Jersey: Jersey SPVs And Structured Finance

This note provides a brief summary of the use of Jersey SPVs in structured finance transactions, outlines the principle legal and regulatory regime in Jersey governing such transactions and highlights some key considerations for these types of structures.


Jersey has political and economic stability, high levels of regulation, tax neutrality and a sophisticated modern and flexible legal system combined with vast experience and expertise offered by highly skilled financial services providers. All of this contributes to maintain Jersey's position as one of the world's leading international finance centres.

Jersey continues to remain a primary jurisdiction in which to incorporate a special purpose vehicle ("SPV") as an issuer of debt securities. Jersey is the jurisdiction of choice for corporate entities seeking to list – with the greatest number of FTSE 100 companies registered outside of the United Kingdom (the "UK"), being registered in Jersey.

Jersey is an associate member of the Organisation for Economic Co-Operation and Development (the "OECD") and, whilst in the Customs Union and essentially part of the Single Market for trade in goods, is not otherwise part of the European Union. Securities issued by a Jersey SPV are treated as been issued by an OECD domiciled issuer.

Jersey SPVs in capital markets transactions are used for a wide variety of purposes, such as repackagings, Tier 1 capital raising, equity and debt capital raisings, derivatives, car fleet securitisations, real estate asset financing, sukuk structures and various other types of ABS and ABCP transactions.

Company Law Regime

Jersey companies are constituted in accordance with, and governed by, the provisions of the Companies (Jersey) Law, 1991, as amended (the "Companies Law"). The Companies Law allows great flexibility in structured finance transactions, such as:

  • share capital - there is no minimum authorised or issued share capital for a Jersey company. There is no stamp duty payable in Jersey on the authorised share capital or on the issue or transfer of shares (with the exception of the shares in a Jersey company owning Jersey real estate). A Jersey company may issue shares with a par value or no par value with limited or unlimited liability. Treasury shares and fractional shares are permitted. The par value share capital of a Jersey company may be denominated in any currency and different classes of shares may be denominated in different currencies. Shares may be issued nil-paid, partly paid, fully paid or at a premium. In certain instances, securities may be uncertificated which facilitates the listing of shares via central securities depositories such as Euroclear;
  • ultra vires – there are no statutory limits on the capacity of a Jersey company to undertake business transactions;
  • directors – a Jersey company must have at least one director. There is no requirement for a director to be resident in Jersey, however, for a typical capital markets SPV, one Jersey resident director with appropriate experience will normally be required. Corporate directors are permitted in Jersey if provided by a Jersey regulated corporate services provider ("CSP");
  • capital reduction – a Jersey company may reduce its capital without court approval;
  • annual general meetings – a Jersey private company is no longer required to hold an AGM;
  • accounts – a Jersey private company is not required to audit or file its accounts;
  • secretary – a Jersey company must have a company secretary (not necessarily in Jersey). Corporate secretaries are permitted in Jersey; and
  • registered office – a Jersey company must have a registered office in Jersey.

Regulatory Regime

There is a single regulatory authority in Jersey called the Jersey Financial Services Commission (the "JFSC") that oversees, amongst other things, the issue of securities by a Jersey SPV. Whilst the JFSC has certain requirements that must be satisfied in relation to securities issues by a Jersey SPV, it does, in the interests of maintaining maximum flexibility, keep such requirements to a minimum. As long as the JFSC is satisfied that the Island's reputation will not be prejudiced by being associated with the securities issuing scheme, it generally adopts a "hands-off" approach to the regulation of such issues and reviews its procedures and relevant legislation on a regular basis to achieve this.

When considering an application for a Jersey SPV to issue securities, the JFSC will have close regard to the following:

  • type of investor(s): the JFSC will require confirmation of the intended target market;
  • parties involved: all major parties to the transaction will need to be disclosed; and
  • the SPV: the JFSC will need to be advised, on a confidential basis, of the beneficial ownership of the SPV.

If the number of persons in whose name the securities are to be registered or held (for bearer securities) exceeds ten, then regulatory consent for the issuance will be required by the SPV pursuant to the Control of Borrowing (Jersey) Order 1958, as amended (the "COBO Order").

If there is to be a "public" offer of securities (basically, an offer to more than fifty people), the SPV will then be issuing a "prospectus" (as defined in the Companies Law) and must be incorporated as a public company. Consent from the registrar of companies (the "Registrar") must be obtained prior to the circulation of a prospectus in Jersey or elsewhere (the "Registrar's Consent"). The prospectus will be subject to the provisions of the Companies (General Provisions) (Jersey) Order 2002 (the "GPO"). Certain derogations from the requirements of the GPO may be obtained provided that the Registrar is satisfied that such derogations do not affect the substance of the prospectus or are not calculated to mislead. A copy of the prospectus signed by the directors of the SPV must be filled with the Registrar. The Registrar will require a true and fair English translation of any prospectus or information document that is to be issued in a foreign language.

There are stricter filing requirements for public companies with the most important being that a public company must prepare and file annual audited accounts together with the auditor's report.

The route to obtaining consent under the COBO Order for a securities issue can be divided into four stages, as follows:

  • preliminary stages;
  • initial review stage;
  • document review stage; and);
  • registration and/or consent.

There is no charge for the issue of a consent to issue securities pursuant to the COBO Order or for a Registrar's Consent.

The only charges that need to be considered are the company incorporation fee (standard fee of £200 with an additional "fast-track" incorporation fee if necessary) and the annual return fee (£150 per annum).

