Jersey has long recognised corporate re-domiciliation, allowing companies incorporated inside Jersey to re-domicile out of Jersey and conversely allowing companies incorporated outside Jersey to re-domicile into the island and become a Jersey company.  Jersey law also permits certain other entities to re-domicile into and out of Jersey, such as limited partnerships.

We have on occasion fielded enquiries from certain clients looking to ‘on-shore’ properties held by Jersey companies (i.e, transfer the ownership of such properties to an English company).  Traditionally this was done by a transfer of the property by way of distribution so these proposals may potentially, if brought into force, provide a simpler method for achieving this result.

This is distinct from the ability of a Jersey company to alter its tax residency by becoming resident in another jurisdiction; Jersey tax law allows a Jersey company to be resident elsewhere (and not resident in Jersey) provided that it is centrally managed and controlled outside Jersey in a country or territory where the highest rate at which any company may be charged to tax on any part of its income is 10% or higher, and the company is resident for tax purposes in that country or territory.  This tax relocation is often a more popular route, providing the selected tax residency with the flexibility of a Jersey corporate structure.

A company re-domiciling will continue to be bound by all of its existing contractual obligations without the need for complex and costly arrangements effecting an asset or  business transfer or the assignment or novation of contractual arrangements as the company remains the same corporate entity with the same legal personality. Generally speaking, the effect of a re-domiciliation is that:

  • the property and rights of the company immediately prior to the re-domiciliation will continue to be the property and rights of the company post re-domiciliation;
  • the company will continue to be subject to all criminal and civil liabilities, contracts, debts and other obligations; and
  • all legal proceedings which are pending by or against the company may still be continued by or against it once it has completed its re-domiciliation.

The Companies (Jersey) Law 1991 (Law) prescribes the requirements for each process and we summarise these below.

The term “re-domiciliation” means the process by which a company or other legal entity incorporated in a particular jurisdiction moves its place of incorporation or registration (that is, it “redomiciles”) to a different jurisdiction.  This process is also often described as “migration” or “continuation”.

Continuance out of Jersey

The Law provides that a company seeking continuance out of Jersey must apply to the Jersey Financial Services Commission (JFSC) for authorisation for continuance as a body incorporated under the laws of a foreign jurisdiction.  The following key actions need to be undertaken before the application is made to the JFSC:

  • the directors of the company must resolve (either at a board meeting or by written resolutions) to approve among others, (i) the proposed re-domiciliation, (ii) the circulation of the special resolution of members, (iii) the creditors notification, (iv) declaratory statement of solvency and (v) the application to the JFSC;
  • the members (and each separate class of members to the extent this is applicable) must pass a special resolution approving the re-domiciliation.  A special resolution is a two thirds majority of those voting unless the articles of the company provide for a greater majority;
  • the company must either (i) obtain written approval to the re-domiciliation from all its known creditors or (ii) at least 21 days before making the application to the JFSC, publish notices in a newspaper circulating in Jersey (commonly the Jersey Evening Post) advising of the proposed re-domiciliation and the right of creditors to object to the application within this 21 day period.  A written copy of this notice must also be sent to each known creditor of the company;
  • the directors of the company must make a solvency statement in the prescribed form set out in the Law (being as 12 month look forwards cashflow test from the date the re-domiciliation is effective); and
  • the company must also obtain confirmation from each of the Comptroller of Revenue and the Department of Social Security in Jersey that they have no objections to the proposed re-domiciliation.

Once the above has all been actioned, the application can be made to the JFSC.  The application must include copies/evidence of the above, as well as:

  • evidence that the laws of the jurisdiction to which the company is to re-domicile allows the continuance of the company and that all property and rights of the company will continue in the foreign jurisdiction, the company will remain subject to all civil and criminal liabilities, contracts, debts and other obligations and all legal proceedings and other actions pending may be continued.  This commonly comes in the form of a legal opinion given by local counsel in the target jurisdiction;
  • evidence that no member has objected to the proposed re-domiciliation by making an application to the Royal Court of grounds of unfair prejudice (or if such application has been made, evidence that it has been determined); and
  • the latest financial statements of the company.

The requirements of the jurisdiction into which the company proposed to re-domicile will also need to be met and therefore a co-ordinated approach will be needed with the other advisers.  There are a couple of points of interest arising from the consultation paper which may impact on re-domiciliations from Jersey to the UK.

The first is that English law currently requires companies to have at least one natural director and we are aware the UK government is considering a ban on corporate directors are part of the wider reform of corporate governance.  While this may not be an issue in practice, for companies which are used to having only corporate directors provided by a corporate services provider, new arrangements would need to be made.

The second is that there is  likely to be a requirement for the company to be solvent on both a cashflow and balance sheet basis.  Under Jersey law, the solvency of a company is assessed on a cashflow basis, and it would be possible for a company with accumulated losses on its balance sheet to re-domicile out of Jersey (if the cashflow solvency statement can be made by the directors).  These companies may not be able to re-domicile to the UK if the UK regime requires both cashflow and balance sheet solvency so alternative approaches to transferring the property/assets of the Jersey company may need to be explored.

Continuance in to Jersey

Similar to continuances out of Jersey, a company intending to re-domicile into Jersey is required to apply to the JFSC for authorisation to seek to continue as a company incorporated under the laws of Jersey.

Th application to the JFSC will need to include (amongst other items):

  • new memorandum and articles of association which conform to Jersey law and  which are to be adopted upon the re-domiciliation being effective;
  • a solvency statement signed by each current director and each proposed director being appointed upon the re-domiciliation being effective;
  • confirmation from legal counsel in the foreign jurisdiction that the company may migrate, all necessary authorisations have been given in the foreign jurisdiction to enable the migration to take place and, on continuance in Jersey the company will cease to be incorporated in the foreign jurisdiction.  This commonly comes in the form of a legal opinion given by local counsel in the originating jurisdiction;
  • details of the directors and secretary (both at the time of the application and upon the company’s continuance as a Jersey company) – note that currently this information is not made public in respect of a private company;
  • the latest year-end accounts of the company not exceeding 12 months prior to the making of the application; and
  • certain confirmations from the directors about creditors and members not being unfairly prejudiced by the re-domiciliation.

Applicants should also consider other licensing or regulatory requirements.  For example, a company seeking to conduct business in Jersey, and employ staff, may need licenses under the Control of Housing and Work (Jersey) Law 2012.  Likewise, licenses or permits may be needed under the Financial Services (Jersey) Law 1998 or the Collective Investment Funds (Jersey) Law 1988 for companies carrying on regulated activities.

As evident from the above, a re-domiciliation allows a company the luxury of the continuity of its existence and operations while enabling it to change the origin of incorporation.  Appleby has extensive experience of re-domiciles both into and out of Jersey for a wide range of clients, including private companies and regulated entities.

Type

Insight

Locations

Jersey

Key contacts

Andrew Weaver

Partner: Jersey

T +44 (0)1534 818 230
E Email Andrew

Daniel Healy

Senior Associate: Jersey

T +44 (0)1534 818 010
E Email Daniel

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