Jersey’s States Assembly has approved changes to the island’s Companies Law that will make it easier for Jersey companies to merge with foreign entities. The new rules take effect tomorrow.
As reported, the proposed changes were intended to boost Jersey’s competitiveness as a jurisdiction, by making it more attractive to international investors. At present, it is possible to directly merge a Jersey company only with another, so foreign companies had to first be brought in using a ‘continuance’, which is cumbersome and costly.
As of tomorrow, however, Jersey companies will be able to merge not only with foreign companies, but also with foreign bodies that are incorporated outside Jersey but which are not technically companies themselves.
Jersey companies will also be permitted to merge “in any combination” with other Jersey companies and with such entities as Jersey foundations.
The changes will bring Jersey’s merger capabilities more in line with those of such rival jurisdictions as neighbouring Guernsey, which already permits direct cross-border mergers.
Jersey Finance chief executive Geoff Cook said the changes would be of particular interest to investors in such emerging markets as India. The organisation, which represents Jersey’s financial services industry, is due to open a marketing office in Mumbai next month, and already has one operating in Hong Kong.
“We know from our visits to India that there is huge interest in bringing Indian capital into Europe, but also a need to recover and repatriate profits made from that capital investment back to India,” Cook said.
“These provisions will provide institutional investors in India and elsewhere with more options when they establish entities in Jersey to meet investment objectives. Institutional and intermediary clients in Hong Kong and mainland China, for instance, may wish to take advantage of these new provisions when considering the use of Jersey holding companies for listing on exchanges.”
Matt Shaxson, a senior associate at Mourant Ozannes, the Channel Islands’ largest law firm, told International Adviser last month that the changes would accommodate “international groups with a Jersey presence that want to consolidate their corporate structures”.
Emerging market companies interested in listing on certain Western stock exchanges would also be helped by the new regulations, he noted, since merging with a Jersey company would permit them to list directly, and thus avoid the need to use such alternative structures as depositary receipts.
Under the new regulations, any proposed merger involving a body other than a Jersey company will require the consent of the Jersey Financial Services Commission, which must take into account the interests of members, creditors, the public and the reputation of the island.
