Powers of attorney in Guernsey

A power of attorney ("POA") is a legal document through which an individual (the grantor) authorises another person (an attorney) to act on their behalf. Traditionally, standard POAs end automatically if the grantor loses mental capacity. This limitation meant that families in Guernsey often had to apply for guardianship, a lengthy and costly process, when a relative lost capacity to make decisions. The LPA regime was therefore introduced to close this gap, and offer a further layer of security to individuals wishing to plan for the future. 

LPAs in Guernsey

An LPA is a specific type of power of attorney that continues to have legal effect even if the grantor loses capacity. Following in the footsteps of England and Wales, Guernsey introduced two types of LPA - one for property and financial affairs ("PFA") and one for health and welfare ("HW").

The prospective grantor of an LPA for PFA may elect for it to take effect upon registration. This can assist if the grantor becomes physically impaired or frail but does not lack mental capacity. The alternative is for the power to take effect upon incapacity. By contrast, an LPA for HW can only become effective upon mental incapacity.

LPAs are the physical embodiment of principles introduced by the Capacity Law, aiming to empower individuals to make their own decisions where possible, whilst ensuring that any decisions made on behalf of those who are frail or without capacity are made with respect to their rights and wishes.

LPAs created and registered outside of the Bailiwick

Where a person has created a foreign lasting or enduring power of attorney in their home jurisdiction, and later needs it recognised in Guernsey, typically because they have assets or affairs in the island, the document must first be formally recognised by the Royal Court of Guernsey (the "Royal Court") before it can be used or relied on locally.  This typically relates to foreign LPAs for PFA, where non-residents have elected to hold moveable property in Guernsey (e.g. savings in a bank account).

Before applying in Guernsey, the foreign LPA must already be activated and registered in the jurisdiction where it originated. This is a prerequisite, and without it the Royal Court will not proceed.

When considering the application, the Royal Court will consider the test outlined in the case of Haug v Royal Bank of Canada Investment Management (Guernsey) Limited [2000-02 GLR 217] (cumulatively, the "Haug test") requiring that:

(a) the [grantor] was resident and domiciled overseas;

(b)    there were no parallel or proposed protection proceedings in Guernsey;

(c)     there was no intention to appoint a Guernsey [attorney] and no local issue requiring one to be appointed;

(d)    the [grantor's] title to the property was clear;

(e)    the property was movable; and

(f)      the [attorney] had been properly appointed and empowered by the foreign jurisdiction to recover property in Guernsey.

The Haug case concerned a foreign guardianship order, and therefore an instance where the patient (equivalent to "grantor") had already lost capacity. As outlined above, for an LPA, the document can become "live" upon registration or upon incapacity. Therefore, whilst Haug was originally concerned with a foreign guardianship order, the transition of the applicability of the Haug test to foreign LPAs where the grantor was incapacitated was largely the same, save for some discussion as to whether a local guardian needed to be appointed in Guernsey. In Haug, the Royal Court established that no local guardian would be required and therefore gave the attorney powers as if they were operating in their home jurisdiction. 

Until recently, the Royal Court had not considered a case where the grantor is not incapacitated.

Bedell Cristin recently acted for an attorney, in what we understand to be the first case of its kind in the jurisdiction, who had been appointed under an LPA registered in England and Wales. The grantor had elected for the document become live upon registration and they did not lack capacity. However, circumstances had arisen which meant that without an order from the Royal Court of Guernsey, the grantor and the attorney were unable to access or manage a bank account in Guernsey held in the name of the grantor. An application for an order recognising the LPA was therefore required and made. In addition to the attorney swearing an affidavit, the grantor themselves prepared an affidavit outlining their understanding, consent to and support for the application.

As there has not been an instance previously dealing with a grantor of sound mind, the onus was on the attorney to persuade the Royal Court there was no difference between an LPA which enacts on registration as opposed to incapacity. It was submitted that the Haug test could be applied to the facts of the case and even extended to cover such an eventuality. Ultimately, the Royal Court was convinced that in the circumstances of the case, that it was appropriate to extend the Haug test and grant an order recognising the LPA in question. The Royal Court noted the importance of the inclusion of the affidavit sworn by the grantor, which was evidence that they fully understood the purpose of the application, consented to it, and were in full support of it being made.

Conclusion

In summary, the introduction of Guernsey's LPA regime represents a significant and practical evolution in how the island supports autonomy, dignity and forward-planning for its residents. By enabling individuals to appoint trusted attorneys for both financial and welfare matters, whether immediately upon registration or in anticipation of future incapacity, the law now provides clearer, more flexible mechanisms for managing personal affairs. The Royal Court's willingness to recognise foreign LPAs, even in novel circumstances where the grantor remains capacitated, demonstrates a further development in the law and the statutory principles outlined in the Capacity Law.

Together, these developments strengthen the island's commitment to protecting individuals' wishes, reducing administrative barriers, and ensuring that support is available when most needed, whether capacity has been lost or challenges simply arise earlier than expected.

If you have any queries or concerns regarding LPAs, please get in touch with your usual Bedell Cristin contact, or one of the contacts listed.

This reform has practical and immediate implications for international clients with Jersey trusts, foundations, and wills that contain historic drafting reliant on the distinction between "legitimate" and "illegitimate" children. For some families, the default effect of the Law may be directly contrary to their dispositive intentions unless action is taken.

Rationale for the amendment

By the early 2020s, close to half of children born in Jersey were born to unmarried parents and were legally regarded as "illegitimate". This included children born into civil partnerships, long‑term cohabiting relationships, same‑sex families, and families formed through assisted reproduction or surrogacy arrangements.

Although legitimacy had become a status label with almost no remaining material legal effect (Jersey legislation had already been substantially updated in respect of parental responsibility and succession), the classification itself came to be seen as out of step with modern Jersey society, the evolving legal recognition of diverse family structures, and international law.

Effect of the amendment

The Law applies from 24 November 2025 onwards.

In broad terms, it does not retroactively alter legal instruments established before that date, even where they expressly refer to illegitimacy, nor does it affect the succession of any person who died before that date. Such instruments will be interpreted in accordance with Jersey law as it stood prior to the implementation of the Law.

The Law will, however, affect new instruments drafted after this date. It may also introduce uncertainty as to how future events will unfold under existing instruments.

Why this matters for international clients

Many international clients, particularly those from civil law or culturally conservative jurisdictions, have historically chosen to exclude certain categories of children, sometimes expressly by reference to legitimacy and sometimes implicitly. Where there is any lack of clarity, wording should be reviewed to ensure that it continues to have the intended effect under Jersey law.

By way of example, a trust deed may refer to its beneficial class as including "legitimate children", intending this to operate as shorthand for the exclusion of other children. Following the abolition of illegitimacy, such language may no longer achieve that result and may give rise to ambiguity.

In respect of new trusts, where a settlor wishes to exclude certain children who would previously have been described as "illegitimate", the relevant concepts will need to be expressly and carefully defined, and not defined by reference to Jersey law. It would also be prudent to ensure that drafting is sufficiently clear to limit the scope of trustee or executor discretion, particularly where decision‑makers may otherwise feel compelled to include additional beneficiaries on perceived public policy grounds.

Practical steps mitigating risk

Practical steps may include updating letters of wishes to expressly acknowledge the change in the legal landscape, replacing beneficial classes with named individuals, tightening beneficial class language to reduce trustee discretion, and limiting powers of addition.

Early review and clarity in this regard will help protect against the risk of costly claims, unintended benefit to previously excluded parties, and the airing of sensitive private family matters in public court proceedings.

Clients are encouraged to contact us to review their trusts, foundations and will documentation to ensure that their original intentions continue to align with their legal effect under the new regime.

LPAs have been designed to be easy to make, with guidance available on the Jersey Court Service website and a small registration fee of £25. However, creating an LPA understandably involves a lot of trust. It is important to carefully consider who is appointed as an attorney and whether appropriate safeguards should be put in place.

The recent case of Paul Flowers in the UK demonstrates this. Mr Flowers was jailed for stealing from his friend, Margaret Jarvis, using a power of attorney. Ms Jarvis had known Flowers for decades and she gave him power of attorney over her financial affairs. Flowers was a former Chairman of the Co-Operative Bank, Councillor and Methodist minister; Ms Jarvis must have believed that she was fortunate to have such a competent and trustworthy friend to act as her attorney. But Flowers abused this trust and, as Ms Jarvis developed Alzheimer's, he used her money to fund extravagant holidays, events, alcohol, and home improvements. Flowers was caught and pleaded guilty to multiple counts of fraud. He was jailed for three years and ordered to pay compensation to the beneficiaries of Ms Jarvis' estate.

What safeguards can be used to guard against the risks of fraud?

Simply choosing an attorney who is trustworthy is not sufficient. The proposed attorney might be disorganised, indecisive, challenging, self-serving, domineering, or easily influenced by others, which impacts on their ability to make good decisions. There is also a phenomenon known as "entitled-itis" whereby children who are appointed as attorneys do not understand their fiduciary and statutory duties, asserting such things as 'Mum wanted me to have the house', 'I'll inherit it all in the end' or 'I deserve it because of everything I do'.

Taking legal advice on the creation of an LPA is a safeguard. Lawyers are subject to stringent regulatory duties to ensure that the donor is not acting under coercion and that they understand the LPA. They can also educate the attorneys as to their fiduciary and statutory duties and advise on appropriate safeguards to put in the LPA tailored to the donor's specific circumstances. For example, if the donor is appointing one of their children as their financial attorney, they ought to consider appointing all their children as attorneys together, so that they can oversee each other and prevent the onset of entitled-itis. The donor may consider inserting in their LPA an instruction that the attorneys must provide another trusted friend, relative or adviser with bank statements and accounts so that they can oversee their conduct and raise the alarm if necessary.

What if there are concerns about the conduct of an attorney?

The Viscount has powers to investigate complaints or concerns raised by interested parties.

In Jersey, the number of complaints dealt with increased in 2024 to seventeen (from thirteen in 2023).  There has been a similar increase in England and Wales, where the Office of the Public Guardian ("OPG") is authorised to investigate allegations of abuse by attorneys. Concerns raised with the OPG increased to 11,266 from 10,577 last year, representing a 6.5% increase, corresponding with the increase in the number of LPAs registered.

What might be the outcomes?

The good news is that the OPG reports that 73% of investigations undertaken in the reporting year required no further action.

However, 24% of complaints did result in Court of Protection action and 3% of investigations resulted in alternative remediation (such as requiring attorneys to provide a revised account to demonstrate how they are adhering to the code of practice.)

Some examples of actions taken by the OPG from previous investigations are as follows:

• It was alleged the donor was in residential care and the attorney had moved into the donor's property, claiming it was now their property and using the donor's funds to renovate it. An investigation by the OPG included a visit to the donor by an official visitor to confirm the donor no longer had mental capacity to manage their own affairs, and that the donor would not have had capacity to agree to either the attorney living in the property or to agree to paying for any renovations. The donor was deprived of any potential rental income from the property that could have gone towards paying for their ongoing care needs. There was another attorney who had not taken appropriate steps to safeguard the donor. Therefore, neither attorney was acting in the donor's best interests. The attorneys were invited to address these issues but chose not to. Consequently, an application was made by OPG to the Court to remove both attorneys from the LPA.
• An investigation was launched that involved communicating with the attorneys and carrying out a visit to the donor to confirm that the donor had lost capacity to manage their property and financial affairs. A financial analysis revealed some transactions did not appear to have been made in the donor's best interests. The attorney who had made these transactions was contacted by OPG and then returned these funds to the donor's finances. The attorney was provided with advice and guidance on keeping financial accounts and permitted gifts from the donor's finances and expenses. Based on the information, the investigation concluded no further action was required. The investigation had shown through evidence that no intentional wrongdoing had occurred, and the attorney had returned the funds in question.

The number of LPAs being registered in Jersey is steadily increasing, so it is more important than ever to put the appropriate safeguards in place in order to maximise the benefits they can provide.

If you have any queries or concerns about Lasting Powers of Attorney, please do get in touch.

Family offices worldwide are evolving in sophistication, particularly in governance, succession planning and asset protection. In recent years, the Cayman Islands foundation company (FC) has emerged as a compelling hybrid vehicle, founded in company law, but with elements similar to trusts law, thereby meeting the needs of ultra‑high‑net‑worth families and family office structures in particular.

This article explores the legal features of FCs and their applications in both private trust company (PTC) structuring and as standalone entities within the family office ecosystem.

Legal framework

The FC was introduced by the Foundation Companies Act, 2017 and operates within the broader framework of the Companies Act (Revised). It is a unique corporate form that blends the separate legal personality of a company with the purpose‑driven governance of a trust.

An FC has a separate legal personality from its founder, members and supervisors, which distinguishes it from a trust and enables it to hold assets, enter into contracts and litigate in its own name. Unlike traditional limited by shares companies, an FC does not require shareholders, allowing it to be structured as an ‘orphaned’ entity. This feature enhances continuity and control, particularly in relation to succession planning and asset protection.

Directors manage the operation of an FC’s business and are subject to director duties, as they will be well known to readers. In addition, where an FC ceases to have members (as is typically the case), it must have at least one supervisor, whose role is akin to that of a trust protector, providing oversight of the directors and safeguarding the FC’s objects.

The constitution may give rights, powers and duties to members, directors, officers, supervisors, founder or others. There are no limits imposed on the scope of such rights, powers and duties and common examples include power to appoint and remove supervisors and directors, to make and alter byelaws and to make distributions.

The different roles in the governance structure can include fiduciary, advisory and supervisory functions. Families can therefore design corporate governance structures that meet their individual needs, including tailoring the governance of the family office with family charters or constitutions. 

An FC’s objects may be charitable or non‑charitable and can include providing benefits to beneficiaries (howsoever described). The economic interests in an FC can therefore combine a family’s philanthropic and other goals with providing benefits to family members in a manner that is much more familiar to the trusts world.

In addition to the constitution (memorandum and articles of association), an FC may adopt bylaws, which are binding on directors, officers and others with duties or powers under the constitution. The bylaws do not need to be filed with the registrar and commonly provide detailed rules in relation to the management and supervision of the FC’s business, as well as the investment of the FC’s property and the making of distributions.

Foundation companies as a family office hub

FCs are increasingly being deployed as the primary holding vehicle within family offices. Their versatility allows them to serve as philanthropic platforms, with charitable or mixed‑purpose objects, while, at the same time, being the vehicle through which benefits are made available to the family itself.

The corporate governance structure of an FC enables multi‑generational participation, blending professional management with family oversight. In other words, family members, family office employees, independent persons, such as legal counsel or investment advisers, as well as others, can play a role in the management of the family office.

There are no restrictions on the property that an FC may hold. They can therefore be used as a holding vehicle for operating businesses, marketable securities, investments in private markets, such as private equity, venture capital and private lending, real estate, both personal use and as an investment, and private assets, such as private jets and superyachts.

Foundation companies as private trust companies and other roles in family office structures

PTCs are widely used in private wealth planning to act as trustees of family trusts, offering great flexibility and control over the management of such trusts. An FC may be registered as a PTC, which benefits from light touch regulation, and this allows all of the flexibility of governance and ownership of an FC to be built into the management and operation of the trustee of a family trust.

As an ‘orphan’ structure, long‑term control can be provided for without requiring shareholding by individuals or complex holding vehicles, such as STAR trusts (or other forms of purpose trust). This simplifies succession planning and avoids probate complications on the founder’s death.

The flexible corporate governance of an FC can be particularly useful where a PTC acts as trustee of more than one family trust, potentially where those family trusts are established for different branches of the family. The constitution can, for example, make provision for only particular directors and/or supervisors to be responsible for exercising powers under a particular trust, rather than the board as a whole. In this way, members of one family branch (possibly along with independent directors or the principal) are primarily involved in the management of the trusts which are established for that particular family branch.

FCs are also commonly used in a more limited role, such as a corporate guardian of a foreign foundation, a protector of a trust, or an investment adviser or manager. In this role, the ‘orphan’ ownership and flexible governance can be blended into a more traditional structure.

Key considerations for implementation

The flexibility of FCs means that careful planning must be carried out when designing the constitution and bylaws. In addition, as an FC is typically ownerless, consideration must be given to the succession to the key roles of director and supervisor, among others.

While the Cayman Islands tax treatment of FCs is very simple in that the Cayman Islands imposes no direct taxes, the tax position elsewhere, including reporting, of the FC and its founder, directors, supervisors and beneficiaries should be considered.

The Cayman Islands is party to global transparency frameworks, such as the Common Reporting Standard and the establishment and maintenance of beneficial ownership registers. It also robustly regulates certain types of business, including securities investment business, trust business and company management business. Generally, where a company, including an FC, provides services only to a single‑family office, exemptions from or a light touch approach to such regulations, are available. Care should be taken to understand the FC’s obligations under such frameworks.

FCs also benefit from the Cayman Islands’ asset protection legislation. Gratuitous transfers of property to an FC benefit from the protections of the Fraudulent Dispositions Act (Revised) such that, where a transfer is made with no intention to defraud creditors, it may be voidable at the instance of a prejudiced creditor under that Act. In any case, no action or proceeding may be commenced more than six years after the transfer. Further, the ‘firewall’ provisions of the Trusts Act (Revised), which, among other things, deny heirship rights to the property of a living person apply to property contributed to FCs.

Whereas it can be difficult to oblige parties to a trust to resolve disputes by arbitration (or other alternative dispute resolution mechanisms), an FC’s constitution may provide for the resolution of disputes, differences or difficulties by arbitration or by any other lawful method. In other words, rather than litigating family disputes before the courts, in the case of FCs, such disputes may be kept private.

Conclusion

FCs are a modern, adaptable vehicle for family offices seeking continuity, flexibility and ease of administration. Whether used as a family office hub, a private trust company or as an office holder in another structure, the FC offers a compelling alternative and/or additional option to traditional trust and corporate structures.

The innovative mix of company and trust concepts make the FC particularly well‑suited to international families that prioritise values‑based governance and long‑term legacy planning.

This article ‘The increasing popularity of Cayman Islands foundation companies for family offices and PTC structures’, by Andrew Miller and Fraser Allister, is taken from the 38th issue of The International Family Offices Journal, published by Globe Law and Business.

The full journal can be read here: https://www.globelawandbusiness.com/journals/the-international-family-offices-journal

The Cayman framework provides certainty for investors and VASPs on legal treatment and regulation of virtual assets, whilst the introduction of Sandbox licences creates a carefully regulated environment for innovation.

Any business that is considered a VASP should register (or, as applicable, seek a licence) with CIMA. The registration requirements focus on VASPs' compliance with international standards on anti-money laundering ("AML"), countering the financing of terrorism ("CFT") and counter proliferation ("CPF"). 

Certain VASPs will also require a licence, in addition to their registration (see further below).

VASP legislation

The primary legislation is the Virtual Asset (Service Providers) Act (as revised) (the "Act"), and this is supplemented by the Virtual Asset (Service Providers) Regulations (as revised) (the "Regulations"). The Regulations set out definitions, the forms to be used for applications to register and a schedule of fees. 

The Act also contains provisions relating to enforcement, penalties and offences for those in breach of the Act.

VASPs will also need to consider the application of the Securities Investment Business Act (as revised) ("SIBA") to their activities.

What is a virtual asset?

The Act defines "virtual assets" as a digital representation of value that can be electronically traded or transferred and used for payment or investment purposes. That definition includes all transferrable/tradeable digital assets but expressly excludes non-transferable and non-exchangeable assets such as virtual service tokens or "digital representations of fiat currencies". The Act describes a "fiat currency" as one issued by a country or government which is designated by decree or law as legal tender in that country.

What are virtual asset services?

The Act defines "virtual asset services" as the issuance of virtual assets or providing, as a business, on behalf of a third-party entity or inpidual, one or more of the following services:

• exchange between virtual assets and fiat currencies;
• exchange between one or more other forms of convertible virtual assets;
• transfer of virtual assets;
• virtual asset custody service; or
• participation in, and provision of, financial services related to a virtual asset issuance or the sale of a virtual asset.

Issuing virtual assets is subject to CIMA's approval, and the Act sets out the relevant factors CIMA must consider before giving such approval.

The Act defines a "virtual asset custody service" as the business of safekeeping or the administration of virtual assets (for example in a wallet) or the instruments that enable the holder to exercise control over virtual assets (such as security keys and codes).

What about trading platforms?

A VASP will require a licence from CIMA if they operate a "virtual asset trading platform", which for the purposes of the Act would be if, for reward or benefit, it operates a centralised or decentralised digital platform which facilitates third parties exchanging virtual assets for fiat currencies or other virtual assets where the VASP holds custody of or controls virtual assets on behalf of clients, or purchases virtual assets to sell them to a buyer as part of a process of matching bids or transactions.

Who can be registered or licensed as a VASP?

The Act expressly provides that individuals may not carry on virtual asset services as a business, nor purport to do so. Cayman companies, limited liability companies, foreign registered companies, partnerships, limited partnerships, exempted limited partnerships and limited liability partnerships can register and/or apply for a licence as necessary.

Who needs to be registered or licensed?

Any Cayman incorporated or registered entity which issues virtual assets or which provides virtual asset services on behalf of third parties in or from within Cayman (which expression includes the fact of using a Cayman registered/incorporated entity) as a business or in the course of a business will need to be registered or licensed as a VASP with CIMA. Existing CIMA licensees can apply to CIMA for a waiver on the basis that their virtual asset business does not materially change the business for which they are licenced and that they already have in place sufficient supervision and oversight.

Registration requirements

Schedule 1 of the Regulations has the Form to apply to CIMA with the details which CIMA will require on the entity and the virtual asset service to be offered. Details required for the application include the procedures (and officers) the entity has put in place to meet AML/CFT and CPF standards, its internal safeguards and data protection systems and the qualifications, expertise and relevant experience of its directors and senior officers.

Directors, senior officers and beneficial owners of applicants will be required to satisfy CIMA's standards on fitness and propriety.

Sandbox licences

Under the regulatory framework, CIMA is able to grant a VASP a temporary "Sandbox" licence for a period of up to one year, where the VASP proposes a virtual asset service which represents an innovative use of technology or uses an innovative method of delivery that CIMA considers will require a level of supervision and oversight not offered by registration under the Act (or any other existing Cayman legislation) or by CIMA granting a licence.

How does a Sandbox licence work?

During the licence year CIMA will assess, monitor and supervise the innovative use to ensure that the service complies with its principles, including standards of honesty, integrity, and fair treatment of customers and that it protects customers' data and assets. CIMA will also monitor to ensure the service meets Cayman and international financial regulations, in particular those for AML/CFT and CPF, and also with a view to developing best practices and guidance for the future. A Sandbox licence may be subject to restrictions or allow exemptions depending on the nature of the innovative use. CIMA will retain the power to review, amend or revoke licences (on notice).

How much does it cost?*

All VASPs must register with CIMA. The application fee payable is a flat KY$ 1,000 (~US$1,220), in addition to further fees which are payable depending on the service type and expected revenue:

Annually, registered VASPs will be required to pay an annual fee matching the amount paid at registration. 

Where a registered VASP is required to be licensed in addition to its registration (custody or trading platforms), the application fee payable is a flat KY $5,000 for all licence types. 

VASPs providing custody services will be required to pay a grant fee of KY$ 30,000, with renewal fees ranging from KY$ 30,000 to 200,000 based on revenue. 

VASPs providing trading platform services will be required to pay a grant fee of KY$ 100,000, with renewal fees ranging from KY$ 50,000 to 100,000 based on revenue. 

Local companies that are registered as VASPs can expect to pay lower fees, being KY$ 3,000 for custody services and KY$ 10,000 for trading platform services. 

Sandbox licences align to the general fee structure of the VASP regime but are subject to CIMA's discretion. Fees will be quantified by CIMA on review of the nature, scope, and complexity of the project.

*Figures are taken from the Virtual Asset (Service Providers) (Amendment) Regulations, 2025 and are subject to change (guidance only).

The 2025 Amendment Bill and tokenisation of funds

The Virtual Asset (Service Providers) (Amendment) Bill, 2025 (the "Amendment") was passed by the Cayman Islands Government in June 2025 and proposes to amend the Act. The Amendment is not yet in force, but it is expected to be the subject of a commencement order in early 2026.

The Amendment seeks to clarify the treatment of investment interests and tokenised equity in Cayman registered investment funds by changing the definition of "issuance of virtual assets" or "virtual asset issuance". As Cayman investment funds are considered a more traditional financial instrument, the clarification is helpful to cement the boundary between pure crypto assets and tokenised securities.

