Lodging of draft Companies (Amendment No. 5) (Jersey) Regulations 201-
1. Issue and Recommendation
1.1. The draft Companies (Amendment No. 5) (Jersey) Regulations 201- (“the draft Regulations”) will amend the Companies (Jersey) Law 1991 to provide for certain companies incorporated in Jersey to merge, in any combination, with other such companies, other bodies incorporated in Jersey, or bodies incorporated outside Jersey (subject to certain restrictions).
1.2. It is recommended that the Minister approves the draft Regulations and that these be lodged au Greffe for debate by the States at the earliest opportunity.
1.3. The Law Officers’ Department has indicated that the draft Regulations are Human Rights compliant and that all tariffs for new offences created are commensurate with similar existing offences.
1.4. There are no manpower or cost implications for the States.
2. Background
2.1. At present, it is only possible to directly merge a Jersey company with another Jersey company. However, the Companies (Amendment No.10) (Jersey) Law 2009 introduced an enabling provision into the Companies (Jersey) Law 1991 (“the Companies Law”) allowing the States to make Regulations to permit the cross-border merger of Jersey companies with companies and other bodies incorporated outside Jersey and also with bodies that are incorporated in Jersey but which are not companies.
2.2. In an increasingly globalised world, more and more business is conducted across national borders and there is a growing demand for Jersey companies to be able to merge directly with a wider range of bodies, in particular with foreign companies – something which is already permitted by some of our competitor jurisdictions.
2.3. Although it is possible to merge a Jersey company with a foreign company indirectly by first bringing them into the same jurisdiction (either by continuing the Jersey company into the foreign jurisdiction or by continuing the foreign company into Jersey under Part 18C of the Companies Law) and then merging them (either under Part 18B of the Companies Law or the relevant foreign law), this procedure is more cumbersome than the direct merger process permitted in other jurisdictions and is also more costly.
2.4. In order to ensure that Jersey’s company law remains market leading, it is intended to amend Part 18B of the Companies Law so as to permit the cross-border merger of Jersey companies (subject to appropriate safeguards) with any other body corporate, wherever incorporated. This will include foreign companies, foreign incorporated bodies and also bodies that are incorporated in Jersey but are not companies, such as foundations (once corresponding amendments have been made to the foundations legislation).
2.5. It is considered that the proposed amendments are necessary in order to strengthen the competitiveness of the Jersey company, one of the key tools used by the finance industry in the Island, which will help to maintain Jersey’s position as one of the most progressive jurisdictions in the world.
Draft Companies (Amendment No.5) (Jersey) Regulations 201-
2.6. The draft Regulations provide for certain companies incorporated in Jersey to merge, in any combination, with other such companies, other bodies incorporated in Jersey, or bodies incorporated outside Jersey (subject to certain restrictions).
2.7. The result of a merger is either that one of the merging bodies (a survivor body) absorbs the others or that they are all merged into a new body which is created by the merger and shares certain characteristics with at least one of the merging bodies.
2.8. All merging bodies that are companies must obtain approval from their members and give notice to their creditors, and both members and creditors may object to the court if their interests would be unfairly prejudiced.
2.9. A merger involving only Jersey companies can be carried out through the registrar of companies. Any other merger requires the consent of the Jersey Financial Services Commission (“the Commission”), which must consider the interests of members, creditors and the public, and the reputation of Jersey.
2.10. The draft Regulations will permit a merger to take place where, although the merged body will be solvent, one or more of the merging companies will not meet the test for a solvency statement before the merger (in a merger involving an insolvent merging body other than a company, the merged body would still have to be solvent and the Commission, before deciding whether to give consent, would consider the interests of creditors of all of the merging bodies.
2.11. The merger can only take place if the company without the solvency statement applies to the court, and the court decides to permit the merger on the basis that it will not be prejudicial to any creditor of any of the merging bodies. The company must send a copy of the application to any creditors of any of the merging bodies who are known after reasonable enquiry to be owed over £5,000, and to any other creditors on request.
3. Recommendation
3.1. It is recommended that the Minister approves the draft Regulations and that these be lodged au Greffe for debate by the States at the earliest opportunity.
DIRECTOR, FINANCE INDUSTRY DEVELOPMENT
gov.je