Jersey: Raising Finance For Corporates: The Use Of Jersey Companies In ´Cash Box´ Structures Briefing

Last Updated: 9 February 2009
Article by Jonathan Walker and John Rainer


The current conditions in the financial markets have made financing mergers and acquisitions with debt more difficult, but they have also had the effect that assets are available at good prices for those who can raise the necessary finance. For corporates wanting to raise cash for an acquisition without depleting their cash reserves or drawing on borrowing facilities, the equity markets can be attractive but a number of conflicting concerns have to be reconciled.

Cash placings are an efficient way of raising small amounts of new equity but do have drawbacks for more significant amounts. A UK listed company ("UK PLC") that wishes to raise cash by the issue of shares is restricted by the pre-emption rights regime under UK law as to the amount it can raise through a straightforward issue of securities for cash unless the new shares are offered pro-rata to existing shareholders.

Cash placings may exceed the limits prescribed by law but only with approval from the shareholders of the UK PLC, as the issuing company. Obtaining shareholder approval will entail not only the expense and delay of convening a meeting, but also the need to announce and describe the proposed transaction for the purposes of the shareholder meeting. Often, the proposed use of the required cash is highly confidential, with the effect that it will not be feasible to call a shareholders' meeting as the proposed transaction cannot be described in public. In addition, guidelines have been published by the Pre-emption Group (a committee of representatives from the Association of British Insurers, the National Association of Pension Funds and certain other institutions and companies), setting out maximum limits on the disapplication of statutory preemption rights.

The restrictions mentioned above apply to shares issued by UK PLC for cash. Shares issued for a non-cash consideration are not subject to the same restrictions.

This is one of the ways in which "cash box" structures are useful (see also "Uses of Cashbox structures"). They allow the UK PLC to raise cash, above the usual limits, from the equity markets without the need for a shareholder meeting, by enabling it to issue shares for a non-cash consideration, and to do so within a short time-scale. Provided that the new shares of UK PLC represent less than 10% of its issued share capital, under the UKLA listing rules, it is not required to produce listing particulars.

This briefing describes how cash box structures work, some of the reasons for using them and why Jersey companies are particularly well suited to cash box structures.

What is a cash box structure?

(a) Incorporation of a subsidiary UK PLC incorporates a new subsidiary which acts as the "cash box" ("Cashbox"). Cashbox is usually incorporated in Jersey (see "Advantages of using Jersey companies"), but in order to avoid the need for HM Treasury consent, it must be managed and controlled in the UK for the purposes of UK tax. If merger relief is to be sought, it is usual for a proportion of the equity share capital of Cashbox to be held by the institutions acting as dealers or managers (the "Dealers") for the issue of shares by UK PLC. Cashbox will also have a class of redeemable preference shares for issue to the Dealers.

(b) Subscription of shares in the Cashbox UK PLC, the Dealers and Cashbox enter into a series of agreements under which:

  • UK PLC and the Dealers agree to subscribe for and pay up their respective ordinary shares;
  • the Dealers agree to subscribe for the redeemable preference shares in Cashbox to be issued fully paid for an amount equal to the net proceeds of the placing and to transfer all of the shares in Cashbox held by them to UK PLC in return for the issue by UK PLC of shares to placees determined by the Dealers; and
  • UK PLC agrees to issue new shares to placees selected by the Dealers in exchange for the transfer to UK PLC by the Dealers of the shares that the Dealers hold in Cashbox.

The agreements also contain option arrangements to enable the structure to be unwound if the placing of UK PLC's shares does not proceed.

(c) Placing and admission The Dealers place the shares to be issued by UK PLC with investors and, upon listing of those shares:

  • the Dealers pay the subscription monies for the redeemable preference shares to Cashbox and Cashbox issues the redeemable preference shares to the Dealers;
  • the Dealers transfer all of their holdings of shares in Cashbox to UK PLC; and
  • in return for the transfer of the shares in Cashbox, UK PLC issues its shares directly to the investors selected by the Dealers.

(d) Payment of cash to the UK PLC As a result of the transfers of Cashbox shares, Cashbox becomes a wholly-owned subsidiary of UK PLC, holding funds equivalent to the net proceeds of the placing by the Dealers. These may be lent by Cashbox or paid to UK PLC by way of redemption of the redeemable preference shares or distributed to UK PLC in a winding up of Cashbox.

(e) Some variations Cashbox structures used in connection with placings usually require only a single issue of shares by Cashbox. Where Cashbox structures are used in connection with rights issues, however, it is quite common for there to be more than one tranche of shares issued by Cashbox, with a gap between them in order to allow for the adjustments required if any cheques for the rights issue shares are unpaid.

Under the usual Cashbox structure, subscription monies are paid by the investors in UK PLC's shares to the Dealers and the Dealers use the funds to satisfy their undertaking to subscribe for the redeemable preference shares in Cashbox. With a view to mitigating credit risk, however, for some Cashbox structures, a trust mechanism is used so that the funds are held on trust for the different persons interested in the funds through the various stages of the process.

Uses of Cashbox structures

Cashbox structures are commonly used as part of the financing structure for acquisitions, but may also be used in convertible bond issues and for rights issues to create distributable reserves.

In relation to rights issues, the requirement to account for share premium is relieved if the requirements for merger relief to be available on the issue of the new ordinary shares issued pursuant to the rights issue are met. The redemption of the shares in Cashbox can then allow for the creation of distributable reserves in the hands of the parent. Even in a rights issue it may also be useful to have an element of flexibility in relation to preemption rights. This is particularly useful if there are overseas shareholders.

Advantages of using Jersey companies

Jersey companies are suited for use in Cashbox structures for a number of corporate and tax reasons:

  • Jersey companies can be incorporated within a short timescale: using the urgent process, same day incorporation can be achieved for an additional filing fee of only £200.
  • Jersey companies are typically incorporated on a bespoke basis and are not shelf companies; incorporating a bespoke company makes it easier to demonstrate that Cashbox is a subsidiary of UK PLC with UK management and control from incorporation.
  • Jersey companies can be managed and controlled in the UK whilst retaining their registers and registered offices in Jersey: there is no requirement for board or shareholder meetings to be held in Jersey or for there to be Jersey resident directors.
  • A Jersey company can redeem shares from any source of funds, including share capital, making Jersey companies more flexible in this regard than UK companies.
  • Jersey companies' law enables Jersey companies to issue no par value shares. These are shares that do not have a specified par value but are issued for an agreed price recorded in a stated capital account. The whole of the stated capital account may be used for the purposes of redeeming the shares.
  • Winding up solvent Jersey companies is also a simple and quick procedure. It is not necessary to appoint a liquidator and the process can be completed within a day.
  • Jersey companies can be tax neutral and assist with the UK tax analysis:
    • liable to 0% tax on income;
    • no capital gains tax;
    • no withholding tax;
    • no duty payable on the issue or transfer of shares;
    • Jersey companies are not resident for tax purposes in Jersey if the business is centrally managed and controlled outside Jersey in a country or territory where the highest rate at which any company may be charged to tax on any part of its income is at least 20%; and
    • transfers of shares are carried out on the register which is required to be maintained in Jersey and all transfers and share certificates can be executed and retained in Jersey, outside the UK.
  • Jersey has an experienced professional infrastructure accustomed to managing the regulatory, technical and practical demands of the Cashbox structures.

Our services

Mourant has acted on Cashbox structures used in a wide range of high profile transactions, providing legal and administrative services in Jersey and also administrative support within the UK. The close working relationships between our teams giving legal advice, and those carrying out corporate administration and secretarial support and their experience of these transactions, means that we are able to provide efficient, smooth and seamless support for all aspects relating to the Jersey company. Mourant's services include:

  • Jersey legal and regulatory advice,
  • company formations,
  • registered office services, and
  • company secretarial and other corporate administration services.

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
Mondaq Advice Centre (MACs)
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
Check to state you have read and
agree to our Terms and Conditions

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.

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 by clicking here .

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.


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.