The Amendment seeks to clarify the regulation applicable in respect of fund tokenisation for registered Cayman funds registered under (as applicable) the Mutual Funds Act (as revised) or the Private Funds Act (as revised) and how this corresponds with the required regulation under the Act.

A clear regulatory landscape for VASPs and Cayman funds demonstrates the jurisdiction's adaptation to the global market and future-proofing for Cayman digital, funds and financial sectors.

Bedell Cristin

If you would like any further information or advice on Cayman's VASP framework, you would like to apply to CIMA to register as a VASP or for a licence, and/or you need advice on tokenised investment funds, please contact your usual Bedell Cristin contact or one of the contacts listed.

• spouses and civil partners;
• former spouses and civil partners;
• a person who, during the whole of the period of two years immediately before the death of the deceased was living in the same household as their spouse or civil partner;
• a child of the deceased;
• any person who is not the child of the deceased who, in the case of any marriage or civil partnership to which the deceased was at any time a party, was treated by the deceased as a child of the family in relation to that marriage or civil partnership; and
• any person who immediately before the death of the deceased was being maintained, either wholly or partly, by the deceased.

A person is treated as having been maintained by the deceased if they made a "substantial contribution in money or money's worth towards the reasonable needs of that person" and reasonable financial provision is set out as:

• in the case of spouses or civil partners, such financial provision as it would be reasonable in all the circumstances of the case for a spouse or civil partner to receive, whether or not that provision is required for them/their maintenance; and
• in the case of any other person, including former spouses and civil partners, such financial provision as it would be reasonable in all the circumstances for the applicant to receive for them/their maintenance.

The Royal Court of Guernsey (the "Court") has the power to make orders for and in relation to:

• periodical payments;
• lump sum payments;
• vesting orders in relation to property;
• variations to pre- and post-nuptial settlements to which the deceased was a party; and
• orders creating, extinguishing or varying any:
  • usufruit (the right to enjoy a capital asset, usually a house, for a period of time);
  • droit d'habitation (the right of residence in a property); or
  • lease, licence or other right of occupation in relation to property comprised in the deceased's estate.

The Court also has the power to make these orders on an interim basis in cases where applicants are in need of immediate financial assistance, but it is not possible to determine what order (if any) should be made.  

The Court will also have regard to a number of factors including, but not limited to, the following:

• the financial resources and financial needs which the applicant (or any other applicant) has or is likely to have in the foreseeable future;
• any obligations and responsibilities which the deceased had towards any applicant or towards any beneficiary of the estate of the deceased;
• the size and nature of the net estate of the deceased;
• any physical or mental disability of any applicant or any beneficiary of the estate of the deceased;
• the financial circumstances of the marriage/civil partnership; and
• any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the Court may consider relevant.

Applicants should find comfort in the Law being able to potentially provide a remedy for those who were financially dependent on another. During what are uncertain and upsetting times, it is important to seek legal advice as soon as possible. There is a six-month time limit from the date of death within which to make applications against estates for financial provision, so applicants need to act swiftly. The factors set out above are not exhaustive and careful note needs to be taken of the full terms of the Law.

Please get in touch with a member of our team who can advise on the applicable provisions and assist applicants in making a claim in time.

The Wagoner rule

The "Wagoner rule", derived from Shearson Lehman Hutton Inc. v Wagoner, 944 F.2d 114 (2d Cir. 1991), is a principle which, for the purpose of this briefing, goes to the ('prudential' i.e. common law) standing of offshore officeholders to bring claims in the United States. Simply put by the judge in the eponymous case, the principle is that:

"when a bankrupt corporation has joined with a third party in defrauding its creditors, the trustee cannot recover against the third party for the damage to the creditors."

The rule is predicated on the (rebuttable, as there are exceptions) principles that management's wrongdoing is imputed to the company and that the trustee (or the liquidator if appointed in Cayman or the BVI) stands in the shoes of the company and is thus taken to have participated in the wrongdoing. The rule often goes hand in hand with the broader doctrine of in pari delicto (an affirmative defence), which is that wrongdoers cannot recover from third parties if they assisted in the wrongdoing. 

For Cayman Islands officeholders, the practical impact of the Wagoner rule is clearly significant: it can determine whether cross‑border recovery actions against U.S. based third parties survive a motion to dismiss. Three recent New York decisions, Trott v Deutsche Bank AG, Barkhouse v Dean and In re Endo International plc, illustrate how nuanced and fact‑sensitive the application of the rule has become since it came on to the scene (as far as those of us operating in the Cayman Islands are concerned) in Bullmore v Ernst & Young Cayman Islands.

Bullmore v Ernst & Young Cayman Islands ("Bullmore") (19 June 2008) Supreme Court, New York County Commercial Division

In this 2008 decision, the court applied the Wagoner rule and granted summary judgment in favour of the defendant, dismissing claims by Cayman-appointed liquidators against the auditors of a hedge fund for lack of standing because:

• the liquidators were to be treated as standing in the shoes of the hedge fund;
• the wrongdoing of the managers was imputable to the hedge fund, with the "adverse interest" exception not applying because what the managers did benefitted the hedge fund and could not be said to have been carried out purely in the managers' own interests (the adverse interest exception is a "narrow exception" to the Wagoner rule that rebuts the presumption that the acts and knowledge of an agent are imputable to the principal – it applies "where the wrongful acts of management are so adverse to the corporation that management is deemed to have totally abandoned the corporation, for its, or a third party's, sole benefit"); and
• there was no "cleansed entity" or "innocent successor" argument available. The court did not agree with the liquidators that the liquidation had effectively created a new entity, innocent of the wrongdoing perpetrated by the managers.

Thus, the liquidators were denied standing to pursue the claims and the motion to dismiss succeeded.

Barkhouse v Dean ("Barkhouse") (26 September 2025) United States District Court for the Southern District of New York 

Rejecting arguments that the Wagoner rule applied to deprive the Cayman/BVI liquidators of standing, the court in Barkhouse denied a motion to dismiss the liquidators' fraudulent-transfer and unjust-enrichment claims against a U.S. transferee connected to the 1MDB scandal. 

The court found the rationale deployed in Scholes v Lehmann (a 1995, Seventh Circuit, decision) persuasive. In that case, the judge found that once wrongdoers are displaced by independent fiduciaries, the corporation is no longer the wrongdoers' "evil zombie", the entity now in liquidation is no longer tainted, and that entity may pursue recovery for the benefit of creditors (not the entity itself), which the judge considered the avoidance claims were designed to achieve.

The court in Barkhouse was free to consider Bullmore if it so chose, but it did not.  

In re Endo International plc ("Endo") (29 September 2025) United States Bankruptcy Court for the Southern District of New York

Three days after Barkhouse, the Bankruptcy Court for the Southern District of New York decided Endo. The nuance of this case was that, while the application of the Wagoner rule was an issue, offshore officeholders were not involved. Rather, the plaintiff was the trustee of a Delaware statutory trust established to administer unsecured creditor claims in the bankruptcy of a range of Endo-affiliated debtor entities, one of which was incorporated in Ireland. 

The court applied New York choice of law principles and found that Irish law governed the trustee's claims for aiding and abetting relating to the Irish entity. The court then found that the Wagoner rule did not apply to defeat those claims. This was because the Wagoner rule was a construct of the Second Circuit/New York law and not mirrored in Irish law.

Trott v Deutsche Bank AG ("Trott") (30 September 2025) United States District Court for the Southern District of New York

A single day after Endo, Judge Ho gave judgment in Trott. In this case, Cayman-appointed liquidators over a Cayman debtor, Madison Assets LLC ("Madison"), had brought claims in New York for fraudulent trading under Section 147 of the Cayman Companies Act. The crux of the Defendant's motion to dismiss those claims was that the Wagoner rule applied. The liquidators had accepted that if it was applicable to their claims, they would be deprived of standing, given their acceptance that Madison had participated in the fraud.

Judge Ho held that the Wagoner rule applied because:

• The Wagoner rule was a federal prudential standing doctrine that applied (unlike in pari delicto which is a substantive rule of New York law) regardless of the law governing the underlying cause of action (thus differentiating, albeit not explicitly, from Endo). 
  
  The liquidators had argued that, as their claims were brought under a Cayman statute and were thus governed by Cayman law, Wagoner, being a creature of New York law, should not apply.
• Contrary to their argument that they were acting for the benefit of creditors, rather than the debtor company, the liquidators were to be taken to be asserting the company's rights. The liquidators still, therefore, stood into the shoes of the company.
  
  The liquidators had argued that Section 147 of the Companies Act provided them with a statutory cause of action which only they could bring, distinct to a claim brought by Madison (to which it was accepted that the wrongdoer's behaviour would be imputed). However, because the court had found (i) that the liquidators had constitutional standing to bring the claim because a Section 147 claim is not brought to compensate particular creditors but rather to cure a loss to the debtor company's assets overall, and (ii) that the liquidators had no interests other than those that related to Madison, the court found that through the Section 147 claim the liquidators were bringing an action on behalf of Madison.
• Comity did not trump federal jurisdictional doctrine, at least not in the Second Circuit.
  
  The liquidators had argued that depriving them of standing through Wagoner would set a dangerous precedent because foreign representatives' insolvency claims would be limited to only those claims that could be brought under domestic law.

Getting to grips with the divergence between Barkhouse/Endo and Trott

Barkhouse declined to apply the Wagoner rule, primarily due to the "cleansed entity" rule from Scholes. Endo found that Wagoner did not apply because it held that whether Wagoner bars recovery depends on whether governing substantive law presents a flat bar that justifies dismissal (which Irish law did not). 

Trott applied it decisively, treating it as a federal prudential rule of standing which applied to plaintiffs, whether foreign or domestic, bringing their claims in the Second Circuit, even if those claims were governed by a foreign law.

Barkhouse and Endo invoked comity. Trott recognised comity but found it could not override a federal rule such as Wagoner.

The quandary facing Cayman officeholders

A Cayman appointee can be forgiven for not knowing exactly what may await them if they seek to bring claims in the United States, particularly in the Second Circuit, which includes the Southern District of New York. Will they encounter a Trott situation where the Wagoner rule will be applied, regardless of which law governs the underlying claims? Will they be able to rely upon the "cleansed entity" exception? Will it be an uphill battle persuading the court that they are acting for the benefit of creditors only and should not be taken to stand in the shoes of the debtor entity to which management's wrongdoing has been imputed?

Recommendations

Given the uncertainty exposed by Barkhouse, Endo and Trott, Cayman officeholders should assume that their standing will be actively challenged in proceedings in the Second Circuit and should structure their claims accordingly from the outset. For example:

• If imputation exceptions are successful, the Wagoner rule can be avoided entirely. So, where wrongdoing was confined to rogue management acting entirely in their own interests, the adverse interest exception should be relied on so as to resist automatic attribution of wrongdoing to the company (and, in turn, the officeholders). 
• To maximise the ability to rely upon the Scholes theory of the "cleansed entity", one should structure a claim as a creditor-oriented asset recovery (fraudulent transfer/avoidance), rather than as a claim to cure loss to the debtor company. The court in Barkhouse was receptive to that approach once independent liquidators controlled the entity and denied the defendants' motion to dismiss. The appointment of independent liquidators should be clearly presented as severing the identity between the wrongdoers and the entity. However, while this argument was successful in Barkhouse, it was not accepted in Bullmore.
• In multi-jurisdictional matters, identify a non-New-York governing law with more favourable treatment of imputation of wrongdoing or in pari delicto. If the court prefers the reasoning in Endo over that in Trott, whether the claim survives a motion to dismiss will depend on the foreign law's Wagoner rule or in pari delicto equivalent.

For further information on standing, the Wagoner rule, and associated in pari delicto or ex turpi causa issues, please contact your usual Bedell Cristin contact or one of the contacts listed.

The two recent Cayman cases appear to have inconsistent outcomes, despite agreeing on the principle that where English (but not Cayman) legislation has overridden an English decision on a particular point of law, that decision should still be followed by Cayman courts.  Where the decision is that of the English Court of Appeal, it remains highly persuasive, and Cayman courts will only depart from the decision where there is a good reason to do so.

Despite the inconsistencies, we consider that the two recent decisions can be reconciled and, in fact, help to advance certainty on the Cayman courts' approach to following English appellate court decisions.

HQP/Direct Lending

On 7 November 2025, the Cayman Court of Appeal ("CICA") handed down its judgment in the joint proceedings of In the matter of HQP Corporation Ltd (in Official Liquidation) and In the matter of Direct Lending Income Feeder Fund Ltd (in Official Liquidation) [2025] CICA (Civ) 19 ("HQP/Direct Lending"). The proceedings concerned whether shareholders of a company that was in liquidation, who claimed they were misled into subscribing for their shares, could make claims for damages in the Cayman liquidation, and if so, what priority those claims should have relative to other creditor and redemption claims.

The case required the CICA to determine whether the decision in the English case of Houldsworth v City of Glasgow Bank (1880) 5 App Cas 317 ("Houldsworth") (a case which established a common law rule that a shareholder who had been induced by misrepresentation into subscribing for shares could not claim damages in the company's liquidation) was a bar on such claims, even though the UK Parliament had legislated to disapply that common law rule.

The CICA held that:

• the bar on shareholders claiming damages in a company's liquidation arising from Houldsworth remains good law and should be followed in Cayman; and
• the Houldsworth principle prevents any person claiming damages for misrepresentations inducing subscription for shares from proving in a liquidation in respect of that claim until all non-member creditors have been paid or provided for, but permits them to prove thereafter.

The CICA emphasised the persuasive weight of English appellate decisions on Cayman courts and confirmed that a compelling reason is required for Cayman to abandon the underlying common law principle decided by an English case, even where English legislation has negated the decision.

The CICA noted that the Houldsworth rule was abrogated in England by statute in 1989, but that this was driven by a need to avoid potential inconsistencies arising from new legislation, rather than by a settled conclusion that the rule was wrong. The enactment of a statute in England, abolishing the rule in Houldsworth, was not, in itself, a compelling reason for the CICA to depart from the common law rule, particularly where the legislation was driven by a desire to avoid inconsistencies in the law, rather than a substantive policy rationale.

IGCF proceedings

Before HQP/Direct Lending was decided, the CICA handed down its decision in the case of Al Jomaih Power Limited and Denham Investment Ltd v IGCF SPV 21 Ltd [2025] CICA (Civ) 001 (the "IGCF proceedings"), in which Bedell Cristin acted for the Appellants. The CICA considered whether the English common law principle of Henry v Geoprosco International Ltd [1976] QB 726 ("Geoprosco") (where the English Court of Appeal held that a party taking steps in foreign proceedings beyond merely contesting jurisdiction is deemed to have voluntarily submitted to the foreign court's jurisdiction) should be applied in Cayman, where English legislation negated the decision but Cayman legislation has not. IGCF SPV 21 Ltd ("SPV 21") sought an anti-suit injunction and a stay of proceedings in Pakistan, arguing that the Appellants breached an exclusive jurisdiction clause in a shareholders' agreement. The Appellants appealed the Cayman Grand Court decision to grant the anti-suit injunction and argued that SPV 21 submitted to the jurisdiction of Pakistan by seeking a stay of those proceedings.

The CICA considered the question of whether Geoprosco represents Cayman law and therefore whether SPV 21 submitted to the jurisdiction of Pakistan. In reaching its conclusion that Geoprosco should not be followed in Cayman, the CICA emphasised (inter alia) that:

• the English Court of Appeal decisions are "highly persuasive" and "respected", however they are not binding on Cayman courts. Cayman courts will depart where there is a good reason to do so;
• while "Geoprosco had not been overruled" by another court decision in England, it had also not "been expressly approved by a higher court in England";
• the introduction of legislation superseding Geoprosco "supported the view that the policy underlying the reasoning in Geoprosco was unsound";
• the English Court of Appeal itself in Geoprosco "recognised the tautology of its reasoning but felt constrained to follow a settled…line of authority";
• Geoprosco has been widely criticised "by judges, textbook writers and academics"; and
• it is "open to the Grand Court" to consider whether Geoprosco "had been doubted…by having been nullified or superseded by legislation in England, or otherwise".

Applying the above reasoning, the CICA rejected the application in Cayman of the rule in Geoprosco, concluding that an application for a foreign stay of proceedings does not, by that fact alone, amount to submission to the foreign jurisdiction. SPV 21's anti-suit injunction was therefore upheld.

The CICA decision in the IGCF proceedings was appealed to the Judicial Committee of the Privy Council (the "JCPC"), which handed down its judgment on 24 November 2025 (IGCF SPV 21 Limited v AL Jomaih Power Limited and another [2025] UKPC 54, the "JCPC Appeal"). The JCPC upheld the CICA's decision in rejecting the application of Geoprosco in Cayman and reiterated the general principles discussed in the Grand Court decision of In the matter of HQP Corporation Limited (in Official Liquidation) [2023] (2) CILR 203 ("HQP"), which in turn are set out in the HQP/Direct Lending decision, that Cayman courts should follow English Court of Appeal decisions (even where English legislation had negated the decision) but can decline to follow them where there is a good reason to do so. The JCPC referenced the Grand Court decision in HQP in which HHJ Doyle had reviewed the existing court decisions in which a good reason had been found to exist and considered that a good reason existed in this case because Geoprosco:

• has been negated by English legislation;
• is "much criticised" and "affront[s] common sense"; and
• is "obsolete" and has "ceased to be authoritative in England and Wales".

The JCPC concluded that: "Geoprosco has rightly been reversed in England and Wales and, by statute or case law, it has been reversed or not followed in other common law jurisdictions. It should form no part of Cayman law".

Conclusion

Both Cayman decisions affirm the principle that English common law appellate decisions remain highly persuasive in Cayman, and that departure requires a good reason. The JCPC Appeal establishes that in some circumstances, a good reason can exist where the English legislation has negated the common law established by the decision.

Although the JCPC did not expressly endorse the reasoning in HQP/Direct Lending (that the introduction of English legislation which negates an English appellate decision does not constitute a good reason for Cayman to depart from the decision if the legislation was introduced for administrative rather than policy reasons) it had the benefit of considering HQP/Direct Lending, which was handed down before its judgment. It is therefore reasonable to infer that the JCPC was content with the CICA’s approach. Accordingly, Cayman courts should apply an additional layer to the "good reason" test by examining the purpose behind the legislation.

The ultimate takeaway is that Cayman courts must follow English appeal court decisions unless there is good reason not to. One good reason may be where English legislation has negated the English court decision. However, based on the CICA decision in HQP/Direct Lending, Cayman courts should consider why the English Legislation was introduced, to determine if the enactment of the legislation alone is a "good reason". If legislation in England is being introduced to abolish outdated, unsound or criticised English common law, a good reason for Cayman to depart from the common law will likely exist.

The fact that these issues have reached the CICA and the JCPC on appeal within the past two years underscores their practical importance and highlights how they may arise in far more situations than one might expect.

If you have any questions relating to this briefing please contact one of the authors.

Prescription is the Guernsey equivalent of the English concept of limitation, being rooted in Guernsey's customary law with Norman French origins. Prescription is essentially different from its English cousin in that it extinguishes the right to bring a claim after a certain period of time. In contrast, the English concept of limitation provides a defence to a claim which arises after the passage of time. This distinction was highlighted by Deputy Bailiff Day when he held, in Holdright Insurance Company Limited v Willis Corroon Management (Guernsey) Limited, 25 August 2000, that "Prescription both establishes and extinguishes rights, in distinction merely to precluding remedies".

The time period after which prescription extinguishes a cause of action differs depending on the type of claim and is set out by way or statute or in Guernsey's customary law. The main types of claim, and the associated time periods, are, by way of outline only:

• contract: six years from the date of breach;
• tort: six years from the date of the cause of action;
• personal Injury: three years from the date of the cause of action; and
• breach of trust: three years from the date of knowledge.

It should be noted that prescription does not operate against minors or individuals deemed to be under legal incapacity.

The Guernsey customary law concept of empêchement d'agir (literally "impediment to action") may interrupt the operation of prescription (by way of extension or suspension) in one of two ways:

• empêchement de fait: the loss of right due to practical impossibilities; or
• empêchement de droit: the loss of right due to a legal disability, for example incapacity. 

In Guernsey, as in England and Wales, parties often enter into standstill agreements in order to prevent a claim being time barred (and often to facilitate negotiations). Prescription can be suspended or even extended upon agreement between the parties. The effectiveness and validity of these "standstill agreements" has been questioned historically by some legal practitioners in Guernsey and the concept has yet to receive any judicial scrutiny in the Bailiwick. An alternative route is to commence proceedings which stops the prescription "clock" running. In practical terms, this happens when a summons is handed to His Majesty's Sergeant for service on a defendant. After that, the parties can agree to "sign over" the proceedings without the need to actually present the matter before the court until a particular date – this has the same effect as a standstill agreement.

It is crucial to seek Guernsey legal advice early to properly understand the effect of prescription. Please get in touch with a member of our team who can advise on the applicable time limits and any empêchement that might affect a potential claim.

An indication of "no consent" from the FIU is not a freezing order and does not directly restrain the funds, but in practice, institutions will not process transactions subject to a "no consent" decision until their suspicions have been resolved or the Royal Court determines the position.

Over time, a consistent analytical framework has emerged through cases such as: Liang v RBC Trustees (Guernsey) Limited (Royal Court Judgment 20/2018) ("Liang"); BD Limited v Investec Bank (Channel Islands) Limited [2022] GRC 103 ("BD"); Loero v Credit Suisse Trust Limited [2024] GRC 075 ("Loero"); and L and M and N and Mrs B v Credit Suisse AG, (Guernsey branch) [2023] GRC 026 ("LMNB"). The Court of Appeal’s recent decision in HM Comptroller v Fidelity Management Ltd and Royal Bank of Canada (CI) Ltd [2025] GCA 065 ("Fidelity"), although a civil-forfeiture appeal under repealed legislation, addresses concepts which also arise in "no-consent" cases and therefore forms part of the developing landscape.

Questions of evidence

The starting point most often cited is Liang, in which the Royal Court of Guernsey (the "Court") confirmed that a suspicion that is "more than fanciful" is sufficient, but that a "vague feeling of unease", as per the judgment in R v Da Silva [2007] 1 WLR 303, "would not suffice". Once the institution identifies material underpinning the suspicion, the evidential burden shifts to the customer to show, on the balance of probabilities, that the funds are not the proceeds of crime.

In BD, the Court undertook a detailed backwards analysis of the account history, combining bank statements, trust documents and inferences to track the funds notwithstanding an incomplete evidential picture. The Bailiff accepted that the Plaintiff had discharged the burden even without a fully documented provenance, confirming that the Court will reach a conclusion on provenance on the balance of probabilities by drawing reasonable inferences from partial records, rather than insisting on a fully documented chain.

The judgment in LMNB added two further lines of reasoning that have influenced how these disputes are approached. These can be summarised as follows:

• causal nexus
  This concerns the connection between the alleged unlawful conduct and the particular funds held. Lieutenant Bailiff Hazel Marshall KC reasoned that a suspicion resting only on general background concerns, without any meaningful link to the assets, may not satisfy the Liang threshold - the genuine suspicion must relate to the funds in question.
• attenuation of taint
  Even if antecedent wrongdoing is assumed, the subject funds may no longer bear any taint of criminality if the connection becomes too remote. Factors such as the passage of time, the scale of legitimate business activity, mixing or dilution, and the transformation of value can all attenuate earlier, historic taint. This "other end of the telescope" analysis provided an independent basis for concluding that the funds in LMNB could not properly be characterised as criminal property.

Most recently, in Loero, the Court reaffirmed the approach in BD, declining to treat gaps in the historic documentary chain as fatal and explicitly refusing to draw adverse inferences where records were incomplete.