The JFSC does not undertake any on-going supervision of securities issues. Any "post-launch" requirements are therefore essentially governed by the terms of the COBO Consent and Registrar's Consent.

Typical structure

  • type of vehicle – in a structured finance transaction, the SPV is typically a limited liability company, a trust, limited liability partnership, cell company or other form of body corporate (depending on the local law in the place of establishment). In Jersey, an SPV issuing debt securities normally takes the form of a limited company. By definition, the SPV will be created specifically for the transaction and will therefore not have any previous operating history. An SPV can be incorporated quickly (usually within 1-2 days or within 4 hours (fast-track as mentioned below) upon payment of an additional fee). The SPV may be used as a "stand-alone" or "multi-issue" vehicle;
  • charitable trust – one of the essential characteristics of a structured finance transaction is that the SPV is not owned, controlled or connected in any way with the arranger, originator or any other entity in the structure. The entire issued share capital of the SPV would normally be held by a trustee of a newly established charitable trust. Jersey trusts can be established very quickly. The trustee would normally be provided by the CSP and should be a Jersey incorporated company of stature and have a relevant track record and a physical presence (staff and premises) in Jersey. This form of "orphan" SPV is essentially to prevent the SPV (and the assets it acquires) from being included in any eventual insolvency proceedings involving, notably, the originator or any related party;
  • bankruptcy remoteness – in most structured finance transactions the SPV will be bankruptcy remote. This is achieved principally by the following:
  • limited recourse and non-petition provisions: as all the transaction creditors (for example, noteholders, swap counterparty, liquidity providers etc.) are known in the transaction they can agree contractually (subject to any legal restrictions) to limit their recourse only to the assets of the SPV for the repayment of any amounts owed to them. The transaction creditors can also waive their rights to "petition" a court to commence insolvency proceedings against the SPV for non-payment of its debts to the creditors;
  • limitations on activities: the business of the SPV should be limited through contractual undertakings and its constitutional documents to what is necessary for it to perform its obligations under the transaction documents (such limitations would typically include prohibition of change of ownership, restricted powers of directors, no additional borrowings or guarantees or granting of security, no employees, no commingling of assets);
  • directors: appointment of independent directors from the originator; and
  • priority of payments: having known and identifiable transactional creditors means that they can agree to clear priorities regarding repayments according to a predetermined waterfall.
  • credit enhancement: this is done in order to improve the credit ratings of the securities so as to appeal to investors. Examples include, over-collateralisation (value of receivables transferred is greater than the consideration paid by the SPV), letters of credit, retained spread (amounts due on the securities are less than the amounts received in respect of the receivables), insurance and issuing subordinated tranches (senior holders of securities have priority of payment and subordinated holders will absorb any losses before the senior holders of securities).

Key Parties

  • originator – usually large financial institutions, large companies or small and medium sized enterprises;
  • arranger – usually a financial institution;
  • investors – usually financial institutions, insurance companies, hedge funds, pension funds, companies and high net worth individuals;
  • trustee/security trustee – usually a professional corporate trustee;
  • swap counterparty – financial institution;
  • collateral administrator – typically a bank;
  • servicer;
  • paying agent – bank;
  • clearing houses;
  • rating agencies;
  • listing agent – specialist teams (usually provided by the CSP); and
  • professional services such as accountants, auditors and law firms.

Key Considerations

  • taxation - a 0% general rate of corporate income tax was introduced in Jersey with effect from 1 January 2009. Since then, SPVs resident in Jersey (that is, incorporated in Jersey, managed and controlled in Jersey or having a permanent establishment in Jersey) will be taxed in Jersey at 0%. Dividends and interest paid to a Jersey or non Jersey resident are not subject to withholding tax. Capital gains are not taxable in Jersey and there is no duty upon the issue of shares or debt securities. Jersey does have a Goods and Services Tax ("GST") which is a tax on the sale of goods and services in Jersey. Upon payment of an annual fee, an SPV can adopt for "international services entity" status and not be liable to pay or charge GST;
  • security - pursuant to article 13 of the Security Interests (Jersey) Law 2012, a Jersey company is deemed to have capacity under Jersey law to grant security governed by a foreign law over property situated outside Jersey;
  • trusts – pursuant to the Trusts (Jersey) Law 1984, trust assets are protected from the creditors of a Jersey trustee if the trustee becomes bankrupt. The trustee's own assets are distinguished from those held in the trustee's capacity acting as trustee;
  • credit rating - the sovereign rating assigned by standards and poor's ratings services to Jersey gives a maximum rating for securities issued by a Jersey SPV;
  • legal opinion – the rating agencies (in addition to other parties) will expect to receive for review a legal opinion to be issued by the transactional lawyers where the SPV is incorporated. Continuous developments and enhancements to Jersey's sophisticated and comprehensive infrastructure of laws ensure that robust Jersey legal opinions can be provided; and
  • listing – securities issued by a Jersey SPV can be listed on a recognised stock exchange in order to meet investor requirements. A listing may also be made on the Channel Islands Security Exchange (the "CISE"), which has received a number of recognitions making it an attractive option for the listing of securities. One of the recognitions includes the designation of the CISE by HM Revenue & Customs (formerly the UK Inland Revenue) as a "Recognised Stock Exchange" pursuant to section 841 of the Income and Corporation Taxes Act 1988 which permits securities listed on the CISE to qualify as Eurobonds for UK tax purposes. The CISE has also been recognised by the US Securities & Exchange Commission and the Australian Securities Exchange. Hatstone Listing Services Limited is a full listing sponsor and can assist with listings on the CISE.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions