The proposals are principally aimed at bringing greater certainty to the PoA Law as it is applied within the cross-border finance sector, as well as providing a clear mechanism for non-corporate bodies with separate legal personality, such as Limited Liability Partnerships and Limited Liability Companies, to grant powers of attorney under Jersey law. This is particularly timely given that the Limited Liability Companies (Jersey) Law 2018 will be coming into force in September of this year.
In summary, the changes are intended to:
- provide that particular entities with separate legal personality that are not body corporates are able to execute powers of attorney;
- clarify the applicability of the PoA Law to foreign-law governed powers of attorney granted by Jersey persons;
- confirm that an attorney may, in certain circumstances, sign a power of attorney on behalf of a donor;
- confirm that an irrevocable power of attorney can be granted for longer than a year where it secures the performance of an obligation owed to the donee (at present this is expressly permitted in relation to defined Jersey security interests or interests secured under foreign law);
- confirm that the PoA Law does not affect arrangements created under the customary law of agency;
- clarify that nothing in the PoA Law shall be interpreted so as to preclude the grant of a power of attorney under the PoA Law by an entity incorporated or established outside of Jersey.
The consultation does not deal with electronic or remote witnessing of Powers of Attorney or other documents; nor will the amendments have any effect on Lasting Powers of Attorney made under the Capacity and Self-Determination (Jersey) Law 2016. The consultation closes on 12 August 2022.
For the finance industry, the changes are likely to be welcomed. Powers of attorney are important for financing transactions and executing foreign law documents in which limited liability partnerships and separate legal partnerships are often used and it is anticipated that limited liability companies will also be similarly used. These entities were (and will be) introduced into Jersey law since the introduction of the PoA Law. The PoA Law currently provides a mechanism by which individuals and bodies corporate may execute powers of attorney, but there is currently no express provision for entities with separate legal personality to do so. The amendments will therefore provide clarity and certainty by way of expressly providing for such entities to execute powers of attorney.
The proposed changes, together with amendments to the Probate (Jersey) Law 1998 expected later this year, to provide new arrangements for the management of movable estate in Jersey, and the ongoing consultation launched by the Government of Jersey and the Jersey Financial Services Commission on facilitating the adoption of digital ID systems will each have a practical impact on the way business is done in Jersey. If implemented, the changes are likely to necessitate adaptations to procedures and processes used by fiduciary businesses and those registered for deposit-taking business, in particular.
Do get in touch with your usual Appleby contact should you wish to discuss what this could mean for you and your business.