The Court of Appeal in Fidelity: clarifying suspicion and burden of proof

Although the appeal in Fidelity related to civil forfeiture under the 2007 civil forfeiture legislation (now repealed and replaced) rather than the "no consent" regime, the Court of Appeal’s reasoning intersects directly with aspects of the "no-consent" framework:

• the Court of Appeal rejected the argument that a discrete predicate offence must be identified or particularised for a suspicion to be valid. Reasonable grounds to suspect that the assets represented the proceeds of unlawful conduct were sufficient. This conclusion potentially narrows the scope of LMNB’s causal nexus strand: the absence of a defined underlying offence does not, of itself, defeat the statutory characterisation of property as criminal;
• the Court of Appeal also rejected the proposition that it is conceptually unreasonable to require a person to prove that funds are not criminal property. Once the suspicion threshold is met, the Court of Appeal held that the burden rests on the account holder to establish lawful provenance. This apparently limits LMNB insofar as it treated the difficulty of "proving a negative" as a philosophical objection; and
• importantly, the Court of Appeal did not address the attenuation analysis in LMNB. Nothing in Fidelity contradicts the proposition that any original taint may, in appropriate circumstances, be displaced through remoteness, dilution or transformation of value. That line of reasoning therefore remains part of the established authorities.

The position as it now stands

Read together, the authorities establish a relatively settled model:

• the threshold for suspicion is low, provided the institution can identify the material on which it relied;
• once suspicion is established, the customer must prove lawful provenance on the balance of probabilities;
• Fidelity confirms that no specific predicate offence need be identified;
• LMNB’s attenuation analysis remains available and is unaffected by Fidelity; and
• reconstructed provenance may suffice where the overall narrative is coherent and supported by the evidence.

These principles now form the basis on which "no consent" disputes are determined in Guernsey.

If you would like any further information, please get in touch with your usual Bedell Cristin contact, or one of the contacts listed.

Over the past decade, a sequence of statutory appeals has examined findings of regulatory breach, assessments of probity, penalties, prohibition orders, public statements and related enforcement outcomes. The resulting body of judgments sets out how the Court understands its appellate role, the principles it applies when considering the regulator's reasoning, findings on the evidence and questions of proportionality, and the circumstances in which an enforcement decision may be confirmed, varied or remitted.

The discussion that follows draws solely on reported judicial decisions and reflects themes that recur across those cases.

The range of enforcement decisions that come before the Court

Enforcement decisions appealed to the Court span the full spectrum of the GFSC's statutory powers. Challenges have arisen in relation to prohibition orders, financial penalties, public statements, and findings that an individual or entity does not meet the minimum criteria for licensing. In several appeals the Court has also been asked to consider the appropriateness of disapplying fiduciary exemptions or the characterisation of conduct as involving a lack of probity.

These decisions are typically taken by a Senior Decision Maker ("SDM") under the Financial Services Business (Enforcement Powers) (Bailiwick of Guernsey) Law, 2020 (the "Enforcement Powers Law") or other regulatory laws in force at the time of the underlying conduct. Appeals have proceeded on the basis that the SDM's determination is the operative enforcement decision for the purposes of the statutory framework. In some cases ancillary issues have arisen, such as applications for a stay of a penalty or prohibition order pending the outcome of the appeal.

The enforcement landscape therefore presents a varied set of decisions for review, and the relevant statutory powers differ depending on the period in which the conduct occurred. A number of general themes nonetheless emerge.

Categories of challenge advanced in the Court

Procedural fairness
Appellants have alleged procedural irregularities in the handling of representations, the use of material said to be incomplete or inaccurate, delay, or other steps said to affect the fairness of the process. The Court has examined whether any such issue materially affected the decision and whether it can be cured through the appellate process. In practice, the Court has held that the statutory right of appeal equips it to address any procedural deficiency when reviewing the merits.

Bias or the appearance of bias
Structural challenges alleging lack of independence or impartiality of the SDM have been advanced but have not succeeded. The Court has consistently held that the combination of an SDM drawn from an external panel and a full statutory appeal to the Royal Court is sufficient to satisfy Article 6 of the European Convention on Human Rights ("ECHR"). Earlier attempts to frame objective-bias arguments through judicial review did not result in the decisions being set aside.

Reasoning and evidential sufficiency
A recurrent ground concerns whether findings are properly supported by the evidence and whether the SDM has sufficiently explained the basis for conclusions, particularly where serious allegations, such as want of probity, are made. The Court has intervened where reasoning has been incomplete or where evidential inferences were not adequately justified.

Proportionality and penalty
The Court has considered challenges to the proportionality of penalties, prohibition periods, and public statements. These challenges require the Court to assess whether the outcome falls within the regulator's permissible evaluative range and whether the balance struck was a reasonable one. In some appeals sanctions have been reduced or set aside. In others the Court has confirmed that the SDM's recommended sanctions were proportionate.

Legal error or statutory interpretation
The Court has addressed whether the SDM applied the correct statutory tests, relied on provisions not properly engaged on the facts, or misapplied regulatory criteria. Appeals have succeeded where there was a misapplication of statutory powers or where a finding was made under an incorrect legislative regime.

Implementation and interim relief
Interim applications seeking a stay of enforcement have required the Court to assess whether implementation of a sanction before determination of the appeal would give rise to prejudice that could not be remedied. Stays have been granted in part, reflecting the nature of the sanction and the grounds of appeal.

The Court's role and intensity of review

The Royal Court has described its appellate jurisdiction as one that permits review of both legal and factual matters capable of affecting the validity of the enforcement decision. Earlier authorities characterised the right of appeal as conferring "full jurisdiction" in the ECHR Article 6 sense, enabling the Court to consider any matter raised by an appellant and, where appropriate, to remit the case with directions. Later authority has emphasised that the appeal is not a rehearing de novo. The Court does not step into the shoes of the regulator or replicate the SDM's evaluative task: it examines whether the decision is affected by error under the statutory grounds for appeal.

In exercising this jurisdiction, the Court has been clear that the GFSC is a specialist regulator. While the Court is empowered to review findings of fact, law and discretion, it avoids substituting its own regulatory evaluation where the SDM's conclusions fall within the range of responses available to a decision-maker acting within the statutory framework. The Court has also recognised the counter-factual difficulty of revisiting a complex supervisory assessment after the event, and its role focuses on whether the SDM's reasoning was sound on the material available at the time.

Proportionality and the assessment of sanctions

Proportionality has featured prominently in appeals concerning prohibition orders, penalties and public statements. The Court has adopted an approach anchored in whether the SDM has achieved a fair balance. It considers whether material factors have been accorded disproportionate weight or whether the sanction exceeds the reasonable range of responses available on the findings upheld. Deterrence and the statutory objectives in the enforcement laws form part of the context in which that assessment occurs.

Intervention has followed where the Court identified legal or evidential flaws that undermined the basis for the sanction. Where underlying findings were set aside, sanctions have been quashed or remitted. Conversely, where the findings remained intact and the SDM's evaluative reasoning was rational and adequately explained, the Court has upheld the sanctions even if other plausible outcomes could also have been reached.

The Court also distinguishes between sanctions primarily dependent on evaluative judgment and those driven by discrete findings, such as probity. In cases where a particular finding materially informs sanction but cannot be sustained, the matter has been remitted to the GFSC for re-determination.

Procedural themes

Breadth of statutory grounds
The statutory appeal provisions enable appellants to raise legal, factual and procedural challenges. The Court has consistently applied these broadly framed rights of appeal to address alleged deficiencies in the SDM's decision-making process.

Article 6 considerations
The Court has held that the enforcement structure is compatible with Article 6 ECHR because any defect at the SDM stage can be addressed on appeal. The possibility of remission with directions ensures that the enforcement outcome can be made compliant with Convention standards.

Hindsight and contemporaneous context
When reviewing findings, the Court evaluates them by reference to the material before the SDM and the statutory framework in place at the time. It avoids relying on information or perspectives that arose later and focuses on whether the decision was adequately reasoned on a contemporaneous basis.

Implementation and timing
The Court has addressed whether sanctions should take effect before an appeal is determined. In assessing applications for interim relief, it has balanced the statutory functions of the regulator with the potential irreversible consequences for appellants.

Present position

After a period of relatively active appellate litigation, the position on appeals appears settled. The Royal Court continues to treat statutory appeals under the Enforcement Powers Law and predecessor legislation as providing a comprehensive framework for reviewing enforcement decisions, including the ability to examine factual, legal and procedural questions and to remit matters where appropriate. The Court of Appeal has confirmed that this process is not a rehearing but a structured review that allows the Court to assess whether the SDM's findings and sanctions fall within the permissible statutory boundaries.

Recent appeals have clarified the Court's approach to reasoning, evidential sufficiency, proportionality and the interaction between probity findings and sanction. They also underline the importance of evaluating decisions within their contemporaneous regulatory context. Where specific findings cannot be sustained, the Court has remitted the matter for reconsideration, but where the SDM's conclusions remain adequately supported, the enforcement outcome has been upheld.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

This obligation stems from amendments to a wide set of UK financial services regulations made under the Sanctions and Anti-Money Laundering Act, 2018, which have been extended to the Virgin Islands through corresponding Orders in Council (the "Modified Sanctions Regulations").

Scope of the requirement

VISU requires any person holding such funds or economic resources to report them, regardless of sector or legal form.  This will commonly include investment funds and managed accounts, administrators, custodians and depositories, trustees and corporate service providers, and structures holding crypto assets, where those assets are owned, held or controlled by a designated person.

Assets located outside the BVI must also be reported if they are subject to the Modified Sanctions Regulations.  By contrast, accounts blocked solely under another national regime (such as OFAC-only blocks) are not required to be reported to VISU.

Reporting mechanics

Reports must be submitted using the prescribed templates available from the BVI Financial Services Commission and Financial Investigation Agency websites and emailed to sanctions@gov.vg.

Each report must include details of all frozen funds and economic resources, with values stated as at 30 September 2025.  Where the assets are securities, shares or other debt or payment instruments (including those denominated in foreign currencies), the USD value must also be provided.

Nil returns are not required unless the filer has previously submitted a frozen-assets report and no longer holds or controls those assets.

Separately, all persons remain under an ongoing obligation to identify, freeze and report funds or economic resources of designated persons, including a requirement to report newly frozen assets without delay.  Failure to comply with financial services legislation, or to seek to circumvent it, is an offence.

Implications for BVI funds and other entities

While VISU does not comment on governance or operational impact, the new reporting requirement has practical consequences for BVI structures:

• Sanctions governance.  Funds, administrators, trustees and custodians will need to demonstrate that ownership, control and designation screening processes are robust and can support a valuation-date driven filing.
• Valuation alignment.  The 30 September valuation date and 30 November deadline intersect with audit and year-end timelines.  Entities should plan for reconciliations and NAV implications.
• Cross-border holdings.  Structures with PRC, CIS, Middle East, African or digital-asset exposure may face complex ownership-and-control assessments, particularly where entities are not expressly named on consolidated lists but are indirectly controlled by designated persons.
• Responsibility and oversight.  VISU recommends appointing a single responsible person for filings to avoid duplicate submissions.  In practice, boards, general partners and trustees should ensure oversight and record-keeping are defensible and ensure there is a single person with authority to file.

Under the proposal outlined in the Budget Address, the rate of stamp duty on residential transactions valued at CI$2 million or more will increase from 7.5% to 10%. For example, a CI$3 million purchase would incur an additional CI$75,000 in duty under the proposed rate.

Currently, the effective date for this change is unclear. The uncertainty surrounding the effective date means that implementation could occur with little notice following budget approval.

Given the proposed increase, parties who have executed an Offer to Purchase, Agreement for Sale or Development Agreements (for off-plan purchases such as at Lacovia or the Watermark) may benefit from locking in the current 7.5% duty rate by having these documents assessed and stamped before the new rate takes effect.

This strategy may result in a significant duty saving on the transfer of the underlying land or property, but it requires swift action and must be carefully weighed against the statutory requirements for timely submission of documents. The Stamp Duty Act (as revised) generally requires documents subject to ad valorem duty (duty calculated on value) to be presented to the Lands & Survey Department for assessment and stamping within 45 days after execution, but this would require careful commercial consideration as Lands & Survey will levy late payment penalties and interest if documents are submitted later than 45 days after execution.

With a partnership including some of the most experienced Attorneys in the jurisdiction, we are able to advise on every legal element – from structuring and regulatory issues, to relocation of staff, work permits and real estate matters.

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The key amendments are:

• to vary the procedure for reduction of share capital;
• to provide for the redemption of fractional shares;
  to extend the nature of foreign companies that may apply to be registered by way of continuation;
• to provide for the re-registration of an exempted company as an ordinary resident company; and
• to provide for the conversion of a limited liability company or a foundation company to an exempted company.

Procedure for reduction of share capital

The present position is that, subject to section 37 of the Act (in relation to the redemption and purchase of shares) and to confirmation by the Grand Court, a company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles, by special resolution reduce its share capital.  That procedure is being supplemented by an alternative procedure that does not require the confirmation of the Grand Court.

With effect from 1 January 2026, a reduction of share capital may be achieved by special resolution supported by a solvency statement.  A reduction of capital is supported by a solvency statement if the directors of the company make a solvency statement no more than 30 days before the date on which the special resolution for reducing share capital was passed.  Any director who knowingly makes a solvency statement without having reasonable grounds to believe that the company will be able to pay its debts in full as they fall due in the ordinary course of business commits an offence.

Where a reduction of capital is supported by a solvency statement (rather than with the confirmation of the Grand Court), the company shall, within 15 days after the special resolution for reducing share capital is passed, deliver to the Registrar:

• a copy of the solvency statement; and
• a minute showing, in respect of the company, the following information:
  • the amount of share capital of the company;
  • the number of shares into which the share capital is to be divided and the amount of each share; and
  • the amount, if any, deemed to be paid up on each share.

The Registrar, on receipt of the copy of the solvency statement and the minute, shall:

• register the solvency statement and the minute, and issue a certificate stating that the solvency statement and the minute have been registered; and
• publish by notice in the Gazette the registration of the solvency statement and the minute.

The minute, when registered, shall be deemed to be substituted for the corresponding part of the memorandum of association and shall be valid and alterable as if it had been contained in the memorandum of association.

Redemption of fractional shares

Provisions authorising a company to issue shares which are to be redeemed or liable to be redeemed at the option of the company or the shareholder are amended to expressly permit the issue of fractions of shares that are to be redeemed or liable to be redeemed.

Continuation

The present position is that a body corporate incorporated, registered or existing under the laws of a jurisdiction outside the Cayman Islands may only apply to the Registrar of Companies to be registered by way of continuation if it is incorporated, registered or existing with limited liability and a share capital.  This requirement is being amended to allow for a foreign company to apply to be registered by way of continuation if it is incorporated, registered or existing with limited liability, regardless of whether it has a share capital.

Exempted company may be re-registered as an ordinary resident company

An exempted company may re-register as an ordinary resident company if:

• the company passes a special resolution that:
  • it should be so re-registered;
  • makes alterations in the company's memorandum of association as are necessary to bring it in substance and in form into conformity with the requirements of the Act with respect to the memorandum of association of an ordinary resident company;
  • makes alterations in the company's articles of association as are requisite in the circumstances; and, if necessary,
  • changes the company's name; and
• an application for re-registration, signed by a director, is delivered to the Registrar of Companies together with:
  • a copy of the memorandum and articles, as altered by the special resolution; and
  • a re-registration fee equal to the fee payable on the registration of an ordinary resident company (which fee varies depending on the company's registered capital)

If the Registrar is satisfied that an exempted company may be re-registered as an ordinary resident company, the Registrar shall:

• retain the application and other documents delivered by the company; and
• issue to the company a certificate of re-registration stating that the company has been re-registered as an ordinary resident company.

Upon the issue of a certificate of re-registration:

• the company becomes an ordinary resident company; and
• any alterations in the memorandum and articles set out in the special resolution take effect accordingly.

Any tax undertaking given to the company pursuant to the Tax Concessions Act (as revised) shall not apply from the date of the re-registration.

The issue of a certificate of re-registration shall not operate:

• to create a new legal entity;
• to prejudice or affect the identity or continuity of the company;
  to affect the property of the company;
• to affect any appointment made, resolution passed or any other act or thing done in relation to the company pursuant to a power conferred by the memorandum and the articles of association of the company or by Cayman Islands law;
• to affect the rights, powers, authorities, functions and liabilities or obligations of the company or any other person; or
• to render defective any legal proceedings by or against the company.

Any legal proceedings that could have been continued or commenced by or against the company before its re-registration may, notwithstanding the re-registration, be continued or commenced by or against the company after re-registration.

Conversion of a limited liability company to an exempted company

A limited liability company (an "LLC") may be re-registered as an exempted company.

The conditions to, and procedure for, such re-registration are broadly similar to those described above in relation to the re-registration of an exempted company as an ordinary resident company, save that:

• the application shall also be accompanied by a certificate of good standing;
• rather than approving the re-registration by special resolution, an LLC shall approve the re-registration in the following manner:
  • the LLC resolves to be so re-registered upon the affirmative vote or written consent of at least two-thirds of its members; or
  • the re-registration is expressly permitted in its LLC agreement to provide an alternative vote, written consent or any other form of authorisation for the conversion as may be provided for in the LLC agreement (the "Conversion Consent"); and
• the Conversion Consent shall adopt a registration declaration and memorandum and articles of association in conformity with the Act.

The re-registration fee is equal to the annual fee payable by an exempted company (which fee varies depending on the company's registered capital).

Further, the effect of a re-registration of an LLC as an exempted company is similar to the effect of a re-registration of an exempted company as an ordinary resident company (as described above), save that:

• the LLC shall cease to be registered as an LLC (and the register of limited liability companies shall be updated accordingly);
• the LLC agreement of the LLC shall cease to have effect;
• the members of the conversion applicant shall be deemed shareholders of the exempted company and shall receive shares with a nominal or par value, at a discount or at a premium as is provided in the resolution, alternative vote, written consent or other form of authorisation; and
• any tax undertaking given to the LLC shall not apply from the date of the re-registration (although the exempted company may apply for a fresh undertaking pursuant to the Tax Concessions Act (as revised).

Conversion of a foundation company to an exempted company

A foundation may be re-registered as an exempted company.

The conditions to, and procedure for, such re-registration are broadly similar to those described above in relation to the re-registration of an exempted company as an ordinary resident company, save that:

• the application shall also be accompanied by a certificate of good standing; and
• the special resolution shall adopt a registration declaration and memorandum and articles of association in conformity with the Act.

For further detailed advice, please do not hesitate to get in touch with the listed contacts. 

The key takeaways from the BJB Career ruling are:

• The ruling has effectively filled a gap where statutory provisions are silent and granted provisional liquidators the right to seek their own release and discharge from their appointment in the absence of a suitable stakeholder to apply (in this case a shareholder).
• A carve-out is imposed on the release of the JPLs for any future claims for any wrongdoing by them but protection is provided as such claims can only be brought by a liquidator of the company with leave of the court.
• Any proposed release of the JPLs' appointment should be widely advertised for a minimum of 21 days to allow anyone with an interest in the company to raise any objections.

Background

The JPLs were appointed 10 years ago to act on behalf of BJB Career following the successful petition for a winding-up order by Crescent Jade Limited (a shareholder of BJB Career) on the just and equitable ground.  The JPLs were ordered to take control of BJB Career's assets, including any of its subsidiaries, and investigate potential legal proceedings on behalf of the company in Hong Kong and China.  Over the course of their appointment the JPLs exhausted any potential legal proceedings in both jurisdictions.  Further, the JPLs conducted various financial assessments of the company and filed five reports with the Cayman court – the final report dated 30 April 2025 confirmed that the JPLs had fulfilled the purpose of their appointment and would be seeking release from their appointment thereby providing notice to any creditors or other stakeholder with a financial interest in BJB Career.  This case was unusual as JPLs are generally appointed on a short-term basis pending an official liquidation or restructuring and their appointment does not necessarily result in the termination of the company and does not always fully oust the jurisdiction of the directors as that is dependent on the order appointing them.  Once JPLs are discharged the company returns to the ownership of the shareholders and the governance of a board of directors.

Lack of a shareholder is no barrier to release

As a result of a share transfer, the petitioner had lost standing as a shareholder to seek the JPLs' release, which resulted in the JPLs issuing a summons for their own release and discharge.  However, neither the Companies Act (2025 Revision) nor the CWR O.4, r.5(1) expressly state that provisional liquidators have standing to seek such an order, particularly when appointed on a shareholder's petition.  Notwithstanding this omission, the CWR O.4, r.5(2) provides provisional liquidators with the unlimited right to seek directions from the court (including a variation of the order appointing them), which the Judge considered in this instance gave the JPLs the right to seek their own release.

Significantly, this ruling underpins the court's inherent jurisdiction to manage cases justly and expeditiously and provide pragmatic solutions where the statutory provisions are silent.

Liability carve-out 

The Judge also considered whether the JPLs' release should be subject to a carve-out in respect of any future claims for misfeasance, misappropriation or improper retention of money or assets and/or breach of fiduciary duty similar to the provision in section 174(4) of the UK Insolvency Act 1986.  The Judge was of the view that such a carve-out in the Cayman Islands was appropriate, unless the JPLs could demonstrate that it was unfair or unwarranted. 

Importantly, the Judge reiterated that the right to bring future claims against the JPLs should only be brought by a liquidator of the company with leave of the court.  This restriction protects the JPLs from any unwarranted future claims following their release and discharge.

Notice requirements to ensure fairness and transparency

It was further stated that, prior to the JPLs' release from their appointment, shareholders and creditors should be given ample opportunity to raise any objections.  The Judge suggested that the proposed release should be advertised in all relevant newspapers and media outlets to ensure full transparency for a minimum of 21 days.  The fact that the JPLs for BJB Career had lodged their final report with the court approximately six months ago, which was available upon request by any creditor or person with a financial interest in the company, and no objections had been raised, satisfied the notice requirement.

Post-release – corporate governance

Whilst the Judge did not formally order the JPLs to do so, he noted in his ruling that the JPLs should advise the company's shareholders to appoint directors to manage the company going forward and to ensure that proper corporate governance was in place following the JPLs' release and discharge, which would have the effect of putting the company back into the hands of the shareholders and any board of directors that remained in existence.

Conclusion

As well as providing specific guidance on a lacuna in the law in the Cayman Islands with respect to the release of provisional liquidators of a company, this case demonstrates the willingness of the Cayman court to utilise its inherent jurisdiction to cover situations where a pragmatic solution is needed. 

The Bedell Cristin insolvency and restructuring team has successfully worked with clients who have had analogous situations and is always willing to look for creative solutions.

What is gazumping?

Gazumping occurs when a seller accepts a higher offer from a new buyer after already agreeing to sell to someone else. This can happen immediately before the sale is due to complete, leaving the original buyer:

• out of pocket for legal, survey, and mortgage arrangement fees;
• emotionally distressed after losing a property they believed was secured; and
• disadvantaged in a competitive market, especially if prices are rising.

Gazumping is particularly common in hot property markets, where demand outstrips supply and sellers are tempted by better offers.

What is gazundering?

Gazundering is the reverse scenario. It happens when a buyer lowers their offer just before completion, often exploiting the seller’s urgency to complete the sale. This can result in:

• sellers accepting a lower price under pressure, even if it’s below market value;
• delays or collapse of property chains; and
• financial strain, especially if the seller has already committed to another purchase.

Gazundering tends to occur in slower markets or when buyers feel they have leverage due to survey results or market shifts.

The legislative proposal

Deputy Max Andrews has lodged a proposition that would require all residential property transactions to include a pre-sale agreement to be entered into by the contracting parties. Under the proposed legislation:

• a financial penalty would apply to either party who withdraws from the transaction without a legitimate reason, such as mortgage refusal, serious property damage, or the collapse of a property chain; and
• certain types of transactions would be excluded, including intra-family transfers, auctions, government-led sales, and commercial property deals.

The proposal has a target date for full implementation by June 2028.

The Council of Ministers have lodged an amendment which proposes that there is an industry consultation period in an effort to defend against unintended consequences.

Pre-sale agreements

A pre-sale agreement is an agreement entered into by the buyer and seller in advance of the completion date. It obliges both parties to complete the transfer of the property on a date in the future. Pre-sale agreements offer some measure of comfort that a completion will proceed on a given date, allowing the parties to move forward with confidence. For example, buyers and sellers can confidently pack up their respective properties and make arrangements for their move.

Pre-sale agreements are very common in other jurisdictions, such as England and Wales, and already form part of the legal landscape in Jersey. However, they are used infrequently with buyers and sellers generally moving  straight to completion.

Existing practice in Jersey

In Jersey, all transfers of property (other than share transfer property) must be completed by passing a contract before the Royal Court. Under Jersey law, an agreement to pass a contract before the Royal Court is not specifically enforceable. This means that where a pre-sale agreement is entered into and a party refuses to complete, the court has no power to grant an order compelling the refusing party to complete.

As such, where a pre-sale agreement is entered into, common practice is to include in the pre-sale agreement a fixed penalty payable by the breaching party. The fixed penalty is commonly set at one third of the purchase price.

Generally, parties prefer to proceed without a pre-sale agreement, as they do not want to incur the legal costs associated with its drafting and negotiation.

Existing practice in England and Wales

Whilst a court could compel a party who breaches their obligations to complete under a pre-sale agreement to complete the transfer, such court order is rarely available. Instead, the court is likely to order the payment of compensation only (which is usually set at 10% of the purchase price).

A standard form of pre-sale agreement (and supplementary contract terms) are used in England and Wales to provide consistency and efficiency in the market place.

The proposed regime

The proposed legislation anticipates that a pre-sale agreement is entered into earlier than the practice in England and Wales. The timing of the pre-sale agreements envisaged by Deputy Andrews' proposal has not been specified. However, the wording of the proposal leaves scope for the legislation to require a pre-sale agreement to be entered into after a sale has been agreed but before the buyer has had confirmation with their lenders that they are happy with the property's title and are willing to lend.

In England and Wales, the pre-sale agreement is entered into after:

• all the title investigations have been carried out;
• the lender has confirmed that they are happy to proceed; and
• all parties in the chain have confirmed that they are also entering into pre-sale agreements.

In England and Wales, a pre-sale agreement is generally entered into two weeks before the anticipated completion date.

Potential benefits

• Whilst there are isolated instances of gazumping and gazundering in Jersey, they occur very infrequently. It is much more likely that both abortive transactions and last-minute price-chips are caused as a result of legitimate issues revealed in the title investigation and property survey.
• A common complaint of the Jersey conveyancing system is that often the parties to a transaction are unsure until the day of planned completion, whether they are indeed going to complete the sale and purchase. The introduction of a pre-sale agreement would provide the parties with additional comfort that the transaction is more likely to go ahead in the final weeks before completion.

Potential pitfalls

• Where the legislation requires a pre-sale agreement to be entered into before a buyer has had the opportunity to fully investigate title, the buyer will be exposed to the risk of being obliged to purchase a property without being in possession of all the facts.
• We may see a swathe of litigation in Jersey which centres on the interpretation of the proposed legislation. For example, whether property damage was sufficiently serious to allow the buyer to withdraw.
• The costs associated with buying and selling residential property will likely increase as a result of the new regime, if adopted, as the parties' legal fees will also need to account for the drafting and negotiation of the pre-sale agreement.
• Without a standard form of pre-sale agreement and supplementary contract terms (as is in place in England and Wales) to aid efficiency, it will likely longer to complete a residential transaction.

Conclusion

A comprehensive regime in which a pre-sale agreement becomes common practice is likely to provide some additional certainty for parties to residential transactions, but it is unlikely to provide a definitive solution to the problems of gazumping and gazundering. It could be particularly beneficial where standard documents are introduced to the industry to aid the efficiency of the new process.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

The central reassurance is unequivocal: the proposed amendments are structured to provide future clarity without retroactively prejudicing established expectations. The Bill's explicit transitional provisions preserve existing rights, timelines and expectations such that the ultimate pathways to the "Right to be Caymanian" on the grounds of naturalisation remain unaffected for PRPS and PIMS holders, along with their spouses/civil partners and dependants.

One of the most discussed potential changes in recent months has been the proposal to lengthen the legal and ordinary residence periods that applicants must satisfy in order to apply for the "Right to be Caymanian". Without the proposed clear transitional framework, there could have been understandable anxiety that lengthened periods would "reset the clock" for those already well along in their Cayman immigration journeys. Thankfully, the Bill decisively avoids that outcome and proposes to preserve the position of existing permanent residents so that their route to Caymanian status, provided they have naturalised as British Overseas Territories Citizens upon satisfying the residence and good character requirements prescribed by the British Nationality Act 1981, remains governed by the rules in force when they embarked on that pathway.

For PRPS, such applications are typically submitted after at least 15 years' legal and ordinary residence in Cayman whereas PIMS ordinarily submit after at least five years' legal and ordinary residence following receipt of their Certificate of Naturalisation or Registration (for children).

Policy-wise, the proposed amendments balance system calibration with legal certainty by aligning processes, enhancing integrity, and clarifying timelines for new entrants. But at every turn, the Bill distinguishes between new applications that should be subject to the updated standards and existing rights that must be respected. That is precisely what a sound transitional regime is designed to achieve: prospectively calibrate the system while insulating those who have built their lives in Cayman under current rules. For permanent residents who have invested deeply in Cayman life through careers, community engagement, investment and family ties, the reassurance is not only legal but principled. The Bill continues to recognise the value that long-standing residents bring and upholds the predictability and fairness essential to a credible immigration system.

The overarching message is consistent and clear: transitional provisions have been deliberately crafted to preserve established positions, ensuring reform and reassurance move in tandem for the continued growth and prosperity of our beautiful Islands. The bottom line is simple. For PRPS, PIMS and their dependants, the ultimate pathway to the "Right to be Caymanian" on grounds of naturalisation remains unaffected. The transitional provisions have been drafted to keep faith with established positions, ensure certificates remain valid as granted, and preserve timelines and criteria that applied at the beginning of Cayman immigration journeys.

Please note that these views are expressed with reference to a selection of provisions contained within the gazetted Bill, which is currently with the public for consultation until 14 November 2025. The Minister of Caymanian Employment & Immigration, Hon. Mr. Michael Myles, MP stated:

"Public consultation of a bill is a cornerstone of good governance. This process ensures that every voice is heard and that the Immigration Bill reflects the realities, needs, and aspirations of the people it will serve. By engaging with the public, we can craft a fair, transparent, and effective immigration system that upholds our national values and supports both our citizens and those who wish to contribute to our society."

Some of the proposed amendments may not come into force or may be enacted in a different form and so this briefing is accurate only at its time of writing. Bedell Cristin is actively monitoring the situation and is on hand to advise about individual circumstances related to this briefing or any other proposed amendments both in advance of and following enacted changes to our immigration legislation.

For further information, or to discuss your personal circumstances, please contact Daniel Altneu by email at daniel.altneu@bedellcristin.com or by telephone on +1 345 949 0488.

What is a Family PIF?

A Family PIF is a type of Guernsey regulated collective investment scheme, restricted to investors who share a family relationship or are eligible employees of the family or its office. These funds are private in nature and cannot be widely promoted to the public.

Under Guernsey’s regulatory framework, each Family PIF must appoint a Designated Administrator with an investment licence. However, many Family PIF sponsors are clients of fiduciary firms, which typically hold a fiduciary licence rather than an investment licence, preventing them from acting as the Designated Administrator of a Family PIF.

The limited investment licence: a targeted solution

To address this gap, the GFSC now offers a limited investment licence to fiduciary firms wishing to act as the Designated Administrator of a Family PIF. This licence is restricted solely to activities related to the administration of Family PIFs and prohibits other restricted investment activities.

Key features of the limited investment licence include:

• eligibility: available to firms already holding a fiduciary licence as primary licensee;
• regulatory oversight: applicants must demonstrate appropriate skills, expertise, and resources - the application process is subject to the same rigour as a full investment licence;
• licence conditions: the limited investment licence will include conditions limiting activities to those associated with Family PIF administration; and
• annual fee: although the application fee is the same as a full investment licence, a reduced annual fee of £1,000 applies, reflecting the limited scope of permitted activities.

Compliance requirements

Holders of a limited investment licence must still comply with the protection of investors law and the associated conduct of business rules. However, given the restricted nature of their activities, many rules may not be applicable. The GFSC may waive or modify certain requirements under other applicable rules, such as in respect of capital adequacy.

Importantly, the limited investment licensee will be responsible for applying customer due diligence measures to all investors in a Family PIF, in accordance with the Handbook on Countering Financial Crime (AML/CFT/CPF).

Conclusion

This policy shift marks a progressive step in Guernsey’s regulatory landscape, enhancing flexibility for fiduciary firms and reinforcing Guernsey's reputation as a leading centre for private wealth structuring. By opening up access to regulated fund structures, the GFSC is enabling innovation while maintaining robust regulatory standards.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

England and Wales operate a statutory scheme under the Housing Grants, Construction and Regeneration Act 1996, granting parties rights to adjudicate disputes under construction contracts (the "Scheme"). Jersey is a separate legal jurisdiction, distinct from England and Wales, and operates no such equivalent scheme.

A recent judgment of the Royal Court of Jersey (the "Royal Court") in Augres Construction Supplies Limited v Legendre Contractors Limited [2025] JRC 054 ("Augres v Legendre") underscores the importance of adjudication as a contractual remedy - especially in Jersey, where no statutory adjudication scheme currently exists.

What is adjudication?

Adjudication under the Scheme is a fast-track dispute resolution process designed to keep construction projects moving. It allows parties to resolve disputes on an interim basis (typically within 28 days) without halting construction work or resorting to lengthy litigation.

Why it matters in Jersey

Most construction contracts in Jersey will utilise a version of an English construction contract issued by the Joint Contracts Tribunal ("JCT") and adapted for use in Jersey.

Although Jersey does not have a statutory adjudication scheme, parties can contractually adopt the Scheme for construction contracts. The Royal Court has confirmed that where parties do so, the English legal framework and relevant case law will be applied.

In Augres v Legendre, the Royal Court noted that many Jersey construction contracts are based on JCT templates and that adjudication clauses are often deleted due to misconceptions about their enforceability in Jersey.

The Royal Court highlighted that deletion of all adjudication clauses in construction contracts leaves litigation as the only remedy (an expensive and disruptive option).

Key takeaways for clients

• Adjudication is contractual in Jersey: whilst not governed by a statutory scheme, adjudication can be included in contracts by agreement. This provides a valuable alternative to litigation or arbitration.
• Speed and cost-effectiveness: adjudication offers a quicker and more affordable route to resolving disputes, helping maintain cash flow and project momentum.
• Judicial support: the Royal Court encourages the use of adjudication and has highlighted the risks of removing adjudication as a contractual remedy.
• Alternatives to adjudication: where the parties choose not to incorporate the Scheme into a Jersey construction contract, alternative methods of dispute resolution should be considered in the contract.
• Strategic contract drafting: parties to construction contracts should generally refrain from removing adjudication clauses in their contracts (especially where there is no other alternative dispute resolution as a contractual remedy).

Conclusion

We strongly recommend that parties to construction contracts and funders:

• review standard contract templates (e.g., JCT) to ensure adjudication provisions are retained or appropriately adapted;
• seek legal advice before removing adjudication or arbitration clauses; and
• consider adjudication as a proactive strategy to manage disputes and protect project delivery.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

Historically, Guernsey accommodated PTCs through a discretionary exemption from licensing, provided certain criteria were met, and there was also a strong focus on whether the PTC was acting "by way of business" (usually evidenced by the receipt of compensation for trustee services). The GFSC's updated public guidance now provides that all Guernsey PTCs fall within scope of the Fiduciaries Law and must either be fully licensed or operate under an express limited permission. The update confirms that reliance on a PTC acting “not by way of business” to stay outside of the scope of the regime is no longer appropriate.

Route A: full fiduciary licence (s.6):  A PTC (or its managing entity) can apply for a standard fiduciary licence. This is likely to be used only where it has sufficient in-house capability to meet the regulatory requirements under the Fiduciaries Law, and where this is warranted by its business model and scale of operations.

Route B: limited permission (s.3(1)(ac)): PTCs are more likely to apply for permission on a limited basis, which requires that they meet certain criteria and are supported by a licensed fiduciary. The GFSC's criteria, as reflected in the updated guidance, substantially mirrors the previous criteria for discretionary exemption:

• the PTC acts only as trustee of one trust or a group of connected trusts with a common family interest;
• there is no marketing to the public;
• the PTC is administered by a company licensed under the Fiduciaries Law; and
• such company confirms to the GFSC that it will retain sufficient knowledge and information about the PTC's ownership and control to be satisfied that it is effectively administered and governed, and compliant with Guernsey law and regulation (usually achieved by providing a director, company secretary or authorised signatory to the PTC to maintain effective oversight/governance, and embedding appropriate AML/CFT/CPF controls).

The permission is granted with a time limit, generally three years, with renewal as needed. The licensed fiduciary administering the PTC should maintain records such that beneficial ownership, directors/controllers, and trust party information (including settlors, beneficiaries and protectors) are available to the GFSC on request.

It is advisable for existing PTCs, whether previously holding an exemption letter or operating "not by way of business", to review their regulatory position. In most cases, the practical next step will be for PTCs not currently licensed to apply for limited permission under s.3(1)(ac), unless a full license is warranted under the circumstances. The success of applications will depend on the licensed fiduciary having an appropriate level of oversight and information/record-keeping.

New PTCs will require a limited permission application to be prepared alongside their constitutional documents.

If you would like to discuss your PTC's requirements, please get in touch with a member of our International Private Client Team.

Whether you are seeking to register as a doctor, nurse, dentist or other
health practitioner, we can guide you through each step, providing clear advice and practical support to help you meet the necessary requirements and deadlines with confidence.

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This article explores the use of material adverse change (also known as material adverse effect) provisions (“MAC”) in M&A deals within the Asia-Pacific region (“APAC”), to examine how approaches differ to US norms.

The article stems from a review of 46 publicly available sale and purchase agreements (“SPAs”) which were either governed by the laws of an APAC jurisdiction, or featured an APAC based party or target. These findings were also compared to the ABA’s 2023 US Deal Points Study to benchmark APAC practice against US norms.

The review revealed that MAC clauses in APAC deals diverge from US norms, and are generally shorter, less negotiated, and with fewer carve-outs. This divergence is worth understanding, in order to avoid misaligned expectations, negotiation risk, or gaps in risk allocation when considering APAC transactions.

However, as deal size increased, there was greater convergence towards US standards, suggesting that drafting complexity tracks value, not jurisdiction.

Legal foundations

The use of MAC provisions has largely been driven by US legal practice, where MAC definitions are frequently deployed in M&A transactions.

Unlike the US, which has a strong body of court decisions in relation to MAC provisions, such as Akorn, Inc. v. Fresenius Kabi AG, Del. Ch. (2018), Hexion Special Chemicals v Huntsman Corp. Del. Ch. 965 A.2d 715 (2008), and IBP, Inc. v. Tyson Foods, Inc., Del. Ch., 789 A.2d 14 (2001), the courts of other jurisdictions have limited case law on the point.

In the UK, the lack of judicial precedent was discussed in Travelport Ltd v WEX Inc [2020] EWHX 2670 (Comm), where the judge pointed to the “dearth of relevant English authority” in contrast to the “better developed body of case law in the US, notably in Delaware”. Consequently, the court relied on Delaware authority for its decision, stating that to “… ignore the thinking of the leading forum for the consideration of these clauses, a forum which is both sophisticated and a common law jurisdiction, would plainly be imprudent.”

This observation was approved in the recent English case BM Brazil Fundo De Investimento Em Participacoes Multistraegia v Sibanye BM Brazil (Pty) Ltd [2024] EWHC 2566, where Delaware precedent again led the English courts in analyzing the meaning of a material adverse change, and assessing under what circumstances one could arise.

Consequently, the English courts have only recently developed precedents on MAC clauses. The question therefore arises how MAC provisions apply in regions like APAC, which have differing legal approaches, which may create uncertainty as to interpretation and enforcement.

Legal diversity

APAC has a diverse range of legal traditions, which leads to different drafting practices.

Many jurisdictions apply common law principles (Australia, Hong Kong, Malaysia, Singapore and New Zealand), with legal practice aligned to English principles, and Delaware judgements are likely to have persuasive effect if English approaches are followed. However, a question remains as to what standards of materiality are likely to be applied by the local courts.

Other jurisdictions, such as China, Indonesia, Thailand and Vietnam, are civil law jurisdictions. Many of these jurisdictions integrate MAC concepts as part of a wider force majeure principle, which leads to varied approaches towards MAC clauses, both in terms of drafting and interpretation. For example, a recent Indonesian academic paper observed that “the concept of MAC has been widely used in practice, whereas the understanding and familiarity of MAC in Indonesia has yet to progress.”[1]

Some jurisdictions have hybrid systems, which fuse civil law with common law elements, such as judicial precedent. Examples include Japan, the Philippines and Taiwan, where common law influences are largely founded on US legal principles, and there is significant trade with the US, leading to wider familiarity with MAC provisions.

Application in practice

In order to assess whether there was actual divergence in practice, research was carried out on 46 SPAs, which were filed with the Securities and Exchange Commission (SEC), and either governed by the laws of an APAC jurisdiction, or involved an APAC based target or counterparty. While this is a limited sample size, it offers directional insight into drafting tendencies.

Of these SPAs, 31 agreements were governed by the laws of an APAC jurisdiction (“APAC SPAs”), being agreements governed by the laws of Australia, Hong Kong, Indonesia, Japan, Malaysia, the Philippines, Singapore and Taiwan. A further 15 APAC related agreements were governed by English law or the laws of a US state (primarily Delaware or New York).

MAC clauses in APAC deals

Of the 31 APAC SPAs, approximately 61% contained a concept of MAC. Where the SPA contained a MAC provision, this was defined in 63% of instances. Of these agreements, MAC provisions appeared in all the Philippine law agreements, 70% of Hong Kong law agreements, 50% of Malaysian law agreements, 50% of Indonesian law agreements, and 40% of Singapore law agreements.

By contrast, 80% of the US and English law SPAs contained a MAC concept, which was defined in 83% of instances. Put differently, US/English law SPAs in this dataset were nearly twice as likely to contain a MAC definition as Singapore law agreements, and typically defined them in greater detail.

This review suggests that the use of MAC provisions outside of US law governed contracts is variable, both in terms of its inclusion and definition. This may be due to regional drafting differences, expectations, familiarity, or transaction value, but is suggestive of different approaches to risk allocation.

Drafting differences

Where a MAC was defined, the average word count for MAC definitions in the APAC SPAs was around 50- 60 words. This is a stark contrast to the 400-600 word average that appeared in the English and US SPAs, underscoring a major gap in scope and detail.

This difference in definition size may be driven by the comparative lack of complexity in APAC MAC provisions. For instance, in the APAC SPAs, 25% of MAC definitions contained forward looking language, compared to 83% of the US/English SPAs, which were therefore over three times as likely to appear in the US/English dataset. “Prospects” language appeared in 42% of APAC SPA’s versus 25% of US/English occurrences, a rare instance where APAC inclusion was more frequent. Carve-outs were present in just 25% of APAC SPAs compared to 58% of the US/English dataset, and therefore less than half as likely to appear. Similarly, disproportionate effect qualifiers appeared in just 17% of APAC definitions, compared to 42% in the US/English dataset, showing that the qualification was less than half as common in the sample set.

The value differential

In higher value transactions, the divergence between approaches begins to converge. In order to assess whether there was a value differential, the SPAs were filtered, such that only deals with a transaction value of over USD 10M were reviewed. This resulted in a subset of 13 APAC SPAs, and 9 SPAs governed by US or English law.

Of the 13 filtered APAC SPAs, approximately 85% contained MAC provisions. Of the 9 filtered US or English SPAs, approximately 89% contained MAC provisions.

This suggests that, where the transaction value is higher, commercial imperatives become more important that regional drafting practice. It is likely that, where transaction value is higher, purchasers are more focused on risk mitigation and deal counsel may be more aligned to US commercial and legal norms.

In short, deal size, rather than jurisdiction, appears to be the dominant driver of MAC drafting complexity.

Comparison with ABA data

In the ABA’s 2023 US Public Target Deal Points Study, the ABA’s M&A Committee observed that 95% of deals included MAC provisions, which were defined, 2% were undefined, and 3% had no provision. Whereas, in the APAC SPA dataset, just under two thirds had a concept of MAC at all, and it was only defined in 63% of those instances. However, when transactional value filters are included, the occurrence of a MAC concept narrows towards ABA standards, but a significant definitional gap remains, underscoring the risk of assuming equivalent coverage.

A distinction emerges when looking at forward looking language, which occurs in 93% of the ABA’s dataset, but only 25% of the APAC SPAs. Conversely, while “prospects” only occurs in 10% of the ABA dataset, this provision appears in a significant number of APAC SPAs (approximately 42%).

Conclusion

APAC deal practice reflects varied legal traditions, but when deal value increases, MAC drafting partially converges towards US norms. This convergence is partial, inconsistent, and still exposes risk, especially in jurisdictions with civil law foundations or hybrid drafting cultures. For US practitioners, the key risk is assuming that MAC provisions in APAC transactions provide equivalent coverage to US norms without verifying scope, carve-outs, and definitions.

This article was originally published in the ABA M&A Deal Points newsletter in September 2025 and is republished with permission.

Bybit Fintech Limited, incorporated in the BVI in 2018, ran the cryptocurrency exchange Bybit. The business was later transferred to Bybit Seychelles (allegedly without proper consideration, raising concerns of asset stripping). The company was struck off in 2021, restored to the register, and put into liquidation in September 2024, with Messrs Edwards and Lynch of Alvarez & Marsal ("A&M") appointed as liquidators on the application of Mr Hwang.

Mr Hwang claimed approximately US$735 million as a creditor in the liquidation. Another creditor, "Creditor IV", claimed 47.68 BTC and 1,305.96 ETH. Both claims were under investigation as at the date of the hearing before the Court.

In January 2025, Mr Hwang applied under section 187 of the BVI Insolvency Act, 2003 (the "Insolvency Act") to remove the joint liquidators on the following grounds:

• that the liquidators had failed to call an initial creditors’ meeting (as required by section 179 of the Insolvency Act).
•  that the liquidators had a conflict of interest, on the basis that A&M’s involvement in the FTX restructuring allegedly conflicted with Bybit’s liquidation;
• that the liquidators had failed to preserve assets and there had been a delay in securing assets transferred to Bybit Seychelles; and
• finally, that there had been a loss of confidence and the creditors no longer trusted the liquidators.

Initially, both known creditors supported removal, however, Creditor IV later reversed her stance, supporting the liquidators after receiving updates from them and advice from new BVI counsel.

In considering the application, the Court noted the test for removal under section 187 of the Insolvency Act, which allows removal of a liquidator if:

• the liquidator is ineligible, breaches duties, fails to comply with orders; or
• the liquidator's conduct falls below a reasonably competent standard, there is a conflict, or some other reason exists.

The Court applied a three-stage test (from Chu Kong v Ocean Sino Ltd (in liquidation) VG 2021 HC 080), namely:

• stage one: whether the applicant has standing to bring an application to remove a liquidator;
•  stage two: whether "due cause" exists; and
• stage three: whether the court should exercise its discretion to remove a liquidator.

Giving judgment, Justice Mithani held that liquidators must maintain neutrality in removal applications. While a liquidator was perfectly entitled to defend allegations against them, they were not entitled to lobby creditors in a bid to gain their support.

The Court held that, on the issue of standing, Mr Hwang had clear standing as a creditor, even though parts of his claim were disputed. As to ground one (the failure to call a creditors’ meeting), the Court held that the liquidators had delayed unreasonably in calling a meeting and that their notice under s.183 of the Insolvency Act was unsatisfactory. Further, the Court held that the liquidators had only convened a meeting after repeated requests from Mr Hwang, which was a failure on their part.

As to ground two (the conflict of interest), the Court noted that, on his appointment, Mr Edwards had assured the Court that there was "no real conflict". However, subsequent disclosures about A&M’s involvement with FTX had raised doubts about this. Justice Mithani held the conflict issue was not resolved at appointment and must be properly assessed.

Concerning ground three (failure to preserve assets), the Court held that the liquidators had delayed in pursuing Bybit Seychelles for misappropriated assets and in seeking freezing orders. Further, the court found that communication with the creditors had been inadequate. This fell below expected standards.

Finally, as to ground four (loss of confidence), Justice Mithani noted that at the time of filing of the application, both creditors had supported removal. Even though Creditor IV later changed her position, the Court found her change of stance dubious, stating that the change of position was “unconvincing", and held that confidence had substantially been lost by Mr Hwang, the majority creditor.

Justice Mithani criticised the liquidators for taking an adversarial stance on the application instead of remaining neutral, failing to provide timely updates or transparency, and withholding communications between their counsel and Creditor IV’s counsel.

