Jersey: Capital Markets: Listing Jersey Holding Companies

Last Updated: 30 September 2019
Article by Sara Johns, Tim Pearce and Guy Westmacott

With £184 billion market capitalisation held by Jersey listed companies on global exchanges as of 30 June 20191, this briefing explores why Jersey vehicles remain such a popular choice for taking international businesses to market.

Jersey's listing credentials

Jersey has, over many years, established itself as a prime jurisdiction for incorporating holding companies destined for listing on global exchanges. The many advantages offered by the island, some of which are outlined in this briefing, have resulted in shares and depositary interests in Jersey companies being listed on exchanges as far afield as the United States, Canada and Asia as well as in Europe. In particular, Jersey has registered the greatest number of FTSE 100 and AIM companies outside of the United Kingdom2, a fact which underlines the confidence both investors and businesses place in the island as a jurisdiction.

Jersey's reputation on the world stage

Jersey's blue-chip reputation, which is based on strong historic fiscal, judicial and political stability, has continued to grow in recent years as a result of the island's demonstrable compliance with evolving international regulatory standards. Recent developments have included Jersey:

  • underlining its transparent and co-operative tax practices by implementing measures for the automatic exchange of information, and exchange of information on request, including FATCA and the Common Reporting Standard (CRS) of the Organisation for Economic Co-operation and Development (the "OECD");
  • ratifying the OECD's measures to prevent the harmful tax practices of base erosion and profit-sharing (BEPS); and
  • introducing new economic substance legislation to meet the requirements of the EU Code of Conduct Group on Business Taxation.

In 2019, these and other developments resulted in the EU Finance Ministers (ECOFIN) confirming Jersey's position as a co-operative jurisdiction and the OECD confirming that Jersey's tax regime is "not harmful".

Those looking for an international finance centre which has succeeded in maintaining and even enhancing its reputation on the world stage in response to these initiatives need look no further than Jersey.

Tax neutrality

As a tax neutral jurisdiction, Jersey is attractive in that:

  • it does not levy corporation or capital gains tax;
  • it does not impose stamp duty or similar transfer taxes on the issue or transfer of a Jersey company's shares;
  • it is our understanding that UK stamp duty should not arise on the transfer of a Jersey company's shares where the shares are traded electronically and a Jersey-based registrar maintains the register of members in Jersey;
  • Jersey companies which are tax resident in the island are generally subject to a 0% rate of income tax locally;
  • Jersey companies may choose to be exclusively tax resident outside Jersey, and therefore not resident for tax purposes in the island, if they are managed and controlled, and tax resident, in another jurisdiction where the corporate income tax rate is 10% or more;
  • Jersey companies do not need to make withholdings on dividend or interest payments on account of Jersey tax; and
  • unless they are resident in Jersey, recipients of dividends or interest payments from a Jersey company will not be liable to Jersey income tax.

The combination of these factors means that Jersey companies can be used at a holding company level to facilitate cross-border investment without triggering associated complex cross-border tax issues. Tax can be levied instead where the business operates and in the investors' home jurisdictions. This makes Jersey an attractive choice for the incorporation of listing vehicles with multiple potential investors in multiple locations around the world.

Familiarity and flexibility

The Companies (Jersey) Law 1991, as amended (the "Companies Law") is the main statute applicable to Jersey companies. Because it is based on the English Companies Act, it uses many of the same corporate concepts with which UK investors are familiar. This means that a lot of the rights and restrictions applicable to a Jersey company and its shareholders are likely to be readily acceptable to potential investors and their advisors.

At the same time, the Companies Law has taken a different – though still robust - approach in certain key areas. As discussed in more detail below, the provisions of the Companies Law relating to capital maintenance, for example, are more flexible than the corresponding provisions in the English Companies Act. As such, this can offer Jersey companies an advantage over many of their UK and some international competitors.

Capital maintenance

The Companies Law allows companies – including public companies - to return funds to shareholders from a wide variety of sources. In each case, creditor protection comes from the requirement for directors to sign a statement in advance confirming (essentially) that the company is and will continue to be cash-flow solvent for the next 12 months.

This means that, subject to this solvency statement being signed and (where necessary) a shareholders' resolution being passed to approve the relevant corporate action:

  • distributions can be made out of any source other than the nominal capital account and any capital redemption reserve. Thus, distributions can be made from share premium;
  • shares in Jersey companies can be redeemed or repurchased from any source, including share premium; and
  • Jersey companies can reduce their capital accounts in any way without the need for the Royal Court of Jersey to confirm the reduction.

