Why Jersey?
There are a number of reasons why Jersey is chosen as the place of incorporation for a holding company of international groups. Not least is the Island’s reputation as an established offshore jurisdiction providing an excellent financial services offering in a well-regulated, stable and reliable environment. In addition, the Organisation for Economic Cooperation and Development (OECD) has placed Jersey on its ‘white list’ and this ensures international confidence in Jersey as a jurisdiction.
Companies looking to have their holding companies in Jersey know that there is a plethora of legal, accountancy, banking and other financial expertise available in Jersey and transactions are often easier and more cost-effective as a consequence. What is also attractive to investors is that Jersey’s court system is well developed and is capable of handling the most complex and difficult cases.
Legal considerations
Jersey provides a stable, tax-neutral environment in which to establish and maintain corporate structures. Jersey companies (apart from locally regulated financial services companies and utility companies) are, typically, zero rated for income tax and are not subject to capital gains tax within the jurisdiction. In addition, there is no Jersey stamp duty on share transfers. Companies can be – and often are – incorporated in Jersey but resident for tax purposes in another jurisdiction.
As it is modelled on English company law, Jersey company law is familiar to investors around the world, making it easier to understand the implications of using a Jersey company. The law provides further flexibility such as the choice of types of corporate entity available and more flexible options on dividends, share issues and financial assistance regimes (there is no prohibition on financial assistance in Jersey for either public or private companies). In addition, the share buyback, share redemption and capital reduction regimes are straightforward.
Jersey law is also flexible enough to permit the holding of virtual shareholder meetings (provided that the relevant company’s articles do not contain provisions to the contrary) and this has greatly assisted companies in keeping their shareholders and employees safe in relation to the ongoing COVID-19 pandemic.
The flexibility of Jersey law is highly attractive to companies and investors when seeking the place of incorporation for a holding company. If need be companies can also replicate investor protection and other market standards through a Jersey company’s memorandum and articles of association. Furthermore, Jersey law provides a suite of potential options should investors in a Jersey company be looking to exit their investment whether such exit takes the form of a Jersey scheme of arrangement, a takeover, a merger, demerger or an initial public offering.
Listing Jersey companies on the world’s exchanges
For those seeking to list via a Jersey company on exchanges around the world, including the main market and the Alternative Investment Market (AIM) of the London Stock Exchange (LSE), the New York Stock Exchange (NYSE) and the Hong Kong Stock Exchange (HKSE), Jersey provides access to high quality advisory services.
Jersey has, in particular, attracted companies seeking a listing on the LSE, on both the main market and AIM. This is partly because Jersey company shares settle in the same way as UK shares on the London market (either through the paperless CREST system or through stock transfer forms). In addition, the UK Takeover Code (Takeover Code) applies to a Jersey company listed on AIM and the main market of the LSE (other than an open-ended investment company), irrespective of where it is managed and controlled. This is attractive to investors as the Takeover Code is highly regarded among many investor circles.
There are a number of Jersey companies currently listed on the NYSE and Nasdaq. Jersey company law is flexible enough to largely reflect the market standards that US investors would expect to see and recent changes to the law allow Jersey company shares to trade using the systems operated by those exchanges including the use of the DRS system. In addition, there are certain share registrars that have operations in both the US and Jersey which enhances Jersey’s offering regarding listings in New York.
Companies also continue to be listed on the HKSE. While Jersey and Hong Kong company law are both largely based on English company law, where there are differences between the two, the HKSE will expect any issues to be bridged by way of amendments to a Jersey company’s articles of association. The company’s internal management and the protections and control afforded to the shareholders will therefore largely reflect the ‘norms’ under Hong Kong law and will be in line with local market expectations.
The International Stock Exchange (TISE)
As a complement to other services that can be accessed directly from Jersey, The International Stock Exchange (TISE) is a regulated marketplace which offers a convenient and cost-effective service for listing a wide range of securities. Trading companies, such as SandpiperCI Group Limited (which is the Jersey holding company of an international retail and food service operator), have listed their shares on TISE and TISE continues to be an exchange of choice for debt listings and REITs. TISE has also being working on expanding its range of services and one recent innovation is TISE Green which is a market segment for green investments, including bonds, funds and trading companies which enhance or protect the environment.
The future
It is expected that the trend of using Jersey companies as ultimate group holding companies and to effect listings on exchanges around the world will continue.