Conclusion

The Court held that the grounds for removal were established as there were serious concerns about neutrality, asset protection, conflicts, and creditor confidence. The application to remove the liquidators was granted and replacement liquidators were appointed. Justice Mithani stressed that removal was in the best interests of creditors and the integrity of the liquidation, and was not based on any improper motive by Mr Hwang.

Key takeaways

This case illustrates that:

• liquidators must maintain neutrality in removal applications and that even perceived conflicts of interest can justify removal;
• creditor confidence is crucial and, where it is reasonably lost, the courts may intervene; and
• transparency and timely communication with creditors are essential to proper liquidation conduct.

The case revolved around a dispute concerning the insolvency and liquidation of Barrington Capital Group Ltd in the BVI. The appeal, stemming from earlier rulings by the Eastern Caribbean Court of Appeal, centred on whether Mr Stevanovich, a former director of the company, had legal standing to challenge the admission of a debt claim by a US trustee under the BVI Insolvency Act, 2003. This case raises significant questions about the interpretation of "person aggrieved" in insolvency proceedings and highlights the complexities of liquidators' powers.

By way of background, Barrington Capital Group Ltd became embroiled in legal issues following the fraudulent activities of a US company, Petters Company Inc., resulting in significant financial claims against it. After a series of legal actions, the US trustee submitted a claim for $424.4 million, later admitted by the liquidators, which led to the company's insolvency. Mr Stevanovich sought to contest this admission, arguing that it was improper and asserting that his rights were directly affected by the liquidators' decision, as it precipitated the insolvency and subsequent legal proceedings against him.

The lower courts ruled against Mr Stevanovich, determining that he lacked standing under section 273 of the Insolvency Act, 2003, as he was neither a creditor nor a contributory with a direct interest in the liquidation. They emphasised that standing must be established based on a genuine connection to the liquidation process. The courts also noted that Mr Stevanovich could challenge the claim's admissibility within the ongoing main proceedings, where his legal interests were being adequately represented.

Conclusion

The Privy Council ultimately upheld the decisions of the lower courts, affirming Mr Stevanovich's lack of standing to challenge the liquidators' admission of the claim. The ruling clarifies the interpretation of "person aggrieved" within the context of insolvency law, emphasising a stringent requirement for demonstrating a direct interest in the matter at hand. As a result, the appeal was dismissed, leaving Mr Stevanovich to pursue his defence in the main proceedings, rather than through separate challenges to the liquidators' decisions.

Key takeaways

This case holds broader implications for the understanding of standing in insolvency cases. The Privy Council's ruling underscores the necessity for an applicant to demonstrate a legitimate interest directly affected by the liquidators' actions, as established in previous rulings. It illustrates the limitations imposed on who can challenge decisions made by liquidators, reinforcing that only those with a direct stake in the insolvency process should have the right to dispute such decisions.

The case concerned an appeal by Geminis Investors Limited ("Geminis") against Goods Technology Starting International Limited ("GTS") and G-Force International Co Ltd ("G-Force") regarding a statutory demand and substantive proceedings related to nine short-term notes in the sum of US$6.2 million issued to GTS and G-Force between 31 December 2019 and 31 May 2020 (the "Notes"). The Notes were governed by New York law.

On 23 December 2021, GTS served a statutory demand on Geminis, but without having first served a default notice. By this time, the Notes had matured. Geminis subsequently applied to set aside the statutory demand, arguing that the debt was not due and that rights of set off existed. Geminis additionally argued that they had elected to settle the debt via asset settlement, i.e. the transfer of fund shares.

First instance judgment

In the Commercial Division of the High Court (the "Commercial Court"), Geminis' application was dismissed. The primary arguments before the Commercial Court revolved around whether Geminis had a substantial dispute over the existence of the debt, which would justify setting aside the statutory demand. GTS and G-Force maintained that Geminis could not invoke the asset settlement provisions in the Notes because the Notes had matured, and no default notice had been issued. Geminis argued in response that its proposal to settle the debt with shares in an investment fund constituted compliance with the asset settlement terms.

However, the Commercial Court held that the proposed asset settlement did not fulfil the necessary conditions, as Geminis had failed to demonstrate any actual transfer or allocation of assets to GTS or G-Force to substantiate its argument, which was essential for invoking the asset settlement. Additionally, Geminis owed a shortfall that was in excess of the statutory limit for insolvency (i.e. less than US$2,000).

The Commercial Court noted that the maturity of the Notes meant that Geminis was obliged to pay the debt, and the absence of a default notice did not negate this obligation. Geminis' claims regarding further payments were also deemed insufficient without evidence to support them. There was, therefore, no substantial dispute regarding the debt owed.

Appeal and legal issues

The main issue before the Court on appeal was whether Geminis had been entitled to invoke the asset settlement provisions in the Notes to claim that the debt had been extinguished and, therefore, whether there existed a substantial dispute regarding the existence of the debt, or a part of the debt sufficient to reduce the undisputed amount to below the statutory threshold. Geminis also sought leave to adduce a fresh expert report on New York law, which had not been relied upon at first instance.

Court's analysis

The Court held that Geminis had not raised an authentic or genuine dispute and accepted GTS and G-Force's construction of the asset settlement provisions in the Notes. The Court emphasised that Geminis had failed to establish:

• that the asset settlement provisions  had been validly invoked;
• that a valid default notice had been served; and
• that any settlement would not leave, or had not left, a residual balance above the statutory threshold.

As to the application to adduce fresh evidence, the Court reaffirmed and applied the test in Ladd v Marshall [1954] 1 WLR 1489, noting that a refusal to set aside a statutory demand was a final and not an interlocutory order. The Court held that Geminis had failed the first limb of the test, as it had not shown that the expert report could not have been obtained earlier with reasonable diligence.

Conclusion

The Court dismissed Geminis appeal, confirming the Commercial Court's judgment that there was no substantial dispute regarding the debt owed.

Key takeaways

This ruling emphasises the importance of invoking contractual rights properly and adhering to contractual provisions (such as notice, timing and calculation), as well as the need for clarity in communications concerning defaults and settlements. In addition, the Court's ruling reaffirms the position that a debtor must show more than speculative argument in challenging a statutory demand, and must demonstrate a real, arguable challenge to the debt in question. Finally, because a refusal to set aside a statutory demand is treated as final in the BVI, the standard principles on fresh evidence are applicable even in an insolvency context.

This case underlines the preparedness of the BVI courts to take a robust line in relation to alleged disputes, and to decisively construe contractual provisions as part of a winding up application despite the summary nature of the jurisdiction.

The Companies opposed disclosure, arguing that Ms Papanikolaou was acting for an improper purpose — i.e., to benefit the principal of a minority shareholder, Felix LP, one of the two shareholders of Intimere Holdings Limited, whom they accused of leading a hostile campaign against the Companies and their ultimate beneficial owner. The Companies claimed the funder's identity was not relevant to Ms Papanikolaou's duties and could be misused if revealed.

First instance judgment

In the Commercial Division of the High Court, Mr Justice Wallbank granted Ms Papanikolaou's application, allowing full inspection, including the unredacted engagement letters. He held that the BCA provided a mandatory, unqualified right for directors to inspect company records under section 100(1), and that Ms Papanikolaou was seeking disclosure for a legitimate reason, namely, to assess the Companies' financial exposure in ongoing litigation, and that any responsible director would have such concerns. Allegations of improper purpose, he ruled, were speculative and unsupported by evidence.

Appeal and legal issues

The Companies appealed, arguing that:

• section 100 of the BCA should permit refusal where a director is acting for an improper purpose;
•  the judge had made an error of fact by concluding that Ms Papanikolaou acted for a proper purpose; and
• the judge had incorrectly interpreted section 100 of the BCA as leaving no room for improper purpose considerations.

Court of Appeal's analysis

The Court reaffirmed that section 100(1) of the BCA grants a mandatory and unqualified right for directors to inspect documents and records. Unlike shareholders, whose rights under section 100(2) of the BCA may be refused, directors' rights are not subject to discretion.

Improper purpose test still applies

The Court clarified that, while section 100 of the BCA is mandatory, directors must act in accordance with their fiduciary duties. If a director seeks to inspect documents for an improper purpose, the Court can refuse the application under section 184B of the BCA. However, the burden is on the party opposing the inspection to prove that it has been sought for an improper purpose.

The Court further held that, contrary to the Companies' argument, Mr Justice Wallbank had assessed the allegation of improper purpose and had rightly concluded that there was insufficient evidence showing Ms Papanikolaou was acting in bad faith or colluding with hostile parties.

The Court agreed that Ms Papanikolaou's desire to know the litigation funder's identity was reasonable. Without knowing who was funding ongoing litigation or the terms of such funding, she could not adequately assess the Companies' financial risk or fulfil her duties as a director.

The Court emphasised that mere suspicion, conjecture, or past affiliations are not enough to justify restricting a director's statutory rights. What is required is real "cogent" evidence. In this case, the Court held that there was no cogent evidence linking Ms Papanikolaou to any improper use of the information.

Outcome and upshot

The appeal was dismissed with costs. The Court upheld the lower court's decision that Ms Papanikolaou should have full access to the Companies' documents, including the unredacted engagement letters.

This decision clarifies the mandatory effect of section 100(1) of the BCA and that the burden will be on a party alleging improper purpose to prove it, by reference to cogent evidence. Mere suspicion or past affiliation will not be sufficient to establish an improper purpose. However, it should be noted that the Court's decision does not suggest that section 100 of the BCA does not permit refusal of an application to inspect company documents where the court is satisfied (on evidence) that an applicant is acting for an improper purpose.

This case concerns the legal framework governing the transmission of shares in companies registered in the BVI after the death of their owner. The central issue of the case was whether such shares were to be considered immovable property under BVI law, which would mean their transmission would be subject to local laws, particularly the requirements of the Wills Act 1872.

The deceased, Sheikh Saoud Mohammed Al Thani (the "Sheikh"), owned shares in BVI companies but had a valid will under Qatari law, raising questions about the applicability of BVI law in this situation.

In terms of the facts, the Sheikh had made a declaration regarding his inheritance in Qatar, which was recorded in court. Following his death, the appellants, his widow and daughter, initiated proceedings in both Qatar and the BVI, seeking to revoke a declaration that was deemed a valid will under Qatari law.

The subsequent Qatari Court of Appeal affirmed the will’s validity, complicating the legal proceedings in the BVI where the appellants sought letters of administration without disclosing the existence of the will.

The key legal proceedings in the BVI focused on whether the appellants were estopped from disputing the will's validity due to the Qatari judgment, and whether BVI law classified the shares as movable or immovable property for succession purposes.

The rulings of the BVI courts emphasised that while the shares were registered in the BVI, they were to be treated as movable property under private international law, governed by the deceased’s domicile at the time of death, i.e. Qatar.

The BVI Court of Appeal concluded that the shares' situs was in the BVI for title purposes but categorised them as movable property for the purposes of succession, thus applying Qatari law to the issue of the validity of the will.

This interpretation aligns with established principles in private international law, which dictate that a deceased's movable estate is governed by the law of their domicile, while immovable property is governed by local law.

Conclusion

The Privy Council ultimately upheld the decisions of the lower courts, affirming that the shares in question were to be considered movable property and thus governed by Qatari law for succession purposes.

Key takeaways

This ruling emphasises the importance of understanding the intersection of local and international laws in estate matters and also highlights the complexities inherent in cross-border estate issues, particularly for international business structures in jurisdictions like the BVI.

The Board's decision also serves as a clear precedent for similar cases, ensuring that foreign wills can remain effective without the need for additional local instruments, thereby promoting legal certainty in the BVI's business environment. The ruling further reinforces the need for clarity in legal frameworks to protect foreign investors from unexpected legal obligations.

This case revolves around the recognition and enforcement of a foreign judgment from Russia in the BVI. The appellant, Mr Taruta, along with his co-defendant Mr Katunin, faced a claim by VTB Bank for a breach of a guarantee related to loans to Enieseiksy Plywood Mill Limited.

The Russian court ruled in favour of VTB Bank, but Mr Taruta argued that he was never properly notified of the proceedings, claiming a breach of natural justice.

The central issue in the appeal focused on whether the judge erred in determining that the breach of natural justice was cured by subsequent proceedings in the Russian Appeal Court. The initial ruling found that Mr Taruta had not been served with the originating process as required, which constituted a breach of natural justice, as he was unable to defend himself adequately. The judge further evaluated whether this breach was material and if the processes following the initial ruling provided "substantial justice", a key principle under English law regarding the enforcement of foreign judgments.

In delivering its judgment, the BVI Court of Appeal emphasised the need for courts to adhere to principles of natural justice, especially where foreign judgments were being recognised and enforced. The failure of the trial judge to seek independent expert guidance on Russian law further complicated the issue, as it undermined the legitimacy of the conclusions drawn regarding the curative effects of the Russian appellate process.

This highlighted a potential gap in ensuring that courts have the appropriate expertise to interpret foreign legal frameworks effectively, which was held to be crucial in cases involving international judgments.

Conclusion

In conclusion, the BVI Court of Appeal ultimately allowed Mr Taruta's appeal in part, dismissing the counter appeal from VTB Bank and setting aside the enforcement order of the Russian judgment. The injunction was lifted and costs were awarded to Mr Taruta, and VTB Bank was ordered to repay sums paid under the enforcement.

The decision underscores the significance of procedural fairness and the right to a proper defence in judicial proceedings, reaffirming that breaches of natural justice cannot be overlooked, regardless of the jurisdiction.

Key takeaways

This case emphasises that:

• breach of natural justice is fatal and that a foreign judgment obtained without proper service violates common law notions of substantial justice and cannot be enforced;
• proper proof of foreign law is required. Where foreign law is crucial, independent expert evidence is mandatory. Judges should not interpret non-common-law foreign statutes unaided;
• the possibility that an appellate process might fix a defective original trial must be properly pleaded, evidenced, and proven - the burden is on the judgment creditor; andf
• when a breach of natural justice is established, courts should not second-guess the merits. The focus is on procedural fairness, not the substance of the original claim.

The practical implications of this case are as follows:

• cross-border enforcement: this case reinforces the high threshold for enforcing foreign default judgments in common law jurisdictions when service or notice is disputed;
• due diligence: judgment creditors must ensure robust service records and be prepared to produce qualified foreign law experts; and
• strategic consideration: even where a debtor has lost an appeal in the foreign jurisdiction, the original breach may still bar recognition if the appeal did not fairly cure the defect.

We summarise the key cases and their implications below, with full briefings on each of the six judgments from the Privy Council and the BVI Court of Appeal.

Enforcement of a foreign judgment (Sergey Taruta v JSC VTB Bank VG 2024 CA 18)

This BVI Court of Appeal case focused on the recognition and enforcement in the BVI of a foreign judgment from Russia, and ultimately saw recognition of a US$30 million Russian judgment set aside due to unsafe analysis of foreign law and inadequate service.

The key points for practitioners are:

• cross-border enforcement: this case reinforces the high threshold for enforcing foreign default judgments in common law jurisdictions when service or notice is disputed;
• due diligence: judgment creditors must ensure robust service records and be prepared to produce qualified foreign law experts; and
• strategic consideration: even where a debtor has lost an appeal in the foreign jurisdiction, the original breach may still bar recognition if the appeal did not fairly cure the defect.

Read our full briefing here.

Succession under foreign wills (Al-Thani & Anor v Al-Thani & Ors [2024] UKPC 35)

In this Privy Council case, the Board of the Privy Council confirmed that BVI shares are movables and that succession under foreign wills is governed by the deceased's domicile.

This case concerns the legal framework governing the transmission of shares in companies registered in the BVI after the death of their owner - the central issue was whether such shares were to be considered immovable property under BVI law, which would mean their transmission would be subject to local laws.

The key points for practitioners are:

• the importance of understanding the intersection of local and international laws in estate matters and also the complexities inherent in cross-border estate issues, particularly for international business structures in jurisdictions like the BVI; and
• the case serves as a clear precedent, ensuring that foreign wills can remain effective without the need for additional local instruments, promoting legal certainty in the BVI's business environment.

Read our full briefing here.

Statutory demands and contractual compliance (Geminis Investors Ltd v Goods Technology Starting International Ltd [2025] ECSC J0130-1)

In this BVI Court of Appeal case, the court held that there was no genuine dispute on a statutory demand and reaffirmed the strict standards for fresh evidence and security for costs.

The case before the BVI Court of Appeal concerned an appeal by Geminis Investors Limited against Goods Technology Starting International Limited and G-Force International Co Ltd regarding a statutory demand and substantive proceedings related to nine short-term notes.

The appeal by Geminis Investors Limited was dismissed, confirming the lower court's judgment that there was no substantial dispute regarding the debt owed.

The key points for practitioners are:

• the court emphasised that ambiguities in communications regarding defaults and settlements could lead to significant legal consequences; and
• the court ordered costs to the respondents, marking a decisive outcome in favour of the claimants and reinforcing the legal principles surrounding commercial debts and obligations.

Read our full briefing here.

Disclosure of records and improper purpose (Intimere Holdings Ltd & Anor v Katina Papanikolaou (BVIHCMAP2022/0031, 4 June 2025, Unreported))

This BVI Court of Appeal case considered whether a court-appointed director of two BVI companies was entitled to inspect company records, including unredacted engagement letters with legal counsel which revealed the identity of a third-party litigation funder who was paying the companies' legal bills in several court cases.

The companies opposed disclosure, arguing that the director was acting for an improper purpose i.e., to benefit the principal of a minority shareholder, whom they accused of leading a hostile campaign against the companies and their ultimate beneficial owner.

The key points for practitioners are:

• the appeal was dismissed with costs. The BVI Court of Appeal upheld the lower court's decision that the director should have full access to the companies' documents, including the unredacted engagement letters; and
• this decision clarifies that the burden will be on a party alleging improper purpose to prove it, by reference to cogent evidence. Mere suspicion or past affiliation will not be sufficient to establish an improper purpose.

Read our full briefing here.

Standing in insolvency cases (Stevanovich v Richardson [2025] UKPC 18)

This Privy Council case focuses on the interpretation of a "person aggrieved" under section 273 of the BVI Insolvency Act, 2003. The dispute focused on the liquidation of Barrington Capital Group Ltd in the BVI, and whether a former director of the company had legal standing to challenge the admission of a debt claim by a US Trustee under the BVI Insolvency Act, 2003.

The key points for practitioners are:

• this case holds broad implications for the understanding of standing in insolvency cases - it underscores the necessity for an applicant to demonstrate a legitimate interest directly affected by the liquidators' actions; and
•  this case illustrates the limitations imposed on who can challenge decisions made by liquidators, reinforcing that only those with a direct stake in the insolvency process should have the right to dispute such decisions.

Read our full briefing here.

Removal of liquidators and neutrality (Bybit Fintech Limited (in liquidation) - Jeongmin Hwang v Wesley Edwards & Barry Lynch (Joint Liquidators) (BVIHCOM2024/0303, 18 August 2025, Unreported))

In this case, the BVI Commercial Court reaffirmed the requirements to be met on an application to remove joint liquidators.

Bybit Fintech Limited, incorporated in the BVI in 2018, ran the cryptocurrency exchange Bybit - the business was later transferred to Bybit Seychelles, was struck off in 2021, and restored to the register, and put into liquidation in September 2024.

A creditor successfully applied for the removal of the liquidators, citing various failures and a conflict of interest. Giving judgment, the court criticised the liquidators for taking an adversarial stance, and for failures of transparency.

The key points for practitioners are:

• the court held that the grounds for removal were established as there were serious concerns about neutrality, asset protection, conflicts, and creditor confidence; and
• the court stressed that removal was in the best interests of creditors and the integrity of the liquidation, and was not based on any improper motive by the applicant creditor.

Read our full briefing here.

The background to the underlying dispute between OWH SE i.L ("OWH") and RTI is set out in our previous briefing, available here.

On 3 October 2024, an LCIA arbitration tribunal handed down a EUR 213m award in OWH's favour against RTI, a Jersey company, and its ultimate parent, Russian entity United Company Rusal International PJSC ("Rusal"). OWH sought to enforce the award in Jersey against RTI, obtaining a world-wide freezing and disclosure order ("WWFDO") on 18 November 2024.

RTI's challenges to the WWFDO and to enforcement of the award in Jersey failed (although RTI is still appealing the latter), and in June 2025 RTI finally provided disclosure of its assets (see the Court's judgment here).

Upon disclosure and further correspondence, it became clear that, in late September 2024, shortly before the award was handed down, RTI had transferred at least $166m to another Rusal group company, leaving total assets of less than 10% of the award. RTI's lawyers said that this was done as part of a general restructuring.

The Court's approach

Given the dissipation of assets, OWH applied to appoint PLs to preserve any potential clawback claims. RTI conceded that OWH had standing to make an application for a creditors' winding up, notwithstanding the appeal against enforcement of the award in Jersey, in light of the Jersey Court of Appeal's previous decision in HWA 555 Owners LLC v Redox Plc S.A. [2023] (2) JLR 1 (which held that unless and until the appeal was successful, the decision at first instance stood, for these purposes).

In the absence of Jersey jurisprudence, the Court agreed with OWH's submission that it was appropriate to look at English authority on the appointment of PLs. The Court quoted extracts of the English textbook McPherson and Keay's Law of Company Liquidation (5th Ed), which noted that it was a draconian power, with the following cited as potential factors in favour of exercising it:

• the assets and affairs of the company being in jeopardy, primarily because the directors and/or shareholders may dissipate the assets while the petition is pending;
• the ultimate effect of leaving the assets in the hands of the company may be that the creditors and/or members will be disadvantaged in the event of an eventual winding up order; and
• the usual concern is the attitude of the directors, and a need to displace them from their position of authority to deal with the assets.

McPherson and Keay further states that the degree of urgency, the need established by the applicant and the balance of convenience will all be relevant criteria.

The Court also endorsed principles set out by the English Court of Appeal in Revenue and Customs Commissioners v Rochdale Drinks Distributors Limited [2011] EWCA Civ 1116 to the effect that:

• the appointment of PLs was an order not to be made lightly, especially in relation to a trading company where such an order will likely have a terminal effect on a company's trading life; and
• the applicant must demonstrate that it is "likely" to obtain a winding up order on hearing the winding up application (in the sense of more likely than not, on the balance of probabilities).

In the present case, RTI was not a trading company and appeared to be undergoing some form of restructuring. The Court found that there were serious questions about why a loan of $166m was repaid shortly before the arbitration award was to be released, and whether, as alleged, some form of asset stripping had occurred. RTI's evidence lacked detail and begged more questions than it answered. This warranted investigation and steps being taken to preserve assets. The Court agreed with OWH that, if matters were to be left until the creditors' winding up application was resolved, the trail would likely have "gone cold". Investigations, and any steps to preserve assets, needed to take place as a matter of urgency.

The English case law places emphasis on an urgent need to preserve assets, rather than (for example) a general need to investigate. This case is unusual because the assets requiring preservation were not tangible property, but rather potential claims to recover property which had already been transferred away (the directors of the company apparently taking the view that no such claims existed).

In appointing the PLs, the Court made orders preserving the rights of the directors of RTI to pursue the appeal against enforcement of the award in Jersey, and to challenge the appointment of the PLs. It also made orders preserving the privilege of RTI's legal advice as against OWH.

Bedell Cristin successfully acted for OWH in its application for the appointment of PLs. The full judgment (OWH SE i.L v RTI Limited [2025] JRC 204) can be found here.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

KESP was incorporated to hold a majority interest in K-Electric Limited ("KEL"), Pakistan's largest electricity company which services approximately 20 million residents in Karachi and is national strategic asset of Pakistan. In 2008, SPV 21 invested in KESP, and entered into a shareholders' agreement ("SHA") with the Appellants. Under Schedule 4 of the SHA, SPV 21 undertook to exercise all of its powers as a shareholder or otherwise and to procure that a "solvent liquidation, winding up or dissolution" of KESP would not take place. In July 2023, SPV 21 presented the Petition. In response, the Appellants applied to strike out the Petition and sought declarations that SPV21 was prohibited from presenting the Petition, and breached Schedule 4 by doing so. The Appellants also sought an injunction restraining SPV21 from prosecuting the Petition in breach of Schedule 4, an order that KESP and/or SPV21 exercise all its powers to procure the striking out of the Petition and an order that the Petition be dismissed pursuant to section 95(2) of the Companies Act. At both first instance and before the Court of Appeal ("CICA"), the Appellants argued that the presentation of the Petition was part of a wider litigation strategy deployed by SPV 21 to take control of KEL.

