Migration of a foreign incorporated body to Jersey10 Nov 2008
In 2002, changes were made to the Companies (Jersey) Law 1991, as amended, (the "1991 Law") to enable a body incorporated in a foreign jurisdiction to move its place of incorporation to Jersey.
The procedure is referred to in the 1991 Law as "continuance", but is also commonly known as "migration" or "redomiciliation", and these terms are used interchangeably.
References in this briefing to the "Company" are references to a corporate body incorporated in a foreign jurisdiction seeking continuance as a Jersey incorporated company.
Effect of migration
Upon migration to Jersey, the Company ceases to be a body incorporated under the laws of the other legal jurisdiction and becomes a Jersey incorporated company, governed by the laws of Jersey.
Why migrate a company to another jurisdiction?
The migration of a company can, in certain cases, be a cost effective means of moving business from one jurisdiction to another, as the company moved to the new jurisdiction will retain legal liability for all of its former contractual obligations without need for complex and costly arrangements for business transfer or assignment or novation of existing contractual agreements, and without giving rise in certain circumstances to transfers of property which could create liability to tax in certain jurisdictions.
It is also possible to utilise migration legislation to take advantage of more flexible regulation, costs and business opportunities associated with certain types of regulated activity by moving them to a jurisdiction where those costs are lower.
The Company must apply for prior consent from the Jersey Financial Services Commission (the "Commission"), Jersey’s government authority which regulates financial services.
Consent of an official or public body in the jurisdiction from which the Company intends to migrate will invariably be required. It is therefore sensible to confirm, at an early stage, the procedural requirements of that other jurisdiction.
The procedure to be undertaken in Jersey can be categorised in three stages: stage 1 being those steps to be taken prior to making the application to the Commission; stage 2 being the submission of that application; and stage 3 being the final steps undertaken once the Company's application has been approved by the Commission.
Stage 1: Pre-application
- Creation and approval of articles of continuance: As the constitutional documents governing the Company will not comply with the requirements of the 1991 Law, the Company's members must adopt amended constitutional documents which the 1991 Law refers to as "articles of continuance" and which take effect upon the Company becoming a Jersey incorporated company.
The articles of continuance must be submitted with the application to the Commission and, therefore, must be created and approved in advance of making that application.
Though not part of the migration procedure itself, the following matters must be addressed:
- Determination of company administration services required: At the least, any Jersey company will need a registered office address in Jersey, and consideration should be given at an early stage of the extent to which administration services will be relocated to a Jersey based service provider.
- Client identification: Jersey's regulatory regime requires that full disclosure of the activities and ultimate beneficial ownership of every Jersey company is made to the Commission. In advance of the Company continuing as a Jersey incorporated company, specific "client due diligence" and anti-money laundering documentation in respect of each ultimate beneficial owner of the Company must be provided to the Company's Jersey based administrators.
- Taxation and third party arrangements: Taxation advice from all relevant jurisdictions should be obtained, together with confirmation that no existing agreements or other arrangements which the Company has with third parties would be adversely affected by the Company's migration.
Stage 2: Application
The prescribed C100 application form is submitted to the Commission along with the required supporting documents (including constitutional documents and certain confirmations to be given by the directors) and an application fee which is currently £500.
Stage 3: Post-application
The Commission will inform Jersey's registrar of companies (the "Registrar") that it has granted the Company’s application and the Registrar will then issue the Company with a certificate of continuance.
Upon issue of the certificate of continuance, the Company becomes a Jersey incorporated company, and the articles of continuance become the Company's new constitutional documents.
The Registrar will provide a copy of the Company's certificate of continuance which will ordinarily be sent to the appropriate official or public body in the jurisdiction in which the Company was previously incorporated.
Ordinarily, the Commission should be provided with a copy of the instrument effecting the Company's deregistration as a body incorporated in the other jurisdiction.
Protections afforded by the 1991 Law
The Commission will require confirmation that the interests of the Company's members and creditors will not be unfairly prejudiced by the migration to Jersey.
The 1991 Law provides that, on becoming a Jersey incorporated company:
- all property and rights of the Company will remain the property and rights of the Company;
- the Company will remain subject to all criminal and civil liabilities, and all contracts and other obligations to which it is subject; and
- all actions and legal proceedings which are pending by or against the Company may still be continued by or against it.
Circumstances that would prevent a company migrating to Jersey
The Company's directors, and those persons who will be directors of the Company following its migration, must state to the Commission that the Company can satisfy a solvency test set out in the 1991 Law.
The Company will not be able to apply to migrate to Jersey if it is in the process of liquidation, or the subject of various actions or procedures detailed in the 1991 Law which are indicative of bankruptcy.
The Commission will not grant the Company's application unless satisfied that the laws of the Company's existing jurisdiction allow it to migrate to Jersey, that any authorisation required in that other jurisdiction has been given and that, upon incorporation as a Jersey company, the Company will cease to be a body incorporated in the other jurisdiction.
Any person who on, or in connection with, an application for migration knowingly or recklessly provides to the Commission:
- any information which is false, misleading or deceptive in a material particular; or
- any document containing any such information, is guilty of an offence.
Step by step summary
- Confirm that the Company can meet the requirements for migration imposed by the Jersey authorities and the authorities in the other jurisdiction.
- Determine those services to be provided to the Company by Jersey based administrators and provide the necessary client identification documentation.
- Obtain tax advice and confirmation that no existing agreements or other arrangements which the Company has with third parties would be adversely affected by the Company's migration.
- Obtain approval for the articles of continuance from the members of the Company.
- Following approval by the Commission, the Registrar will issue the Company's certificate of continuance.
- Provide the Commission with a copy of the instrument effecting the Company's deregistration as a body incorporated in the other jurisdiction.