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Statutory mergers under Jersey law

10 May 2023


Under Jersey law, two or more companies can combine, or 'merge', into a single entity, with all assets and liabilities of each merging company automatically becoming those of the surviving merged entity. The Companies (Jersey) Law 1991 (the "Law") provides flexibility as to how mergers are structured and also includes a simplified process for merging affiliated companies, which is often used in group reorganisations or rationalisations.

A merger under the Law may help to avoid potential inefficiencies and tax disadvantages which can result from alternative approaches (such as transferring assets and winding up entities) and requires a lower level of shareholder acceptance than acquisitions which are undertaken by scheme of arrangement or 'squeeze-out', for example.

The Law also permits Jersey companies to merge with foreign entities and survive either in Jersey or in the foreign jurisdiction, in effect achieving migration into or out of Jersey. This approach may, in some cases, be used as an alternative to a regular statutory migration, a separate process which is also permitted under the Law.

The Law includes various elements designed to ensure that the interests of creditors and shareholders are safeguarded, including requirements for them to be notified and given rights to object to a proposed merger, and confirmations of solvency which must be given by the directors of each merging vehicle.

Entities eligible to merge

Most Jersey companies (other than cell companies, for example) are permitted to merge under the Law. Eligible Jersey entities can merge with each other or with entities incorporated in a foreign jurisdiction which has laws that also permit the proposed merger.

Eligible entities that are within the same group can take advantage of a simplified merger process. This primarily removes the need for a merger agreement and may be used for proposed mergers involving two or more subsidiary companies within a group or between a holding company and its subsidiary or subsidiaries.

Merger structure

The Law allows one or more entities (each, a "Merging Entity") to merge into an existing 'surviving' entity or into a newly established vehicle. The resulting merged entity (the "Merged Entity"), whether surviving or new, can be incorporated either in Jersey or in the relevant foreign jurisdiction if applicable.


Before a merger application can be submitted, the following will generally be required for each Merging Entity:

  • Merger agreement: If the merger is between entities that are not within the same group, the Merging Entities must enter into a written merger agreement which sets out:
    • the terms of the proposed merger;
    • the details of the Merged Entity; and
    • arrangements relating to the completion of the merger.
  • Board approval: The directors must pass certain resolutions, including:
    • a statement that they reasonably believe that the Merging Entity is and will remain able to discharge its liabilities as they fall due until the merger is completed (a "Solvency Statement"); and
    • an opinion that the merger is in the best interests of the company.

If the Solvency Statement cannot be given, it is necessary to apply to court for approval of the merger.

  • Shareholder approval: Approval of the merger (and the merger agreement, if applicable) by a special resolution (typically, 2/3) of the shareholders, and each class of shareholders, if applicable, is required. If a non-Jersey entity is involved, approval should be obtained pursuant to that entity's constitution and laws. Shareholders must also be notified of their right to object if they believe that their interests would be unfairly prejudiced by the merger.
  • Creditor notice: Written notice of the proposed merger must generally be sent to each creditor of a Merging Entity with a claim exceeding £5,000. The creditor notice must contain certain details about the proposed merger and the creditor's right to object.
  • Public notice: The contents of the creditor notice must be published in a Jersey newspaper or via certain other approved channels.
  • Merging Entity certificate: A certificate including a Solvency Statement must be signed for each Merging Entity by all directors who voted in favour of the merger.
  • Merged Entity certificate: A certificate stating that the Merged Entity will be able to continue to carry on business and discharge its liabilities as they fall due must be signed by each of the proposed directors of the Merged Entity (or, if none of the directors of the Merging Entities will be a director of the Merged Entity, by each director who gave a Solvency Statement).

The merger will only be registered by the Jersey Registrar of Companies if all procedural requirements have been satisfied and the relevant periods for the shareholders or creditors of each Merging Entity to raise objections have elapsed or, if any objections have been raised, these have been addressed.

Creditor objections

A creditor may object by applying to court for an order restraining the merger or modifying its terms. The court may grant an order if it is satisfied that the merger would unfairly prejudice the interests of the applicant or any other creditor of the Merging Entity.

Jersey Financial Services Commission ("JFSC") consent

Prior consent of the JFSC will be required where one of the Merging Entities is incorporated outside Jersey. When considering a merger application that concerns a foreign Merging Entity, the JFSC will consider:

  • whether the laws of the jurisdiction in which the foreign Merging Entity is incorporated permit the merger and whether all necessary authorisations under the relevant constitutional documents and laws have been obtained (which should be confirmed by a legal opinion from a lawyer in the relevant jurisdiction); and
  • whether the merger would be unfairly prejudicial to the interests of a creditor of any of the Merging Entities.

Effect of merger

As a matter of Jersey law, when a merger is completed:

  • the Merging Entities are merged and continue as one Merged Entity (being either a surviving or new entity, as applicable); and
  • any Merging Entity that is not a surviving company automatically ceases to be incorporated.

On completion of a merger, the Law provides that:

  • all property and rights to which each Merging Entity was entitled immediately before completion of the merger become the property and rights of the Merged Entity;
  • the Merged Entity becomes subject to all criminal and civil liabilities and all contracts, debts and other obligations to which each of the Merging Entities was subject immediately before completion of the merger; and
  • all legal proceedings which were pending by or against any of the Merging Entities before completion of the merger can be continued by or against the Merged Entity.

The content of this briefing is a summary of the relevant law and is intended for information purposes only. Advice from one of our experts should be sought for any specific circumstances.

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