Monday, 29 June, 2015

Foreign company migration to Jersey

The process of migrating foreign companies to Jersey is referred to in Jersey law as ‘continuance’, but is also commonly known as ‘migration’ or ‘redomiciliation’, and these terms are used interchangeably.

Jersey statutory position

The Companies (Jersey) Law 1991 (the ‘Companies Law’) permits a foreign-registered company to migrate to Jersey subject to the laws of the foreign jurisdiction.

Why Jersey

Jersey is one of the most highly regarded offshore jurisdictions in the world. Since Jersey is a tax-neutral jurisdiction, using a Jersey company for structuring can be beneficial for company law provisions and tax treatment. A Jersey company may be useful for a variety of purposes, including holding assets and conducting transactions.

Benefits include the following:

  • Separate legal identity
  • Limited liability for shareholders and ease of transfer of ownership
  • Issue of share capital in any currency and in various classes, including redeemable shares 
  • Jersey companies are used for a wide range of purposes:
    • Investing in property, securities and other assets
    • Acting as a group holding company
    • Holding and exploiting patents and copyright
    • Providing nominee shareholders to hold shares for the beneficial owner
    • Facilitating the collection of commissions and consultancy fees
    • Employing an internationally-based work force
    • Owning and chartering yachts
    • Leasing aircraft
    • Preserving anonymity and confidentiality

Choosing to migrate a company to Jersey may be a cost-effective means of moving business from one jurisdiction to another. A company moved to Jersey will retain legal liability for all of its contractual obligations without the need for (1) complex and costly business transfers, (2) the assignment or substitution of contractual agreements, and (3) often without property transfers which could create liability to tax in certain jurisdictions.

The foreign company can also utilise local migration legislation to take advantage of more flexible regulation, costs and business opportunities associated with certain types of regulated activity.

Procedure

The foreign company will need to apply for prior consent from the Jersey Financial Services Commission (the ‘Commission’), the authority which regulates financial services in Jersey. 

Official consent from the company’s current jurisdiction is usually required and it is important to understand the procedural conditions of that other jurisdiction. 

The application to migrate a foreign company to Jersey involves the following main steps:

  1. The foreign company must implement articles of association which follow Jersey law and which are filed with the Jersey Registrar of Companies (the ‘Registrar’).
  2. Each director and each proposed director must sign a statement of solvency. 
  3. The company must file the particulars of the directors and secretary with the Registrar (they are not made public).
  4. Legal counsel in the foreign jurisdiction must verify that the company is permitted to migrate and the jurisdiction must authorise the migration.
  5. The company must confirm that creditors will not be unfairly prejudiced 
  6. The foreign company must provide any other information the Registrar may need.

Consideration by the Commission

To grant the application, the Commission needs to be satisfied of the following:

  1. The application must comply with the Companies Law.
  2. The proposed name of the company must not, in the Registrar’s opinion, be misleading or otherwise undesirable (and it must comply in all other respects with the Companies Law).
  3. Any other approvals and consents required under Jersey law must have been given.
  4. The application fee and its expenses must have been paid.

Provided the submission and supporting documents are in order, consideration by the Commission will typically takes 5 to 10 days.

Granting of a Certificate of Continuance

Once the Commission has granted an application, the Registrar will register the application, and issue a signed and sealed Certificate of Continuance to the company.

The Registrar will send a copy of the Certificate of Continuance to the appropriate public body in the company’s jurisdiction of incorporation. 

Effect of granting a Certificate of Continuance

Upon migration to Jersey, the company ceases to be a body incorporated under the laws of its original jurisdiction and becomes a Jersey-incorporated company, governed by the laws of Jersey.

The constitutive documents of the company, as amended by the articles of Continuance, will become the memorandum and articles for the company in Jersey.

When a foreign company is continued as a Jersey company, the following occurs:

  1. The property and rights of the company immediately before the migration continue.
  2. The company continues to be subject to all criminal and civil liabilities, contracts, debts and other responsibilities. 
  3. All incomplete legal proceedings may be carried on against the company.

Costs 

The prescribed application form and supporting documents are submitted to the Commission with an application fee of £500.

If you would like additional information or clarification on migrating foreign companies to Jersey, please contact Vistra Jersey.

 

Contacts

Director, Group Compliance,
+44 1534 504755

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