On 19 October 2021, the definition of a “prospectus” under Jersey company law was narrowed by the introduction of a number of a new exclusions which make it easier for Jersey companies to raise funds from sophisticated investors.
Prior to the change, any invitation to acquire or apply for securities issued by a Jersey company was considered a prospectus, and therefore could only be circulated with the prior consent of the Jersey Financial Services Commission (JFSC), unless it was made to a restricted group of potential investors not exceeding 50. For those seeking to raise funds solely from sophisticated investors, obtaining this was a disproportionate administrative burden beyond that imposed in other financial centres and subjected the issuer to on-going legal and administrative requirements, primarily as a result of its automatic treatment as a public company once a “prospectus” had been issued.
Under the new definition, the number of potential investors to whom an invitation can be circulated before the invitation constitutes a prospectus has been increased to 50 investors in Jersey and 150 investors elsewhere and, more importantly, certain qualified and professional investors will no longer be counted towards these limits.
The definitions of qualified investor and professional investor in the new exemptions are taken from the EU Prospectus Regulation and Jersey's investment business regulatory regime respectively and are well-known to investors and those who operate in capital markets.
The Jersey prospectus rules will also not apply where the securities to be acquired or applied for are denominated in amounts of at least EUR 100,000 (or an equivalent amount in another currency) or where the minimum consideration for securities to be acquired by an investor is at least EUR 100,000 (or an equivalent amount in another currency).
As a result, it is now be easier, cheaper and quicker for Jersey companies to access capital markets without prejudicing investor protection or the robust regulatory framework Jersey prides itself on.
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