This flexibility not only makes it easier to carry out innovative pre-listing restructuring, to the extent required; it also means that, unlike public companies incorporated in many other jurisdictions such as the UK, Jersey listed companies do not necessarily need distributable profits in order to adhere to any dividend policy they may adopt.

Company's constitution

The Companies Law permits a similarly flexible approach when it comes to drafting a Jersey company's constitutional documents, its memorandum and articles of association. Although the "look and feel" of the memorandum and articles will closely follow those of an English company, bespoke provisions, tailored to suit the requirements of the relevant listing authority and to meet any enhanced investor expectations, are regularly inserted into the constitutional documents of a Jersey company contemporaneously with its listing. For example, such provisions may include some or all of the following:

  • pre-emption rights on the issue of shares (as the Companies Law contains no statutory pre-emption rights);
  • disclosure and transparency requirements relating to the notification of major shareholdings to the company (e.g. based on the UK's DTR5);
  • enhanced provisions concerning the circumstances in which directors may be proposed, appointed and removed; and
  • investor protection in terms of tighter restrictions on the acquisition and transfer of shares, if the UK Takeover Code does not already apply to the company.

As regards the Takeover Code, it should be noted that this applies to all Jersey companies with securities admitted to trading on a regulated market or a multilateral trading facility, including the London Stock Exchange's Main Market and AIM.

Marketing and trading shares

From a Jersey law point of view, a Jersey company's shares can generally be freely marketed provided that the consent of the Jersey Registrar of Companies is obtained before an admission (or similar offer) document is issued or circulated to the public. This consent is required because the document will constitute a prospectus for Jersey law purposes.

The process for obtaining this consent is straightforward, and generally requires minimal additional information and statements to be included in the prospectus over and above those already needed to satisfy the requirements of the relevant listing authority. So as not to hold up the overall timetable, the Registrar's "in-principle" consent can be obtained in advance based on an advanced draft of the prospectus. Assuming no material changes are subsequently made to the prospectus, the actual consent will be issued when a copy of the final form prospectus, signed by or on behalf of all the directors, is submitted to the Registrar ahead of it being issued to the public.

As regards trading, a Jersey company's listed shares may be held and transferred in uncertificated form on the London and Irish exchanges via CREST, and on certain other approved stock exchanges (including the New York Stock Exchange, NASDAQ, and the Toronto, Luxembourg and Johannesburg stock exchanges).

Company formation and structuring

Jersey companies can be incorporated on a same-day basis, subject to the availability of all relevant information and documents required to support the incorporation application. Typically, a Jersey company to be used for listing purposes will be incorporated as a public company with plain vanilla constitutional documents and a basic share capital. All changes necessary to prepare the company for listing will then be made in consultation with the company's team of advisors.

Once incorporated, the Jersey company can be introduced into any existing current group structure. Subject to tax advice, this is often done by means of a simple share exchange, whereby the existing shareholders exchange their shares in the existing topco for shares in the new Jersey holding company. For complex situations, the Jersey company may also be introduced into an existing structure by means of a court-approved scheme of arrangement.

Ongoing administration

Directors and meetings: there is generally no need for a listed Jersey company to have Jersey resident directors. Additionally, unless the company is to be managed and controlled in Jersey or local economic substance rules apply, there is no need for board meetings to be held in the island. Shareholder meetings may also be held elsewhere.

Local corporate service providers: although public companies can maintain branch registers wherever they transact overseas business, every Jersey company must have a registered office and maintain its central register of members in Jersey. There are many local corporate service providers who can assist in this regard and who will also take care of making the appropriate local filings (see below). Jersey-based subsidiaries of UK registrars are also available to provide electronic registrar services for Jersey listed companies in the island.

Local filing requirements: as well as complying with its stock exchange and any other overseas filing requirements, the listed Jersey company will also need to comply with certain ongoing Jersey filing obligations. Principally, the company will need to file an annual return (disclosing details of the company's shareholders and directors) and a copy of its audited accounts each year with the Registrar of Companies in Jersey. Copies of all special resolutions must also be filed with the Registrar within 21 days of being passed. The company's Jersey corporate services provider will typically deal with all of these local filing requirements.

Footnotes

[1] Source: Jersey Finance

[2] Source: Jersey Finance, as at 30 June 2019

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
Similar Articles
Relevancy Powered by MondaqAI
Bedell Cristin Cayman Partnership
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Bedell Cristin Cayman Partnership
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please 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