At first instance, on 31 May 2024, the Grand Court dismissed the Appellants' strike-out application and handed down its judgment. Although it was common ground between the parties that KESP is solvent, and consequently a winding up of KESP on the just and equitable basis was a "solvent" winding up, the Grand Court held that Schedule 4 did not prevent SPV 21 from exercising its statutory right to apply for a petition to wind up KESP on a just and equitable basis.

The Grand Court explained its reasoning by drawing a comparison between article 145 of KESP's articles of association (the "Articles") and Schedule 4 of the SHA. Article 145 is similar to Schedule 4 in that it requires SPV21 and the Appellants' consent to wind up KESP. However, crucially, article 145 is different to Schedule 4 in that it expressly refers to a "voluntary" winding up (which would exclude winding up petitions) and not a "solvent" winding up. Due to the similarities described above, the Grand Court concluded that Schedule 4 refers, and is intended to refer (and cross-refer), to the type of winding up regulated and dealt with by the Articles, being a voluntary winding up. The Grand Court stated that if it was intended that Schedule 4 would cover a winding up petition on the just and equitable basis, it would have included clear and express language, which was not present in this case. Ultimately, the Grand Court held that SPV 21 was not prevented from exercising its statutory right to seek the winding up of KESP on just and equitable grounds.

Additionally, the Grand Court rejected the Appellants' argument that it would be absurd if either party could petition to wind up KESP on a just and equitable basis if a deadlock in management or some other major disagreement arose, as the SHA provided detailed terms for the exit from and termination of the SHA in these circumstances.

The Appellants appealed the Grand Court decision, focusing on the interpretation of the restriction found in Schedule 4 of the SHA. The Appellants argued that the wording of Schedule 4 is unambiguous with no distinction made between the different types of solvent winding up. Accordingly, the Appellants argued that Schedule 4 should be interpreted on its natural and ordinary meaning, being that shareholders are prohibited (without unanimous consent of the other shareholders) from exercising their powers or otherwise to seek the solvent winding up of KESP, including by way of winding up petition on the just and equitable basis. The Appellants claimed that while a winding up petition cannot be presented without unanimous consent, the SHA contains exit mechanisms which allow for shareholders to exit the agreement if necessary. Further, the Appellants submitted that a distinction should be drawn between article 145 and Schedule 4, as article 145 relates to the winding up of KEL not KESP and therefore the reference to a "voluntary" winding up is irrelevant in the context of Schedule 4. For these reasons, the Appellants claimed that SPV 21 is contractually prohibited from seeking a solvent winding up of KESP, including by presentation of the Petition, without the Appellants' consent, which had not been given.

SPV 21 argued that Segal J had interpreted Schedule 4 correctly. It contended that had the shareholders intended to contract out of their statutory right to wind up KESP, Schedule 4 would have contained express language to that effect. On the exit provision point raised by the Appellants, SPV 21 submitted that the exit provisions in the SHA do not cater for the situations covered by a just and equitable winding up petition.

On 12 September 2025, the CICA handed down its judgment and struck out the Petition on the grounds that Schedule 4 of the SHA prohibited its presentation. The CICA accepted the Appellants' arguments on the interpretation of Schedule 4 and found that none of SPV 21's submissions were an answer to the Appellants' case on appeal. The CICA held that Segal J had misconstrued the key words of Schedule 4 in concluding that it only applied to solvent voluntary winding ups. Instead, the CICA focused on the natural and ordinary meaning of the words in Schedule 4, finding that the term "solvent winding up" included both voluntary, and court-ordered winding up.  The CICA also agreed with the Appellants that article 14 is worded sufficiently differently to Schedule 4 and consequently, a reference to voluntary winding up in article 145 does not dislodge the plain meaning of Schedule 4.

Ultimately, the CICA decided that SPV 21 is contractually bound not to present a petition to wind up KESP, and provisionally awarded the Appellants their costs of both the appeal and the Grand Court proceeding.

The decision highlights the court's willingness to uphold contractual restrictions on the exercise of statutory rights, confirming that parties can, by agreement, limit the ability for a shareholder to seek the winding up of a Cayman company on the just and equitable basis. The decision also emphasises that such restrictions will be enforced according to the natural and ordinary meaning of the words used in the contract.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

Upwards-only rent review clauses are a long-established and fundamental feature of commercial leases which help to underpin the value of commercial property investments. However, in England & Wales, draft legislation has been introduced to Parliament which could lead to a ban of such reviews.

If passed, the ban is likely to send shockwaves through the UK property investment market and could have far-reaching consequences for landlords, tenants and lenders.

What is an upwards-only rent review?

An upwards-only rent review generally provides that the rent payable from the review date (usually every three or five years) is the higher of:

• the rent payable immediately before the review date; or
• the open market rent for similar premises or the rent as it has been increased in line with the retail prices index.

This means that if the market or indexed rent decreases or stays the same, the actual rent payable by the tenant remains unchanged. For example, if a tenant pays £100,000 per annum and the market value falls to £90,000 at review, the tenant still pays £100,000 until the lease's next review date.

Current impact of upwards-only rent reviews

For landlords, upwards-only rent reviews have helped to ensure stable rental income streams, regardless of market volatility. This level of certainty helps to underpin property valuations and long-term investment decisions, which is particularly vital for institutional investors such as pension funds that rely on reliable, inflation-proofed income.  The guaranteed floor on rent makes commercial property an attractive asset class.

Upwards-only reviews can present significant challenges for tenants, especially during economic downturns. Tenants can find themselves locked into above-market rents, which can severely impact business viability and profitability.

Landlords frequently secure their borrowing obligations against commercial property. Commercial property is viewed as good security by lenders who calculate a market value based on the rental income payable under the occupational leases in place at the property. Historically, lenders have stipulated that all rent reviews are made on an upwards-only basis as a protection against the devaluing of the secured assets.

The UK government's stated policy aims address this perceived unfairness by seeking to "make commercial leasing fairer for tenants".

The English Devolution and Community Empowerment Bill: An unexpected shift in UK commercial leasing

The English Devolution and Community Empowerment Bill (the "Bill") was introduced to Parliament on 10 July 2025, and has unexpectedly included provisions that propose a significant reform to commercial leasing in England and Wales.

While the majority of the Bill focuses on devolving powers to local authorities and encouraging community-led growth, it also specifically targets upwards-only rent reviews.

What changes have been proposed by the Bill?

The Bill proposes to "ban" upwards-only rent review clauses in new commercial leases. This means that, notwithstanding any contrary terms in the lease, the rent would be able to go up or down at review, aligning the rent with prevailing market conditions. Any provision seeking to achieve an upwards-only outcome or a minimum uplift would be overridden.

The ban targets rent review clauses where the revised rent cannot be determined at the date the lease is granted and is calculated based on a variable. This includes traditional open market rent reviews, index-linked reviews (e.g., to inflation or another index/multiplier), and turnover-linked rents.

The Bill's explanatory notes suggest that while caps might be allowed, collars (minimum uplifts) would be prohibited, as they could circumvent the ban by effectively setting a floor at or above the current rent.

The Bill includes wide-ranging anti-avoidance provisions to prevent circumvention. Parties will not be able to contract out of these restrictions.

Crucially, to prevent landlords from "resting on a higher rent if the market falls" by simply not triggering a review, the Bill would give tenants the right to initiate a rent review and take any action required to operate it, even if the lease purports to reserve these rights to the landlord.

Side arrangements seeking to require the tenant to pay the difference between what is and what would have been the revised rent are also void. The extensive anti-avoidance provisions demonstrate the government's determination to make the ban effective and prevent landlords from circumventing its spirit.

How will commercial leases be adapted?

The commercial property market will inevitably adapt to new regulations. Landlords may respond by increasing initial base rents, favouring fixed or stepped increases.

These adaptations, while legally compliant, could inadvertently negate the policy's intended effect of making rents "fairer" or "stimulating economic growth" for tenants, especially small businesses.

This situation sets up a potential dynamic where legislative intent is met with market ingenuity. The ban might shift the risk profile rather than eliminate it entirely, potentially leading to less flexible lease structures, higher upfront costs for tenants, and a less attractive market for long-term institutional investment.

The ultimate effectiveness of the policy will depend heavily on how these market adaptations are managed or whether further regulatory interventions become necessary.

How has the ban been received by industry?

The British Property Federation has expressed concerns about the "impact of such announcements without consultation or warning on already fragile investor confidence" and the "limited benefit" it might have on high streets.

Many investors, including pension funds, are likely to be concerned about the uncertainty that downwards rent reviews would bring and the risk of stifling investment. It remains to be seen whether these provisions will become law in their current form or be amended to allow safe passage of other government priorities in the Bill.

The Bill is currently in its early parliamentary stages, with its second reading scheduled for 2 September 2025, meaning its final form is not yet known and significant lobbying is anticipated.

Which leases will be affected by the change?

The legislation is not retrospective so it would not affect existing leases granted before the legislation comes into force.

Leases which have not yet been granted before the Bill's introduction, but which are granted pursuant to agreements for lease entered into before the legislation comes into force, would also be excluded.

As discussed above, fixed or stepped rents, where increases are specified or can be determined at the start of the lease, are specifically exempted.

Conclusion

The proposed ban on upwards-only rent review clauses under the English Devolution and Community Empowerment Bill represents a significant policy shift for commercial property landlords, tenants and lenders in England and Wales.

Whilst the government's stated policy aims are to promote fairer leasing practices whilst stimulating economic growth, the lack of consultation with the property industry has drawn criticism. The proposed ban may be amended (or dropped completely) ahead of the Bill being passed but, if the ban comes into force, the impact on the UK property investment market will be significant. 

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

Offshore structures play a key role in supporting Vietnam's investment landscape, with the British Virgin Islands ("BVI"), Cayman Islands, Jersey and Guernsey, facilitating capital flows into Vietnam, and assisting with Vietnamese investment abroad.

This briefing explores the strategic use and benefits of offshore companies in Vietnam's investment ecosystem.

Vietnam's investment landscape and offshore jurisdictions

Vietnam is one of the leading destinations in Southeast Asia for foreign direct investment, with one of the highest regional GDP growth rates.  A notable portion of these inflows is structured through offshore vehicles.

For instance, the BVI has historically ranked among the top investing countries into Vietnam. By 2015, the BVI accounted for $19.3 billion of cumulative FDI into Vietnam, spread over 623 projects, which placed it among the top 5 investors, alongside countries such as South Korea, Japan and Singapore. 

The reason why offshore companies have become integral tools in structuring investment into Vietnam is that they provide tax efficiency, deal flexibility, legal certainty and international investor comfort. We shall explore these features in the following section.

Why are offshore companies favoured in Vietnam?

Vietnam is a civil law jurisdiction, which has a complex array of rules and regulations in relation to local investment.  Conversely, offshore jurisdictions are based on the common law and widely accepted in international deal structuring, as they allow investors to rely on a legally sound, financially efficient, vehicle, allowing them to enter the Vietnam market swiftly and efficiently.

The practical benefits of an offshore vehicle include:

• Tax advantages: offshore companies are typically not subject to corporate income tax, capital gains tax, withholding tax or foreign exchange controls, which allows international investors to rely upon tax-efficient cross-border profit repatriation.
• Swift and cost-effective incorporation: offshore companies can typically be formed within days, with minimal filing requirements, facilitating swift and friction free deals.
• Flexibility: offshore companies can operate as holding companies, special purpose vehicles, or investment funds, which facilitate investment, ownership transfer and complex deal structuring.
• Strong brand recognition: offshore companies are widely used in Asia (to the extent that "BVI" is widely used as a term to describe an offshore vehicle), making them trusted and accepted investment conduits.
• Jurisdictional flexibility: offshore companies offer efficient use-cases in many scenarios. For instance, BVI companies are frequently used as holding companies, venture capital funds or joint venture vehicles, Cayman vehicles are typically preferred for larger funds with institutional or US based investors, and Jersey and Guernsey are favoured by European investors for outbound fund investment or inbound UK real estate investment.

What are practical use cases for offshore companies in Vietnam?

Offshore vehicles are frequently used to ensure transactional efficiency across the investment spectrum, from formation to exit, and across sectors, from real estate to venture capital. However, some common use cases include:

• Facilitating mergers and acquisitions: offshore companies can operate as a deal accelerant, by holding interests in Vietnamese assets, enabling transfer at the offshore level, rather than the local asset level, thereby expediting transactions and mitigating administrative burdens or delay. 
• Facilitating inward investment: global private equity and venture capital funds frequently choose offshore structures to form funds, given their ease of set-up, investor familiarity and cost efficiency.  Vietnam tracks this pattern.  For instance, Mekong Capital, a pioneering Vietnam focused PE fund, raises funds through Cayman limited partnerships, Dragon Capital structured their fund through a BVI vehicle, and VinaCapital's Vietnam Opportunity Fund is based in Guernsey.
• Simplifying regulatory complexity: in sectors with complex regulatory regimes, or foreign ownership restrictions, such as the real estate sector, it is common practice to use an offshore joint venture, in which the local party and international investor hold shares. Aside from regulatory alignment, this also provides legal protections by locating the joint venture in a legally neutral environment and allows for the efficient management of profit distributions.
• Startup and tech sector: the Vietnam startup scene is booming, and Vietnamese startups commonly incorporate BVI or Cayman parent companies for the purpose of seeking international investment, forming an IPO ready vehicle, or deal structuring to enable employee share plans.  For example, VNG Corporation, Vietnam's first technology unicorn, incorporated a Cayman holding company in preparation for an eventual Nasdaq listing.  Similarly, Sky Mavis, a blockchain gaming studio behind Axie Infinity, is backed by significant venture capital funding and had a hybrid BVI/Cayman holding structure in place when global investors came onboard.
• Outbound investments: given the rapid economic growth in Vietnam, local companies are increasingly investing abroad and frequently leverage offshore vehicles to navigate foreign jurisdictional complexities or international financing requirements. For instance, offshore companies can offer a legally neutral platform for cross-border investment, which is acceptable to investors or financial institutions.
• Private wealth management: with Vietnam's economic success, there has been a concurrent growth in wealthy individuals, which has led to increasing demand for offshore solutions for estate planning purposes. Similarly, family offices in Singapore and Hong Kong, seeking portfolio diversification, frequently form offshore vehicles or funds to pool investments into Vietnam.

Conclusion

Offshore companies have become integral to Vietnam's investment ecosystem, enabling billions in FDI inflows, outbound investments, and facilitating the internationalisation of local startups.

Offshore companies can provide transactional efficiency, accelerate deals, or mitigate financial or tax leakage, across a wide spectrum of use cases, and play a role in contributing to the success of the Vietnamese economy.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

The judges hearing the case (the "Board") issued a Willers v Joyce direction, declaring that their determination to abrogate the Shareholder Rule is to be treated as binding in the courts of England and Wales.

Background

The judgment stems from an appeal from the Court of Appeal of Bermuda in a shareholder dispute arising out of a corporate amalgamation. The Appellant was the entity formed by the 2021 amalgamation of Jardine Strategic Holdings Ltd ("JSH") and JMH Bermuda Ltd. The Respondents were 81 minority shareholders (or former shareholders) of JSH. The amalgamation had cancelled all JSH shares converting shareholders' holdings into a right to receive US$33 per share as 'fair value'.

The Respondents, disputing the fair value of their shares, applied under section 106 of the Bermuda Companies Act to have the court determine the fair value and, as part of those appraisal proceedings, they sought discovery of legal advice that had been given to the Jardine Matheson group when determining the fair value of their shares.

The Appellant claimed these documents were privileged, but the Shareholders argued that an exception, the so-called Shareholder Rule, entitled them to access the legal advice, at least in circumstances where the advice was obtained before any shareholder litigation was contemplated. The shareholders argued that, because the advice was paid for out of the company's funds (effectively the shareholders' funds), the company could not claim privilege against them.

The Chief Justice of Bermuda accepted the shareholders' argument and the Court of Appeal dismissed the company's appeal.

Issues

The Board identified the central question as whether Bermudian law recognises the Shareholder Rule, effectively barring a company from asserting privilege against its shareholders (or former shareholders) in litigation between them. 

In analysing this question, the Board considered the justification and scope of the supposed rule. In particular, it considered whether the Shareholder Rule was founded on the notion that shareholders have a proprietary interest in the company's funds (and hence in advice paid for from those funds) or whether it could be justified as a species of joint or common interest privilege arising from the relationship between company and shareholders. 

The Board also considered whether it could adopt a narrower, fact-dependent exception to privilege in these circumstances, whereby a shareholder could access privileged advice only upon demonstrating a sufficient particular joint interest in that specific advice.

Decision

The Board unanimously allowed the appeal, decisively holding that the Shareholder Rule "forms no part of the law of Bermuda" (or that of England and Wales). In other words, a company is entitled to assert legal professional privilege against its shareholders, absent some other established exception. 

Examining the historical justification for the Shareholder Rule, the Board found that it lacked any valid justification in modern law. The original, proprietary rationale was outdated. It is trite that a company's assets belong to the company alone, not to its shareholders. The proprietary justification was "wholly inconsistent with the proper analysis of a registered company as a legal person separate from its members". 

As for the joint interest justification, analogous to other joint privilege scenarios (e.g. trustee-beneficiary, partners, etc.), the Board firmly rejected this contention. References in some cases and commentary to a broad 'joint interest privilege' between companies and their shareholders were misconceived – that term is a label for various specific relationships where privilege is shared, and "each of [those relationships] had something that the company shareholder relationship did not have". It could not be assumed that there is always a community of interest between a company and its shareholders in respect of legal advice and, indeed, the Board observed that shareholders are not a monolith – their interests often vary among themselves and can diverge sharply from the company's interests, as vividly illustrated by the case at hand. 

Lord Briggs and Lady Hale therefore described the Shareholder Rule as "a rule without justification… Like the emperor wearing no clothes in the folktale, it is time to recognise and declare that the Rule is altogether unclothed". The Board emphasised that legal professional privilege is a fundamental right, and exceptions to it must be narrow and clearly justified. A general shareholder-based exception could not be justified. 

The Cayman angle

Whilst Jardine v Oasis will not strictly be binding on a Cayman Islands court as the decision does not relate to a Cayman Islands case, it is notable that the Board said that it disagreed with Kawaley J's conclusion in Re 58.Com Inc 2023 (1) CILR 328 (sitting as a Grand Court judge in the Cayman Islands) that the Shareholder Rule is a form of equitable tempering of the strict consequences of the separate personality of a company. Accordingly, we would expect that, if the issue were argued before a Cayman court, Jardine v Oasis would be followed.

The decision does leave open though the question of the existence and extent of joint or common interest privilege in other relationships, and the Board mentions that it does commonly exist in a trustee/beneficiary situation. This could be particularly interesting in the context of a Cayman Islands Exempted Limited Partnership, where a statutory trust is set up between the General Partner and the Limited Partners, and could be especially relevant where the Partnership Agreement seeks to exclude the Limited Partners' statutory rights to information. That is particularly so in light of the Board's comments about the ability for joint or common interest privilege to co-exist with specific contractual provisions limiting a shareholder's rights to information.

Conclusion

Jardine v Oasis is a landmark decision in the law of legal professional privilege, formally abolishing the so-called Shareholder Rule. By rejecting both the broad rule and any indeterminate, case-by-case exception, the decision underscores the primacy of legal advice privilege – companies (like other legal persons) can seek candid legal advice, knowing it will remain protected even if disputes with shareholders arise.

While the decision helpfully clarifies the position for a Board of Directors seeking legal advice that they need not disclose that advice to shareholders, the situation is arguably now less clear for trustees and beneficiaries (where the interests of beneficiaries between themselves and vis-à-vis the trustee can similarly diverge) based on the reasoning of the Board. Bedell Cristin can assist anyone wondering what their rights to, or obligations to disclose, information are post Jardine v Oasis. 

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

The following changes are effective from 6 August 2025 and are set out in the Collective Investment Funds (Jersey Private Funds) Order 2025 (the "JPF Order"), as well as a revised version of the JFSC's JPF Guide.

Removal of the existing 50 offer/investor limit

JPFs will no longer be subject to the 50 offer/investor limit and there will no longer be any limit on the number of offers or investors for each JPF. 

Investors in a JPF must continue to be a "professional investor" or an "eligible investor" as defined in the JPF Guide. Under the JPF Order, a JPF can only be offered to a "restricted group of investors", which means that:

• the offer is addressed to an identifiable category of persons to whom it is directly communicated by the offeror or the offeror's appointed agent; and
• only persons in that category may accept the offer.

The revised JPF Guide provides helpful guidance on how existing funds may be able to convert or benefit from the new arrangements under the JPF Order.

Expanded definition of professional investor

The JPF Guide already included 12 broad categories of investors eligible to invest in a JPF and the revised JPF Guide has been updated to include:

• "professional clients", as defined by the UK Financial Conduct Authority's Conduct of Business Sourcebook; and
• "US accredited investors", as defined by the US Securities and Exchange Commission in Rule 501 of Regulation D.

Listing

Units, shares or interests in a JPF may now be listed with the consent of the JFSC. This is a very welcome development for clients seeking technical listings.

24-hour authorisation 

The JFSC's authorisation time to approve the establishment of a JPF has been reduced from 48 hours to 24 hours.

Commentary

The view of our Investment Funds team is that these changes are very positive, and testament to the commitment of the Government and the JFSC, who continue to work collaboratively with us and other members of the funds industry to further strengthen and develop Jersey's best-selling product. We expect our global fund manager clients to welcome these significant enhancements to the JPF regime and we look forward to discussing the benefits with them in respect of new structures over the coming months.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

Cayman private funds are commonly used in the private equity space, investing in more illiquid assets, requiring time to realise value, or to hold investments for a defined period of time.

This guide provides a high level regulatory overview of closed-ended investment funds that meet the definition of a private fund under the PFA.

What is a private fund?

A private fund can be a (i) company, (ii) unit trust, or (iii) a partnership that offers or issues investment interests with the purpose of pooling investor funds. Investors receive profits or gains from the fund's acquisition, holding, management or disposal of investments. The holders of such interests do not have any day-to-day control over the investments, which are managed as a whole by, or on behalf of, the operator of the fund (either directly or indirectly).

All funds will be required to be registered with CIMA, unless that fund is excluded or exempted. Funds that are explicitly excluded from the PFA as "non-fund arrangements" include pension funds, SPVs, joint ventures, proprietary vehicles, holding vehicles, individual investment management arrangements, debt issuing vehicles, structured finance vehicles, preferred equity financing vehicles, sovereign wealth funds, single family offices, and funds that are listed on a recognised exchange.

The operator of a fund is considered to be its managing body, meaning (depending on the type of fund vehicle) the board of directors of a company, the general partner of a partnership, the manager (or equivalent) of a limited liability company, or a trustee of a unit trust. Operators must apply appropriate corporate governance. CIMA has issued statements of guidance on corporate governance, corporate governance on regulated entities, and internal controls of regulated entities (together, the "Regulatory Measures"). The Regulatory Measures need to be applied in an appropriate and proportionate way to the scale and operations of each private fund.

Registration with CIMA

An application must be made to CIMA to register a private fund within 21 days of such fund accepting capital commitments, and in any event before the fund accepts capital contributions from investors in respect of investments.

To register a private fund, certain documents must be submitted to CIMA, including (non-exhaustive) constitutional documents, a summary of the fund's offering terms, and details of the fund's service providers. The relevant application fee must be paid to CIMA at this point. Registration will be complete from the date a completed application is filed, with formal confirmation following within 2-3 weeks.

The directors (or managers of LLCs) of the fund (or directors of the general partner) are not required to be registered under the Director Registration and Licensing Act. However, CIMA has a "four-eye" policy, which means that biographies and contact details of two natural persons as directors need to be included in the registration application (whether registered as companies, LLCs, general partner or a corporate director of a private fund).

Ongoing requirements

Among other laws and regulation, the PFA specifies certain ongoing regulatory requirements for registered private funds. Failure to adhere to such requirements can incur significant fines, depending on the nature and seriousness of the breach. There are also criminal offences for breaching the PFA e.g. failure to register or dishonest/intentionally misleading marketing.

