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Article by Alan Stevens Group Partner, Carey
Olsen
Establishing a Jersey company is an excellent choice for Indian
businesses wishing to set up a company outside India as a listed
vehicle or a holding company for non-Indian assets, or to raise
debt capital. Typically, an established group of companies will
introduce a new listed Jersey parent company or finance company.
Jersey companies are suitable for listing on the main board (FTSE)
and AIM of the London Stock Exchange.
Why choose Jersey?
Jersey companies are popular for many reasons including the
following:
Unlike many offshore jurisdictions, Jersey shares settle
through CREST, the UK's paperless securities settlement system.
This removes the need for a depository receipt programme;
Jersey corporate law is modelled on English corporate law but
incorporates further flexibility, for example by providing a wider
choice of entities and more flexible dividend, share issue and
capital reduction regimes. There is no prohibition on financial
assistance in Jersey;
The City Code on Takeovers and Mergers applies to a Jersey
company if it is centrally managed and controlled in the UK, the
Channel Islands (including Jersey) or the Isle of Man;
In relation to funds, the flexibility and speed of the Jersey
regulatory regime and the availability of innovative structures
make Jersey attractive;
Jersey is located in the UK time zone, covering India's
close of business and the USA's opening of business;
In Jersey there is no Stamp Duty on share transfers, a standard
0% Corporate Tax rate, no Withholding Tax on dividends and no
Capital Gains Tax. Jersey is outside the UK Value Added Tax
network;
Jersey law has been amended to permit the merger of a Jersey
company with an Indian company;
Jersey has excellent air links with London and other cities and
has a wide choice of legal, accounting and other service
providers.
Indian businesses using Jersey
Yatra Capital Limited, an Indian property fund based in Jersey
and listed on Euronext Amsterdam (that raised €100m at its
launch in 2006), aims to create value for investors through the
ownership, development and operation of high quality property on
Indian commercial and retail markets;
Vedanta, an Indian mining business, has used Jersey companies
on a number of transactions, including the issue of US$725m
convertible bonds in 2006, US$1.25bn convertible bonds in 2009 and
US$805m convertible bonds in 2010;
Essar Energy, an Indian energy business, recently used a Jersey
company to issue US$550m bonds convertible into ordinary shares in
its UK parent company.
The use of Jersey companies has served Indian business well and
this trend is likely to continue as Indian businesses expand their
activities and capital-raising into markets outside India.
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.
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