution; and
a minute (a legal document as opposed to a board minute)
confirming certain information in relation to the capital accounts
of the company and the share capital of the company.
This procedure is open to all types of public and private
limited companies in Jersey and it is worth noting that, to the
extent that a Jersey company would prefer to follow the court
confirmed process for a reduction of capital, this is still
possible as an alternative.
The directors who authorise the solvency statement are required
to make a solvency statement not more than 15 days before the
special resolution sanctioning the resolution to reduce capital
as at the date of the statement, the company is able to
discharge its liabilities as they fall due; and
having regard to (i) the prospects of the company and to the
intentions of the directors with respect to the management of the
company's business; and (ii) the amount and character of the
financial resources that will in their view be available to the
company, the company will be able to continue to carry on its
business and discharge its liabilities as they fall due until the
expiry of the period of 12 months immediately following the date of
the statement or until the company is dissolved under article 150
of the Companies Law (that is, on the basis of a solvent winding
The minute must include the following information:
the amounts of the capital accounts of the company following
the share capital of the company following the reduction;
the amount remaining unpaid on issued shares following the
Companies Registry Application
A certified copy of the special resolution, the
original solvency statement(s) and a copy of the
minute are required to be submitted to the Companies Registry
within 15 days of the passing of the special resolution.
The Companies Registry once having completed their review of the
documents then issue a certificate which is conclusive evidence
that the requirements of the Companies Law have been complied
Whilst the old mechanism for court approval of a share capital
reduction remains in place, the new procedure allows for Jersey
companies to more easily reduce their capital accounts and
supplements the ability for Jersey companies to distribute from
certain capital accounts. The procedure also puts Jersey
companies on an equal footing with certain English companies.
Ogier advised on the first non-court capital reduction under the
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.
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