Jersey: Ownerless Assets In Jersey And The Recent Case Of In The Matter Of 15 Minories Holding Limited [2016] JRC 108A

Last Updated: 10 October 2016
Article by Adam Chester and Fritha Ford

We all know what is likely to happen to our possessions when we die. Fortunately there is no inheritance tax in Jersey, so our heirs do not have to worry about the taxman taking a cut, but what happens to the assets of a Jersey company which has been dissolved? Unless those assets have been distributed to the company's shareholders (or creditors if it was wound up in an insolvent situation), there is no heir to whom those assets will obviously pass, unlike in the case of a deceased individual.

There are several reasons why a Jersey company may be dissolved – for example, at the end of its prescribed life, in the course of a normal winding up or through the actions of the Jersey companies registrar for failure to submit an annual return or, as of recently, failure to have a properly authorised registered office. Jersey law is fairly straightforward when it comes to what happens to ownerless assets and the position is similar to the common law England in this regard; freehold Jersey immovable property (i.e. real estate) "escheats" to the Crown as Jersey's land law is based on feudalism and therefore on a system of tenure whereby a freeholder does not own absolutely but is a "tenant in fee simple" and, as such, land reverts to the Crown once the freeholder dies without any heirs (or, if the freeholder is a company which is dissolved, if it has not distributed the land). In respect of movable property (i.e. non-real estate), such assets become "bona vacantia" (Latin for "ownerless goods") and the Crown can claim them by virtue of the Royal Prerogative at customary law. The Crown's representative in Jersey is Her Majesty's Receiver General (the "Receiver General") and is appointed by the monarch to administer the Crown's estate in Jersey and receive or claim any property that has escheated to the Crown or which is bona vacantia. Theoretically the Receiver General could claim property situated outside of Jersey which falls to be bona vacantia although, in practice, this is unlikely to happen as the authorities in the jurisdiction where the property is located may have a better claim over it.

If a Jersey company is dissolved, a shareholder (or anyone else with an interest) will have a 10 year period from the date of dissolution within which to apply to the Royal Court in Jersey to have the company reinstated in order to reconstitute their interest in the company. If successful in their application, the company will be restored to the exact same position as it was prior to dissolution. In the event that that company held property which was subsequently claimed by the Receiver General, the interested party can apply to the Receiver General to recover those assets representing their interests. Furthermore, it is generally considered that there is no time bar on beneficial owners of a dissolved company being able to claim assets directly from the Receiver General.

Reclaiming assets from the Receiver General is a fairly well trodden path - but what happens when corporate shareholders of a dissolved or about to be dissolved company have themselves been dissolved? What is a Jersey company administrator to do with an inactive but solvent company which they wish to dissolve if there is no-one to distribute property to in a winding up or if it is impossible to wind up the company due to lack of live shareholders? Although this seems like a hypothetical situation, the Royal Court recently considered such a case and made an order involving the Receiver General.

In the recent case of In the matter of 15 Minories Holding Limited [2016] JRC 108A, in which Walkers represented the corporate directors of the company, the Royal Court ordered the just and equitable winding up of a Jersey registered company where the company's substratum had gone, but without sufficient shareholders being in existence in order to resolve that the company be wound up in either a summary or a creditor's winding up (due to the fact that one of its three corporate shareholders had been struck off the Cayman register of companies in 2006 and another had been dissolved in 2005). It was considered that the directors allowing the company to be simply struck off under Article 205 of the Companies (Jersey) Law 1991 (as amended) would have been inappropriate from both a legal and regulatory perspective.

The case is one of the few occasions in which the Royal Court has considered the destination of assets of a dissolved company where the shareholder who would have had an entitlement to those assets on a winding up is no longer in existence. The Royal Court acknowledged that in such circumstances movable assets fall to the Crown as bona vacantia, but added that they will only vest in the Crown absolutely after the lapse of 10 years (on the basis that the company might be reinstated within 10 years of dissolution). In the interim, the Court ordered that the funds in question were to be held by the Receiver General who indemnified the corporate directors of the company thus absolving them of liability.

The case is noteworthy in showing the flexibility of a just and equitable winding up as there was previously no precedent for the unusual orders sought by the corporate directors (particularly those involving the Receiver General). This judgment will come as welcome news to company directors and administrators who will no longer have to maintain a dormant company simply because of shareholders that have been either dissolved or struck off the relevant register of companies. Although the corporate directors could simply have allowed the company to be struck off (e.g. by failing to submit an annual return), such a course of action would have been inappropriate not only because the corporate directors were regulated by the Jersey Financial Services Commission but also because it would have rendered the company under the Companies (Jersey) Law 1991 (as amended) (and therefore also the directors by virtue of the Criminal Offences (Jersey) Law 2009 (as amended)) guilty of an offence. Further, in the event that the company was struck off the register, the liability of every director will have continued and may have been enforced as if it had not been dissolved. In ordering the just and equitable winding up of the company and in ordering that funds be paid to the Receiver General, the corporate directors were protected from future claims.

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 Mondaq.com.

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

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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