Companies and cells can migrate from one jurisdiction to another. In Jersey we are seeing an increased number of entity migrations (or 'continuances'), both inbound and outbound, with a definite up-tick in the number of companies seeking to relocate to Jersey.
What is a migration?
A migration involves changing the jurisdiction of establishment of an entity.
On completing the migration the entity survives, and its jurisdiction of establishment is simply changed to that of the destination jurisdiction.
What are the reasons for the increase in migrations involving Jersey?
The increased flow of migrations involving Jersey, particularly company migrations into Jersey, is being driven by a number of factors:
- Restrictions being placed on the use of certain jurisdictions due to international tax compliance matters
- Certain governmental COVID-19 support initiatives being unavailable to groups incorporated in particular jurisdictions
- To benefit from the greater flexibility offered by Jersey company law, particularly in relation to its capital maintenance rules and for the purposes of IPOs
- Economic substance rules, where the requirement to show substance in an entity's place of tax residency can be challenging in certain jurisdictions (Jersey's strong financial services workforce can be deployed here)
- To consolidate their offshore group entities into one jurisdiction to save on administrative costs
What is the process?
A migration is achieved by following a statutory process. The Jersey side of the process is relatively straightforward in the vast majority of cases. Timing is often dictated by the other jurisdiction, with a simple migration taking around five to six weeks to complete.
In many destination jurisdictions (including Jersey), it is necessary to engage a corporate services provider in advance. Completing their client take-on process (even if a 'refresh' of KYC held by an existing service provider) must be factored into the timing question.
Which jurisdictions permit migrations?
Jersey permits migrations to and from any other jurisdiction that allows it. That includes all of the jurisdictions where we practice (Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey and Jersey) as well as certain EU jurisdictions and US States, most offshore jurisdictions and other countries such as Canada and New Zealand.
Notably, many onshore jurisdictions (including the UK) do not permit migrations. However, we have helped clients structure around this to achieve the same effect.
What if the migrating entity is a fund?
Consideration needs to be given to the entity's regulatory status in the destination jurisdiction. In Jersey, there are a number of fund options available. Early engagement with the regulators on both sides is advised to mitigate any effects on overall timing.
It is also possible to migrate partnerships (including limited partnerships) from some jurisdictions to Jersey. A new statutory process for such migrations is expected to be introduced later in 2020, further streamlining this procedure.
Originally published 20 May 2020
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.