With governments across Africa working to improve the business
climate, developed investment communities are appreciating the
reality that Africa remains one of the last unrecognised growth
opportunities in the world. Commodities are not the only
attraction. Increased intellectual capital, in countries such as
Kenya and Nigeria, and significant entrepreneurial spirit have
fostered cross border deals in the telecoms, infrastructure,
leisure and IT sectors. Jersey is ideally placed, with all of the
necessary expertise, to provide solutions.
When looking at inward and outbound investment relating to
Africa, as in any other parts of the world, businesses have to
consider the most effective and efficient structuring methods. The
offshore world already plays a significant role in a number of
African investments, whether for reasons of advantageous tax
treatment or to utilise the flexibility afforded by such
Jersey has already featured prominently in investment
structuring and capital raising and its Government has embraced the
opportunities presented by the continent. Economic and political
stability, features now uncommon in some other European-based tax
structuring jurisdictions, provide significant advantages for
Jersey. Tax neutrality is clearly important and Jersey has a proven
record of providing tax efficient solutions and driving innovation.
It would be unwise to compound any investor uncertainty around
Africa by utilising a structuring jurisdiction that has its own
Jersey companies are used for a wide range of purposes and
requirements including structured finance, capital markets, banking
and property. Using a Jersey company for structuring international
transactions can also be beneficial in terms of company law
provisions around ease of transfer of ownership and distributions
to shareholders. Additionally, share capital can be denominated in
any currency and issued in various classes, including redeemable
shares. The introduction of no par value companies has added yet
more flexibility. These features enable Jersey companies to be
structured to meet a wide variety of business purposes, from
trading vehicles to investment vehicles and joint ventures.
Joint venture activity in the African continent is something
that has risen significantly in the last few years. There have, of
course, been a number of very high profile joint ventures. These
include the one between Nigeria and Russia, established to exploit
Nigeria's vast gas reserves and the use of joint venture
structures by China's state-backed Africa investment fund,
which seeks joint venture partners to build infrastructure
throughout Africa. However, these structures have also been popular
on a private level. Joint ventures are often seen as a cost
effective way of structuring transactions between parties with
complimentary aims and objectives, who seek to pool their various
Jersey provides an excellent and well tested home for these
joint ventures with flexible corporate legislation and the ability
to imbed contractual agreements between the joint venture parties
into the constitution of the company. The parties then have the
ability to control whichever elements of the operation they require
at either board or shareholder level, without the level of
prescription that is sometimes evident in the onshore world.
Vehicles domiciled in Jersey are easily established and
relatively low cost to maintain, which can also be an attractive
feature for parties looking to establish a joint venture. The fact
that these companies are suitable from cradle to grave, or from
inception of an idea to perhaps the flotation of the company, means
that efficient structuring can be put in place at the outset and
ideally before the entity in question has developed value, which
could cause difficulties at a later date (such as the
crystallisation of gains causing tax triggers).
Over the last few years there has been a significant convergence
in the laws and structuring options in the principle offshore
jurisdictions. However, it is Jersey that has the most developed
track record in cross border corporate transactions. As various
African countries, investors and business owners become more
sophisticated and capital raising or investment opportunities increase, there
will undoubtedly be further demand for offshore structuring. Jersey
is perfectly positioned to assist.
This article first appeared in the Jersey Finance publication
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