• Valuation - all private funds are required to conduct an asset valuation on (at least) an annual basis in accordance with CIMA's valuation policy. Valuations must be carried out in a frequency appropriate to the assets held. The fund's written valuation policy must be disclosed to investors. Valuation must be performed by an appropriate qualified third party, independent from the manager or operator of the fund.
• Audit - audited financial statements must be prepared by a local Cayman auditor approved by CIMA, and must be submitted to CIMA within 6 months of the fund's year end. CIMA may allow an extension up to a maximum of three months. A fund must also file consolidated or combined accounts in certain circumstances (e.g. a consolidation with a non-Cayman fund).
• Safekeeping of assets - a custodian is required to be appointed to (i) hold assets which are capable of physical delivery or capable of registration in a segregated custodial account (except where not practical nor proportionate), and (ii) to verify title to, and maintain records of, assets held by the fund based on information provided by the fund or external information. Where no custodian is appointed, the fund must notify CIMA. The fund must appoint a person to carry out title verification in line with the above. This function may be performed by an administrator or an independent third party or the manager (or a person with control relationship of the manager), subject to the conflict rules.
• Cash monitoring - a person must be appointed to monitor the cash flow of the fund. Proper cash monitoring policies and procedures must be in place for its investment strategies and types of investments held. The fund can choose to conduct the cash monitoring process internally, provided the function is separate from the portfolio management function.
• Annual fees - all funds must pay the applicable annual fee to CIMA by 15 January each year. If the annual fee is not paid by 15 January, a penalty of half of the annual fee will be payable each month the fee remains unpaid.
• Separation of assets - all funds must establish, implement and maintain (or oversee the same) strategies, policies, controls and procedures to ensure compliance with the segregation rules, provided for by CIMA (the "Segregation Rules"). These must be consistent with the funds marketing and offering document (and be appropriate for the fund's size, complexity and nature of activities and investors). The Segregation Rules state that all financial assets and liabilities of the fund and any part thereof (e.g. including investor funds and investments) (the "Portfolio") must be accounted for separately from any assets of the manager, operator or custodian of the private fund. The Segregation Rules also provide the overring requirement of the manager etc. not to use the Portfolio to fund any part of its operations.
• AML compliance - the fund must comply with the Anti-Money Laundering Regulations, the Proceeds of Crime Act, the Proliferation Financing (Prohibition) Act, and the Terrorism Act (together, the "AML Regime"). Private funds are generally considered to fall within the scope of the AML Regime, as will be considered to be engaged in "relevant financial business", as defined under the Proceeds of Crime Act. The fund must appoint natural persons to the roles of anti-money laundering compliance officer, AML reporting officer, and Deputy AML reporting officer These roles can be outsourced, if necessary.
• FATCA and CRS - almost all private funds will be a "Reporting Cayman Islands Financial Institution" for the purposes of the US Foreign Account Tax Compliance Act ("FATCA") and the Common Reporting Standard issued by the OECD ("CRS"). The fund must conduct due diligence on all its investors to identify the tax residency of each investor, and assess whether the interest held by that investor constitutes a "reportable account" under FACTA or CRS. Funds address this by (i) seeking appropriate self-certifications and beneficial ownership information from investors at the time of investment, and (ii) engaging the fund administrator or other specialist to assist with reporting obligations. The fund is required to notify the Cayman Islands Tax Information Authority (the "TA") of certain prescribed details and to identify a "Principal Point of Contact' and a "Change Notice Person", such notification is to be made during the first financial year after registration. Reporting on each of the fund's "Reportable Accounts" should be made to the TA each calendar year. The fund must maintain written compliance policies and procedures in connection with the fund's compliance with FACTA and CRS. In the case of CRS, a CRS compliance form containing certain prescribed information should be filed each year.
• Data protection - the Cayman Islands Data Protection Act (the "DPA") provides a framework of rights, duties and principles to regulate individuals' personal data. This is broadly based on the same internationally recognised privacy principles. Any entity established in the Cayman Islands has certain obligations under the DPA for the handling of individuals' data (e.g. contracts with service providers that process personal data on behalf of the fund).
• Economic substance - private funds will be regarded as "investment funds" under the International Tax Co-operation (Economic Substance) Act (the "ESA") and are therefore excluded as a "relevant entity" under the ESA. Funds will need to make an annual notification filing to confirm such exempt status.
• Beneficial ownership - under the Beneficial Ownership and Transparency Act, the exemption for regulated funds in the Cayman Islands was removed. Private funds are now required to either establish a beneficial ownership register or determine if they can follow an alternative route to compliance. This alternative route to compliance will require funds to give their corporate service provider (e.g. registered office) the contact details for the beneficial ownership register.

In summary

An effective and commercially-minded regulator, combined with appropriate but flexible regulation, means that the Cayman Islands will continue to be the top choice of jurisdiction for private funds. The Cayman Islands' reputation as a tax neutral regime, coupled with expertise in professional service providers, means that fund managers can be assured that their funds will be in safe hands throughout their lifecycle.

Bedell Cristin specialises in formation, ongoing regulatory requirements, financing and restructuring of investment funds in the Cayman Islands. Please contact us if you have any queries.

The Royal Court of Jersey (the "Court") rejected an argument that the enforcement in Jersey of a New York Convention award would be contrary to the public policy embodied in Article 46A of the Sanctions and Asset-Freezing (Jersey) Law 2019 ("SAFL"). This provision provides a defence to civil liability for acts or omissions (including a decision not to fulfil a payment obligation) taken in the reasonable belief that they are necessary to comply with sanctions prohibitions.

The background facts

The underlying dispute arose in the aftermath of Russia's invasion of Ukraine in February 2022, and the imposition by the international community of wide-ranging sanctions on Russian banks, companies and individuals in response, which precipitated a steep fall in the value of the Russian rouble (the "rouble").

VTB Russia (PJCS) ("VTB Russia") was, and still is, one such sanctioned entity. On the same day as the invasion, it became inter alia a "designated person" under the UK sanctions regime (and consequently also under the Jersey sanctions regime). In addition, the German federal financial supervisory authority ("BaFin") had by that time begun to take a number of measures to ringfence VTB Russia's (almost) wholly owned subsidiary, a German bank then known as VTB Bank (Europe) SE, and since renamed as OWH, from any influence by VTB Russia. These included:

• appointing a special representative from Deloitte to monitor the sanctions compliance of OWH's payment decisions;
• an order banning OWH from making payments or asset transfers to VTB Russia or VTB Group companies which were detrimental to OWH (the consequence of which was that OWH put in place internal measures to prevent any payments to VTB Russia or the VTB Group);
• a ban on OWH granting loans or accepting deposits or dispersing any contractually agreed but not yet fully dispersed loans; and
• a ban on OWH making payments or other transfers of assets for the benefit of Russian credit institutions.

Prior to the invasion, in September 2019, OWH had entered into a currency swap contract with a Jersey company called RTI Limited, whose parent is the Russian entity, United Company Rusal International PJSC ("Rusal"), and is part of the Rusal Group. The Rusal Group is a substantial enterprise whose business is the production and sale of aluminium. The contract was designed to hedge the Rusal Group's exposure to the rouble, and was based on the familiar International Swaps and Derivatives Association ("ISDA") Master Agreement (2002 edition). It listed English law as the governing law, and any dispute was to be resolved by arbitration under the London Court of International Arbitration Rules ("LCIA arbitration") in England.

Owing to the above-mentioned drop in the value of the rouble, on 28 February 2022, OWH issued the first of a number of margin calls to RTI requiring payment of US$43.5 million. RTI did not initially pay the margin call because of concerns about US secondary sanctions, but subsequently also raised the question of Jersey sanctions. In this regard, Article 11 of SAFL makes it a criminal offence for a person to make funds available (directly or indirectly) to a designated person if the person knows, or has reasonable cause to suspect, the person is making the funds so available. The alleged concern was whether making payment to OWH would make funds available to VTB Russia.

Various exchanges took place between the parties, including a request made by OWH on 4 March that RTI make payment to a specifically designated account of OWH with the German Central Bank, Deutsche Bundesbank, "which will be reserved by us and where all payments are subject to review and approval by a special representative of [BaFin]".

On 23 March 2022, in view of the failure to pay the margin call, OWH sent RTI a Notice of Early Termination for an Event of Default designating 25 March 2022 as the early termination date (the "Early Termination Date"). A sum of €214m was calculated shortly afterwards as being due as a result.

Following a reference to LCIA arbitration by RTI (seeking confirmation that the termination was invalid), OWH was ultimately awarded €213,770,661.77 by the arbitral tribunal against RTI (as well as the guarantor, Rusal), and sought to enforce the award in Jersey.

RTI's public policy argument

RTI sought to rely on Article 44(3) of the Arbitration (Jersey) Law 1998 which provides that enforcement of a New York Convention award may be refused if it would be contrary to public policy to enforce the award, and in particular relied on Article 46A of SAFL.[1]

Approach of the Court

The Court had not previously considered the public policy exception to the enforcement of arbitration awards, and elected to follow the "very restrictive" approach adopted by the English courts in a number of previous decisions interpreting the equivalent provision in the English Arbitration Act 1996.

The Court also found that "Article 46A is intended to support the important public interest of Jersey playing its part effectively in supporting sanctions imposed by the UN or the UK." Jersey's public interest included considerations of international public policy, and was not purely domestic in nature. Furthermore, on its proper construction, Article 46A was equally applicable to payments in respect of transactions governed by a law other than Jersey law. The Court concluded that where an award had given no consideration to whether the defence provided for in Article 46A is available on the facts and the Court finds that it is so available, the public policy exception would be made out such that the award should not be enforced.

However, Article 46A of SAFL did not come into force until 8 June 2022 (i.e. a few months after the Early Termination Date). In accordance with the usual presumption against retrospectivity (which was not rebutted by the language used), Article 46A therefore only applies to acts carried out after the provision came into force.

As to the public policy reflected by the statutory provision, the Court went on to find that "the public policy of Jersey at the present time is that, in respect of acts carried out after Article 46A came into effect on 8 June 2022, there can be no civil liability in respect of such an act if, at the time of the act, the person carrying out the act reasonably believed that it was necessary to do so in order to comply with a sanctions obligation or prohibition (as defined in Article 46A)". However, it also held that "there is no public policy at the present time that this is also the position in relation to acts carried out before Article 46A came into effect". It followed that it would not be contrary to Jersey public policy to enforce the award.

The Court also considered whether, if it was wrong in reaching the above conclusion, a defence under Article 46A of SAFL was made out on the facts. In this regard, the Court considered the witness evidence provided in support of RTI's position and a number of contemporaneous documents including inter partes correspondence, advice received from RTI's lawyers and internal emails. The Court was persuaded that RTI did subjectively hold the required belief for the purposes of Article 46A of SAFL (accepting that its belief would be much influenced by the advice it was receiving from its lawyers), but concluded that this belief was not an objectively reasonable one because:

• there was no evidence that RTI or its advisers ever gave any real consideration to whether the BaFin measures and/or the suggestion of making payment to the Bundesbank account negated the risk of payment of the margin, amounting to a breach of Article 11 of SAFL; and
• there was no evidence that RTI or its advisers ever gave proper consideration to whether RTI could give a notice of Illegality under the contract rather than simply defaulting in payment (such a notice would have delayed OWH's ability to give notice of an early termination by a few days); i.e. RTI did not reasonably believe it was "necessary" to commit a breach of contract.

Commentary

This case shows what can happen when two strong public policies, namely the enforcement of Convention awards and compliance with sanctions, come into conflict. For acts occurring after 8 June 2022, it is clear that the public policy regarding compliance with sanctions will prevail in a case where the statutory test applies on the facts.

In its recent decision in Cayman Shores Development Ltd & Another v The Proprietors, Strata Plan No.79 & Others [2025] UKPC 27, the Privy Council clarified the status and enforceability of certain land rights in the Cayman Islands. The ruling provides important guidance for both land developers and legal practitioners when considering the registration and classification of rights over land.

A quick dive into the case 

The Britannia resort in Grand Cayman was developed in the late 1980s and early 1990s as a slice of tropical paradise including a hotel, golf course, tennis courts, beach club and four residential phases. The developers sold the residential units with rights (the "Rights") granting the owners of residential phases (the "Owners") the use of the beach, golf course and tennis facilities (the "Facilities").  The Rights were registered against the relevant titles but were mislabelled as "restrictive agreements" rather than "easements".

Fast forward a few decades and, in 2016, Cayman Shores Development Ltd ("Cayman Shores") purchased the land on which the Facilities were held.  At that time, Cayman Shores proposed to redevelop the land housing the Facilities and make the same available to the Owners, but only by way of licences as opposed to honouring the existing Rights. The Owners argued that their Rights to the Facilities were property rights in the form of easements, whereas Cayman Shores claimed that the Rights were restrictive agreements and were therefore unenforceable, as they were not in the proper form.  Litigation ensued.

The lower courts

The Grand Court sided with the Owners, deciding that the Rights constituted easements and stated that the relevant land registers (the "Registers") should be rectified accordingly.  Cayman Shores appealed the decision to the Court of Appeal, which reversed the ruling and held that the Rights were improperly registered as restrictive agreements and were therefore ineffective.

The Privy Council's take

The Privy Council has now, in the final act of these long-running legal proceedings, overturned the Court of Appeal's ruling and sided with the Owners.  It held that:

• the Rights were easements, despite being incorrectly described as restrictive agreements, citing that the Rights were easements in substance;  
• recreational rights to use the facilities of a resort could be granted to owners of residential units in the form of easements, referencing authority from a 2018 UK Supreme Court case; 
• the Rights were effectively registered, notwithstanding their label as restrictive agreements, as they were disclosed in the encumbrance section of the Registers and provided sufficient notice, satisfying the purposes of the Registered Land Act; and 
• there was no need to rectify the Registers to preserve the Rights as they were valid and binding.  However, it was noted that the Registrar may wish to tidy up the entries in the Registers to align terminology used with legal substance. 

The competing arguments were finely balanced, as was evident in the lower court rulings.  The Privy Council's decision reflects a modern, common-sense approach to determining proprietary rights.  It confirms that substance prevails over form, and that property rights of this nature will be protected in the Cayman Islands. 

Lessons for developers: read the fine print (and then read it again)

So how does this affect developers in the Cayman Islands real estate market?

• Label carefully: An easement is not a restrictive covenant and a restrictive covenant is not a licence. It is important to note that each serve distinct purposes and should be clearly distinguished.  Developers should take care to ensure that all relevant rights and reservations are properly documented and registered in a manner that reflects their true legal nature in full compliance with the Registered Land Act.  
• Plan for the future: Ensure any access rights, utility arrangements and recreational rights are properly structured to enable you to plan for the future and to tackle any infrastructure, planning or financial changes that may affect the feasibility of a proposed development.
• Involve legal counsel early: The Privy Council's decision underscores the need for comprehensive due diligence when dealing with third-party rights. Whether you are developing land or purchasing an existing development, ensure you obtain the necessary legal advice on the rights and obligations you are intending to create or acquire.

A lawyer as a development partner?

Let's be honest, the law isn't always the easiest beast to tame and missteps in structuring your development can lead to many years of litigation and headaches. Engaging a qualified property attorney during the planning and development stage can help ensure that your plans achieve the intended objectives. Whilst developers can move mountains (or at least dig through them), understanding legal nuances and ensuring the correct agreements have been prepared and registered, could be the difference between commercial success and failure.

Background

The case involved a trust established in 2012 and managed by Church Street Trustees Limited (the "Trustee"). The beneficiaries comprise the children and descendants of the late settlor, including three of his sons, plus spouses/widows and any other person added.  The dispute involved the decision to sell the hotel (which was owned through a company).

One of the three sons, who sits on the board of the company, supported selling the hotel for US$50 million to a third-party buyer. The other two sons opposed the sale, preferring to keep the hotel within the trust for personal and sentimental reasons.

The dispute

The disagreement escalated when the two sons who opposed the sale accused the Trustee of acting improperly in executing a written resolution authorising the sale of the hotel by the company and threatened legal action.

Their brother responded by issuing a Representation (as beneficiary) seeking the Court's approval of the Trustee's decision to consent to the sale of the hotel. He argued that it was a valid decision, one that a fully informed and reasonable trustee could rationally reach and that it was not voidable.

The Trustee asserted that the decision to provide consent was made in good faith, following adequate deliberation, and that it represented a rational conclusion within the scope of decisions a reasonable trustee could make.

The opposing sons raised a series of objections to the Trustee's decision. They alleged that both their brother and the Trustee had conflicts of interest that were not properly addressed, and that the Trustee had taken a passive role, effectively allowing their brother to dominate the decision-making process. They argued that the Trustee failed to treat all beneficiaries equally, favouring their brother's interests and covering his legal costs while denying similar support to them.

They also questioned the commercial rationale for the sale, citing the hotel's value, potential tax burdens and the absence of a reinvestment plan. They contended that the sale would impose disproportionate financial consequences on them, including significant tax liabilities. Additionally, they claimed the Trustee had not adequately considered alternative options, such as retaining the hotel and borrowing against it. Other concerns included the Trustee's failure to account for the wishes of the late settlor.

The Court's decision

In its judgment, the Court affirmed that the correct approach to blessing applications is to apply the legal test set out in Re S Settlement [2001] JLR N37 and reaffirmed in the Court of Appeal decision in Representation of the Otto Poon Trust [2015] JCA 109. The Court emphasised that it must be satisfied that the Trustee acted in good faith, that the decision was one a reasonable trustee could have reached, and that it was not tainted by any actual or potential conflict of interest.

Although the application was brought by a beneficiary rather than the Trustee, the Court held that the same legal principles applied.

The Court concluded that the Trustee acted in good faith and without conflict of interest. It confirmed that the decision to sell was rational and reasonable, with the Trustee being well-informed about material considerations and having followed proper procedures.

The Court reiterated that its role was not to decide what it would have done, but to ensure the Trustee's decision fell within a reasonable range of options. Accordingly, it blessed the Trustee's decisions.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

That decision - and the form of relief it gave rise to - has undoubtedly reshaped commercial litigation across common law jurisdictions.

But for practitioners dealing with offshore structures and international asset recovery, it is crucial to recognise that the rules change once you cross the Channel.

In Guernsey, freezing injunctions are rooted in statute, not in equity. While the orders look familiar, and English jurisprudence is highly influential, the underlying legal framework is distinct.

This article sets out five key points every onshore lawyer should understand about freezing relief in Guernsey: its origins, test, scope, and some of the features that make it especially effective in cross-border cases.

Guernsey statutory foundation, but English common law shape

Freezing injunctions in Guernsey are granted under section 1 of the Law Reform (Miscellaneous Provisions) (Guernsey) Law, 1987 (the "Law"). That provision gives the Royal Court of Guernsey (the "Royal Court") a general power to grant interim injunctions, including freezing orders. There is no equivalent general equitable jurisdiction à la Mareva.

But while the source of the jurisdiction differs, its application often tracks closely with English case law. Guernsey courts regard English authorities as highly persuasive, and orders typically follow the standard form prescribed by the English Civil Procedure Rules.

The courts have embraced the Mareva principles and adapted them through local decisions, building a body of law that reflects both statutory discretion and common law logic.

The result is a regime that feels familiar to English litigators, while still allowing for jurisdiction-specific nuances.

Archaic but intact: the arrêt conservatoire

Long before Mareva, Guernsey had its own form of pre-judgment asset protection. The arrêt conservatoire, derived from Norman customary law, permitted the seizure of tangible property to prevent dissipation pending litigation.

The arrêt is an in rem remedy - it operates directly on the property, not by restraining the defendant’s conduct. It was historically used to immobilise goods (and even vessels and vehicles) but has long since been overtaken by the flexibility and broader reach of the modern freezing injunction.

It hasn’t been used in a reported case in over 20 years, and its practical utility today may be limited. But it remains part of Guernsey law, and its continuing existence underscores the jurisdiction’s unique fusion of civil and common law traditions, and its continuing flexibility.

The test for freezing relief

The Royal Court will typically expect the applicant to demonstrate three core elements:

• a good arguable case in the underlying proceedings (whether domestic or, in some cases, foreign);
• a real risk of dissipation - i.e. a risk that assets may be concealed, moved, or diminished so as to frustrate a judgment; and
• that it is just and convenient for the court to grant relief.

These thresholds are broadly consistent with those applied in England.

Urgent, ex parte applications are possible and often listed within 24 hours. The Royal Court will require the usual undertakings (including to compensate the respondent if the order proves unjustified), and may also require fortification by way of payment into court or other security.

Supporting foreign proceedings: the “exceptional circumstances” gateway

Under section 1(7) of the Law, the Royal Court may grant freezing injunctions in support of proceedings outside the jurisdiction - but only where “exceptional circumstances” exist.

This phrase might sound daunting, but in practice it functions more as a reminder for the court to proceed with care than as a substantive obstacle, and practitioners should not be unduly deterred. The Royal Court has consistently taken a pragmatic and flexible approach in applying this gateway.

In Seed International Ltd. v Tracey (Court of Appeal judgment 55/2003), the Court of Appeal confirmed that injunctions in aid of foreign proceedings are available where the usual Mareva-style criteria are met and there is a sufficient connection to Guernsey (typically, the presence of assets or fiduciaries in the jurisdiction).

This makes Guernsey an effective forum for obtaining mirror injunctions or ancillary relief to preserve assets pending resolution of a foreign claim - especially in fraud or enforcement cases.

Ancillary disclosure orders: a distinctive strength

One of the features that sets Guernsey freezing injunctions apart is the willingness of the courts to grant robust ancillary disclosure orders. These often go further than what would be available in equivalent proceedings in England.

Orders may compel banks, fiduciaries, or others to disclose the location, nature, and value of assets - even where the claim is not proprietary in nature. In Seed, the Court of Appeal affirmed that such orders can have a broader ambit than the freezing order itself, and are not limited to proprietary tracing claims.

These orders are typically to be complied with within timeframes as short as three business days. They add real force to the injunction and are a key tactical consideration when acting swiftly to identify and lock down assets.

Conclusion

Guernsey may be a familiar jurisdiction for international finance, but its legal system - and particularly its freezing injunction framework - retains a character of its own.

Statutory in foundation, but shaped by English common law, the civil freezing order regime offers a blend of flexibility and predictability that provides real advantages to cross-border litigants.

For onshore lawyers, the key takeaway is simple: if the target holds assets or maintains fiduciary relationships in Guernsey, the Royal Court is an effective and responsive forum for urgent, effective interim relief.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

In this case, the trustee sought to vary the trusts by reversing the irrevocable exclusion of F (the settlor) from the class of beneficiaries, appointing F as a beneficiary, and distributing the trust assets to him, effectively terminating the trusts. The trustee also sought approval under Article 51 of the Law for its in-principle decision to appoint F and distribute the assets.

The application was prompted by impending UK tax changes, effective from 6 April 2025, which would impose significant tax liabilities on the current beneficiaries (F's daughters, L and N), even if they did not receive any benefit from the trusts. The application was supported by all adult beneficiaries of the trusts.

The Court reaffirmed the findings in Re DDD Settlements [2012] (1) JLR (Note 8); [2011] JRC 243 and IQEQ (Jersey) Limited re B Trust [2024] JRC 210, confirming that the word "benefit" has been given a wide meaning by the Court and includes tax mitigation for the beneficiaries.

The Court concluded that the proposed variation and the trustee's decisions were for the benefit of the relevant beneficiaries and approved the application.

It is notable that a person who had been irrevocably excluded by the trust deed was given ownership of the trust assets. If the exclusion had been revocable, the trustee could have revoked it without needing a variation. However, a trustee needs a full variation to reverse an irrevocable exclusion in the trust deed. The case highlights that an irrevocable exclusion is not absolute in the world of offshore trusts.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

The Report contains 24 recommendations, and a link to the full report can be found here. In this briefing, we have summarised the key proposals contained in the Report, and discuss the potential implications for our clients.

The Report is now with the Minister for Social Security to consider. If the recommendations in the Report are accepted, the next step would be for a proposition to be tabled to seek the introduction and drafting of new legislation, which would then go before the States Assembly for debate.

Summary of the recommendations

• To create a day one statutory protection from unfair dismissal or an act of detriment (e.g. demotion, stalled career progression or exclusion from the workplace), for individuals who make a protected disclosure in the public interest. The protection shall be introduced to all sectors at the same time.
• Whistleblowing protection should be offered to employees (directly employed or employed through an agency or through a service entity), officers of the States of Jersey Police and officeholders in crown employment.  There are a number of other groups where protection could be extended for example non-executive directors or trustees, perhaps in a second phase.
• A "protected activity" will likely cover where an organisation is, or the whistleblower has a reasonable belief an organisation is: 
  • breaking the law (or intends to break the law);
  • covering up wrongdoing;
  • causing environmental damage; and/or
  • causing a miscarriage of justice.

In considering this, the organisation does not actually need to commit an offence and the allegation does not necessarily have to ultimately be found to be true but the whistleblower must have a reasonable belief that they can draw the conclusion that the facts show there is protected activity.

• Personal grievances that arise in the workplace are not covered. These would be dealt with under an employer's internal grievance procedure;
• A "public interest test" rather than a "good faith test, which focuses on the disclosure itself and the impact and benefit to the public in making the disclosure, rather than the motivation of the person making the disclosure, although the whistleblower should have a reasonable belief that disclosure is in the public interest.
• The process to be followed in raising a concern should be in the first instance to approach the person or organisation responsible for the failure. If that is not possible, or does not resolve matters, a report should be made to a prescribed person, which may include organisations such as the Jersey Financial Services Commission, the Jersey Office of the Information Commissioner etc. Disclosure should not be made to the media or for financial gain – protection will not be provided in these circumstances.
• Claims in relation to unfair dismissal or detriment, where the detriment is suffered in Jersey, should be made to the Employment and Discrimination Tribunal within eight weeks of the dismissal or detriment (the protected act itself may have occurred days, or even years before, or even be a future act where there is an intention to break the law).
• In relation to compensation, there will be three potential elements:
  • an award for unfair dismissal where the employee has been dismissed as a result of them making a protected disclosure. This would be an automatically unfair dismissal. There would be no length of service requirement, so this would be a day one right. Compensation for that unfair dismissal would, therefore, be based on length of service, with a range of four to 36 weeks' pay*. The new uplift provisions, which would allow for an uplift in compensation of up to 25% where the employer's conduct is particularly bad would apply;
  • an award for financial loss (actual loss and future loss), and for hurt and distress. The recommendation is that this is initially aligned to the compensation limits for claims of discrimination, being up to £30,000* per head of claim, but the Employment Forum strongly recommend that the Government and States Assembly consider amending this in the future to allow for uncapped awards, similar to that of the UK where high profile cases are often reported to be in the hundreds of thousands of pounds; and
  • an award for suffering a detriment, which will be capped at a maximum of eight weeks' pay*.
• Jersey Advisory and Conciliation Services should have a key role to play, which would encompass the provision of advice to potential whistleblowers and the provision of template documents for organisations to utilise to develop whistleblowing policies, however they will not be a prescribed person for the purpose of reporting a concern.
• Any provisions relating to anonymity that apply to other employment claims should also apply to whistleblowing cases.

What does this mean for employers?

Many employers, for example those in financial services, government, construction, and certain regulated sectors, such as utilities and energy, will already be familiar with the concept of whistleblowing and enabling employees to make a protected disclosure. They will already have a whistleblowing policy in place to encourage employees to speak up and raise any concerns, which will be investigated and dealt with appropriately. They will also be subject to regulations which would impose heavy fines and penalties if organisations were to undertake many of the activities that fall within the definition of protected activity. Therefore, the impact for these organisations is likely to be less onerous in the first instance.

If draft legislation is approved, it would be prudent to review existing policies in line with that draft legislation, and to update policies and provide training (as needed) to embed these within the organisation.

For organisations which do not have a whistleblowing policy, consideration should be given to drafting one in advance of legislation being passed, while not mandatory, would reflect good employment practice.

The main area of focus will be on the compensation regime and whether this results in a rise in individuals raising protected disclosures. There is a stigma attached to the label of whistleblower, and from case law reported in the UK, blowing the whistle can often be seen as career ending. In a small jurisdiction like Jersey, this may have an even greater impact on an individual's potential career prospects. Many employers will likely hope to see a balance struck, as they want to promote a culture where employees can speak up and raise concerns without fear of retaliation.

We look forward to reviewing and providing further commentary on the draft legislation once it becomes available.

*We have used the compensation figures which will take effect once the proposed amendments to employment and discrimination legislation come into force, anticipated to be later this year.

Since the regime was introduced in 2016, PIFs have been a successful addition to the Guernsey funds toolbox. Designed for smaller funds where the manager has an existing and close relationship with the investors, they offer a flexible vehicle within a proportionate regulatory framework. PIFs are popular with start-up managers, for family investments, for relatively closely held funds, as well as for co-invest, follow-on and continuation vehicles in more established fund structures.

On 19 May 2025, the Guernsey Financial Services Commission (the "GFSC") announced a more streamlined and simplified PIF regime, bringing together what were routes one and two into a single regime – the Qualifying Private Investment Fund (the "QPIF") – while retaining the Family PIF, a family wealth solution with the benefits of a collective investment scheme structure. 

Key features

The key features of a QPIF include:

• there is no numerical cap on the number of persons: (i) that the QPIF may be marketed to; or (ii) that may be admitted to as investors to the QPIF, but the QPIF may not be subject to a public offering;
• all investors with an ultimate economic interest in the QPIF must fit within the definition of a Qualifying Private Investor ("QPI"), and all marketing must be specifically targeted at investors who have been identified as QPIs;
• there is no requirement for a manager, auditor or custodian to be appointed to the QPIF, although it must have a GFSC-licensed designated administrator;
• there is no requirement to produce information particulars (e.g. a prospectus, PPM, offering memorandum etc.); and
• registration can be completed within one business day.

"Investors who have an ultimate economic interest" for the purposes of this criteria looks through any intermediate investor to the persons holding an ultimate economic interest in the QPIF, except where the investment is made through a vehicle managed or advised by a QPI, (e.g. a collective investment scheme or occupational pension scheme) in which case that vehicle be treated as the investor. A carried interest and/or co-investment vehicle established to satisfy the sponsor's commitment obligations to and/or profit sharing in a QPIF would not generally be treated as an investor for these purposes.

Where a Guernsey registered manager is appointed to the QPIF, for example, the general partner of a limited partnership QPIF, that manager would be required to be licensed by the GFSC. However, provided that person acts only as the manager of one or more QPIFs, the GFSC will typically dis-apply the Guernsey conduct of business rules and capital adequacy rules in respect of that manager, and the QPIF manager is not required to appoint an auditor.

Qualifying Private Investors

Under the QPIF rules, a QPI means an investor who:

• is able to evaluate the risks and strategy of investing in a QPIF;
• is able to bear the consequences of investment in the QPIF, including the possibility of any loss arising from the investment; and
• falls within one of the following categories of investor:
• • professional investors, including government bodies; investment businesses; affiliates of a QPIF; or individuals investing the equivalent of US$100,000 or more, representing no more than 25% of their investable assets;
  • experienced investors, including entities which have frequently entered into substantial transactions with investment funds or generally in respect of securities and derivatives;
  • knowledgeable employees, including employees, directors, shareholders etc. of professional investors or advisers to the QPIF as part of their remuneration or incentive arrangement;
  • high net worth investors, whose net worth exceeds US$1,000,000 or equivalent, excluding, in the case of individuals, their principal private residence;
  • UK professional clients;
  • EU professional clients;
  • US accredited investors; or
  • licensee admitted investors, investors who the manager and/or administrator determine are able to (i) evaluate the risks and strategy of investing in the QPIF; and (ii) bear the consequences of investment, including the possibility of total loss of their investment.

Benefits of a QPIF

There are many benefits of using a QPIF:

-      reputation and credibility

Guernsey is a highly respected and long-established international finance centre, which provides reassurance and credibility for structures established in the island. This can be particularly important for QPIF managers who are seeking to attract institutional investors or other international investors. Guernsey's reliable legal system also provides investors with a high degree of legal certainty and predictability.

-      strong but proportionate regulation

Guernsey maintains a well-established regulatory framework, which is compliant with international standards. Designed for professional or other eligible investors, QPIFs are themselves subject to relatively light-touch regulation. At the same time, each QPIF must have a designated administrator in Guernsey, which must comply with ongoing best practice requirements, meaning that investors can have confidence in the integrity of the QPIF structure and its management and administration.

-      tax neutrality

Guernsey has tax-neutral status, meaning that there are no taxes on a QPIF's income or gains. This can allow the pooling of capital without the addition of a further layer of taxation, can provide tax efficiencies for investors and can make Guernsey an attractive location for fund and other investment structures.

-      access to expertise and substance

There is a well-established financial services industry in Guernsey, with a range of service providers offering expertise in fund and corporate administration, legal and regulatory compliance, and accounting. Investment managers and investors benefit from extensive expertise and experience, facilitating the establishment and management of the QPIF structure in a cost-effective manner. Guernsey has a depth of infrastructure and resources which enables the provision of appropriate substance for structures managed in the island.

-      efficient set-up process

A significant benefit of the QPIF regime is speed to market. A new QPIF can be launched within one business day, compared to the weeks or even months it can take to establish a fund in other jurisdictions. This can reduce the time and cost involved in establishing a structure, enabling managers to focus on their core activity of investment selection and management. It can also be particularly advantageous in situations where time is of the essence, such as when a manager wants to take advantage of a specific investment opportunity, or if bespoke structures are required.

-      access to global markets and Europe

Guernsey is strategically located between the UK and Europe, providing easy access to global markets.

The QPIF regime provides access to European investors via the National Private Placement Regime (the "NPPR"). NPPR allows investment managers to market their funds to investors in the European Union (the "EU") without having to comply with the onerous requirements of the Alternative Investment Fund Managers Directive (the "AIFMD").

Compliance with the AIFMD can be time-consuming and expensive, and many managers have found it difficult to navigate the complex regulatory landscape. In contrast, under the NPPR, managers can market and sell their funds to professional investors in EU member states by complying with a simplified set of regulatory requirements, enabling access to a large pool of potential investors without having to invest significant time and resources in complying with the AIFMD.

Conclusion

The QPIF offers an efficient and cost-effective solution for investment managers and investors looking to establish a fund or other investment structure in a reputable and well-regulated jurisdiction. QPIFs are flexible, with the ability to structure matters to accommodate the preferences of managers, investors and the investment strategy of the fund. The benefits of using a QPIF include the strong but proportionate regulatory framework, the reputation and credibility of Guernsey as a financial centre, tax neutrality, access to expertise, and a fast set-up process.

Tax regime

The tax regime in Guernsey is separate from that of the United Kingdom. The States of Guernsey, the island's elected representative body, sets out the island's own legislation and policy and the island is self-funded.

Tax rates in Guernsey have historically been low. Standard corporation tax in Guernsey is 0%, although all companies must file an annual tax return. A rate of 10% may be applicable to businesses conducting certain regulated activities, including some banking, fund administration and insurance business, and a rate of 20% applies to certain businesses, such as telecommunications, gas supply and large retail businesses. Tax exempt status is available for investment funds and other regulated companies.

Importantly, there are no capital gains, value-added or sales taxes or any stamp duty.

The island has taken steps to ensure that these relatively low tax rates do not conflict with international tax standards. Guernsey is 'whitelisted' for tax purposes by both the Organisation for Economic Co-operation and Development (OECD) and the European Union (the "EU"), whilst also maintaining domestic measures to prevent tax avoidance.

Tax reporting

From an international perspective, Guernsey adheres to the US Foreign Account Tax Compliance Act ("FATCA") as well as the Common Reporting Standard ("CRS"), demonstrating its commitment to global tax transparency initiatives and the prevention of cross-border tax evasion. 

Under FATCA and CRS, financial institutions in Guernsey (including banks, investment funds and trust companies), must meet reporting and due diligence requirements where an entity is controlled by a US citizen or resident, or any other resident of a CRS-compliant jurisdiction. Reporting must be completed annually, and the information is then exchanged with the Internal Revenue Service in the US or the relevant body in CRS countries.

The island has also signed Tax Information Exchange Agreements with 61 jurisdictions to facilitate the exchange of relevant information between tax authorities. A full list of the states that Guernsey has TIEAs with – including the UK, the US, Switzerland and Ireland – can be found here.

Economic substance

Guernsey introduced the Income Tax (Substance Requirements) (Implementation) Regulations, 2018 (as amended and consolidated in the Income Tax (Substance Requirements) (Implementation) Regulations, 2021) (the "Substance Regulations") in order to ensure cooperation with international standards.

The Substance Regulations apply to all companies (and other undertakings), anywhere in the world, which are tax resident in Guernsey and which carry on any 'relevant activities' (including banking, insurance and fund management business), requiring them to demonstrate that they have sufficient 'economic substance' in Guernsey. The Substance Regulations impose certain obligations on these undertakings, such as demonstrating adequate employees, expenditure and physical assets in Guernsey.  

For more information on economic substance, please see our detailed briefing on Economic substance rules in the Channel Islands.

Financial crime regulation

With a financial services sector dating back decades, Guernsey has a well-established, and continually evolving, structure in place to ensure the highest standards of regulation. Thus, those making use of Guernsey entities can be confident that they are based in a respected and well-regulated jurisdiction.

The Guernsey Financial Services Commission (the "GFSC") is the regulator for financial services in Guernsey and has a long history of ensuring that the island's regulatory regime operates to the highest international standards. The GFSC is committed to maintaining Guernsey's position as a leading international finance centre, delivering balanced, progressive, risk-based financial regulation.

The Guernsey Financial Intelligence Unit (the "FIU") is an operationally-independent organisation, and is responsible for analysing and reporting on financial intelligence. The FIU plays a key role in contributing to the island's robust regulatory systems, so that risks are properly identified and mitigated.

Beneficial ownership

Since 2017, the island has operated a centralised and non-public register of beneficial ownership of Guernsey legal persons, under the Beneficial Ownership of Legal Persons (Guernsey) Law, 2017. Beneficial ownership information must be provided on all companies, foundations, incorporated limited partnerships and limited liability partnerships. The Guernsey Registry maintains a non-public register with information on beneficial owners. The information contained can only be accessed by specified individuals from the GFSC, the FIU and the Guernsey Registry so they can discharge their statutory duties. This system enables the island to ensure that it remains compliant with international standards. 

Anti-money laundering

In February 2025, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism ("MONEYVAL") published their mutual evaluation report on Guernsey following a review of the island's anti-money laundering and financial crime prevention measures. MONEYVAL's report found that the island was compliant or largely compliant with all 40 of the recommendations set out by the Financial Action Task Force (FATF).

Data protection

Guernsey, whilst not part of the EU and directly subject to the European General Data Protection Regulation ("GDPR"), has introduced many of the principles of GDPR through the Data Protection (Bailiwick of Guernsey) Law, 2017, which ensures that similar high standards are met for the safety and protection of data. This has led to adequacy decisions from both the UK and the EC, which confirmed that Guernsey's data protection and privacy standards were sufficient to safeguard UK and EU personal data, enabling the transfer of personal data without the need for further safeguards or specific authorisation.

Conclusion

As a jurisdiction, Guernsey demonstrates a truly global outlook. The island consistently keeps pace with evolving international standards, ensuring that they are implemented to the highest level.

Accordingly, Guernsey is a highly attractive and stable jurisdiction for fund, corporate and trust administration and this overview has touched on just some of the reasons why.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

In this case, the BVI Court of Appeal (the "Court") considered whether a court-appointed director of two BVI companies, Intimere Holdings Ltd and Hellicorp Investments Ltd (the "Companies"), was entitled to inspect company records, including unredacted engagement letters with legal counsel which revealed the identity of a third-party litigation funder who was paying the Companies' legal bills in several court cases. The director, Ms. Papanikolaou, sought access to the documents under sections 100 and 184B of the BVI Business Companies Act, 2004 (the "BCA") in order to discharge her duties as a director.

The Companies opposed disclosure, arguing that Ms. Papanikolaou was acting for an improper purpose — i.e., to benefit the principal of a minority shareholder (Felix LP), one of the two shareholders of Intimere Holdings Ltd, whom they accused of leading a hostile campaign against the Companies and their ultimate beneficial owner. The Companies claimed the funder's identity was not relevant to Ms. Papanikolaou's duties and could be misused if revealed.

First Instance judgment

In the Commercial Division of the High Court, Mr Justice Wallbank granted Ms. Papanikolaou's application, allowing full inspection, including the unredacted engagement letters. He held that the BCA provided a mandatory, unqualified right for directors to inspect company records under section 100(1), and that Ms. Papanikolaou was seeking disclosure for a legitimate reason, namely, to assess the Companies' financial exposure in ongoing litigation, and that any responsible director would have such concerns. Allegations of improper purpose, he ruled, were speculative and unsupported by evidence.

Appeal and legal issues

The Companies appealed, arguing that:

• section 100 should permit refusal where a director is acting for an improper purpose;
• the Judge had made an error of fact by concluding that Ms. Papanikolaou acted for a proper purpose; and
• the Judge had incorrectly interpreted section 100 as leaving no room for improper purpose considerations.

Court of Appeal's analysis

Director's right to inspect records is mandatory

The Court reaffirmed that section 100(1) grants a mandatory and unqualified right for directors to inspect documents and records. Unlike shareholders, whose rights under section 100(2) may be refused, directors' rights are not subject to discretion.

Improper purpose test still applies

The Court clarified that, while section 100 is mandatory, directors must act in accordance with their fiduciary duties. If a director seeks to inspect documents for an improper purpose, the Court can refuse the application under section 184B. However, the burden is on the party opposing the inspection to prove that it has been sought for an improper purpose.

The Court further held that, contrary to the Companies' argument, Mr Justice Wallbank had assessed the allegation of improper purpose and had rightly concluded that there was insufficient evidence showing Ms. Papanikolaou was acting in bad faith or colluding with hostile parties.

The Court agreed that Ms. Papanikolaou's desire to know the litigation funder's identity was reasonable. Without knowing who was funding ongoing litigation or the terms of such funding, she could not adequately assess the Companies' financial risk or fulfil her duties as a director.

The Court emphasised that mere suspicion, conjecture, or past affiliations are not enough to justify restricting a director's statutory rights. What is required is real "cogent" evidence. In this case, the Court held that there was no cogent evidence linking Ms. Papanikolaou to any improper use of the information.

Outcome and upshot

The appeal was dismissed with costs. The Court upheld the lower court's decision that Ms. Papanikolaou should have full access to the Companies' documents, including the unredacted engagement letters.

This decision clarifies the mandatory effect of section 100(1) of the BCA and that the burden will be on a party alleging improper purpose to prove it, by reference to cogent evidence. Mere suspicion or past affiliation will not be sufficient to establish an improper purpose. However, it should be noted that the Court's decision does not suggest that section 100 does not permit refusal of an application to inspect company documents where the court is satisfied (on evidence) that an applicant is acting for an improper purpose.

The Court of Appeal of the Cayman Islands has clarified the extent of the rights of investors in Cayman exempted limited partnerships to information about the partnership, restricting limited partners to relevant information within the context of their request.

The Court of Appeal's judgment in Abraaj General Partner VIII Ltd, in its capacity as the General Partner of Neoma Private Equity Fund IV L.P. v Abraaj ABOF IV SPV Ltd [2025] CICA (Civ) 8 has clarified the scope of section 22 of the Exempted Limited Partnership Act (the "Act") – setting out that a limited partner's right to "true and full information" does not mean unrestricted access to all information in the possession of the general partner. This protects general partners from unreasonable or excessive disclosure demands.

The Court of Appeal also indicated that disputes of this type are not appropriate for disposal by summary judgment where the general partner has arguable defences which will have to be tested.

The case

The case concerns a dispute over the capital account balance of Neoma Private Equity Fund IV L.P. (the "Fund").

The Fund was originally established in 2008 with Abraaj General Partner VIII Limited as general partner and Abraaj Investment Manager Limited ("AIML") as manager. AIML and Abraaj Holdings Limited were placed into liquidation in 2018-2019, and Neoma Manager (Mauritius) Limited replaced AIML as general partner of the Fund under a new limited partnership agreement.

In short, a dispute arose between one of the limited partners and the general partner about whether the limited partner had committed the required sums for investment, and proceedings were issued in the Grand Court of the Cayman Islands (the "Grand Court"). As part of the dispute, the limited partner requested production of a series of documents held by the general partner, relying in part on section 22 of the Act, which states that: "Subject to any express or implied term of the partnership agreement, each limited partner may demand and shall receive from a general partner true and full information regarding the state of the business and financial condition of the exempted limited partnership."

The Grand Court summarily ordered the production of the documents in June 2023, with the Grand Court noting that: "the limited partners are entitled to the same information that is available to the GP concerning the business and financial affairs of the partnership in this regard so that they may be properly informed as to what has been done on their behalf." The general partner then appealed the judgment to the Court of Appeal, arguing that the Grand Court had erred in its interpretation of section 22 of the Act, and that its decision was inconsistent with the previous judgment Gulf Investment Corporation v The Port Fund (Unreported, 16 June 2020) and the English High Court decision in Inversiones Friera SL v Colyzeo Investors II LP [2012] 1 BCLC 469.

The key issues for the Court of Appeal were whether the general partner's statutory duty under section 22 of the Act had practical boundaries, and whether summary judgment was an appropriate means of disposal for a dispute over compliance with the statutory duty in a case where there were contested factual issues.

The decision

The Court of Appeal allowed the appeal – it found that the judge at first instance had adopted too broad an interpretation of section 22 of the Act, relying heavily on Inversiones.

The judgment offers helpful clarification in that while it recognised the right to "true and full information" in section 22 of the Act is vital, that right does not entitle a limited partner to every document in the general partner's possession. The Court of Appeal went on to describe the test as functional and fact-sensitive, observing that: "…the purpose of the entitlement is to enable the limited partners to have a comprehensive understanding of the business decisions being made on their behalf and the financial consequences of those decisions both to the limited partners and to the business itself. What is meant by ‘full information’ is to be determined in this light."

The Court of Appeal also found that summary judgment, where evidence is on affidavit only, for disputes of this type was an inappropriate means of disposal, as the appellants had arguable defences that required factual testing at trial before an order could be made.

There is nothing new about Artificial Intelligence ("AI") – people have been creating and refining machines to independently apply problem-solving techniques to tasks for decades. This has been happening for so long, and in so many ways, that we don't really worry about AI when a Word document highlights a spelling mistake and suggests an alternative, when a social media provider curates a personalised feed of posts for a user, or when Google Maps suggests a change in route because of heavy traffic ahead.

What is new is the availability of powerful AI tools – including ChatGPT – which have the potential to revolutionise how companies process information and make decisions with accessible models and vast processing power. AI technology has the potential to have a major impact on complex tasks including pre-populating technical documents, economic forecasting, mapping health changes and risks across large populations, and modelling market research.

The use of AI introduces challenges on many fronts – not least regulatory and ethical considerations. Although offshore jurisdictions have no AI-specific legislation, the directors of offshore companies must still meet their statutory and common law obligations when their companies use, invest in, or develop AI solutions. For clarity, this article will define "offshore jurisdictions" as jurisdictions typically used for international financial services and company structures, including but not limited to the British Virgin Islands ("BVI"), the Cayman Islands, Guernsey, and Jersey. Unless otherwise specified, references to statutory duties throughout this article will be generic but primarily informed by common law principles and legislation application to the BVI, the Cayman Islands, Guernsey, and Jersey.

What is AI?

AI refers to the use of computer systems to perform tasks that would have required human intelligence, including problem solving, language processing and analysis. If this processing is confined to a simple calculator app on a phone or a spellcheck, it doesn't raise too many issues from a directors' point of view.

The arrival of ChatGPT and similar tools has changed that. ChatGPT is an example of generative AI, developed by OpenAI. Generative AI is a type of AI system that can be used to generate new context including text, images and audio. The systems are trained on a selection of data that allows new content to be generated, which is different from the training data.

AI offers an understanding of context, language capabilities, and the ability to handle complex tasks, and can produce – or appear to produce – relatively comprehensive technical documents. For example: a discrimination law policy, a summary of market conditions in a given sector and region, or an analysis of a company's projected performance.

Duty of care, diligence and skill

Directors are required to exercise care, diligence, and skill when managing a company. The use of AI, with its ability to provide quick analysis, can be a tool to support directors with decision-making.

The use of AI solutions is not without risk. There are specific risks inherent in the use of AI which may include algorithmic bias, operational failures and cybersecurity vulnerabilities. For example, algorithmic bias might result in discriminatory outcomes, such as biased client assessments or unfair hiring decisions. Operational failures could lead to financial losses if an AI system malfunctions during critical operations, while cybersecurity vulnerabilities might expose sensitive data to breaches.

There may also be civil liability risks, for instance the use or inadvertent disclosure of confidential information when using AI products may raise liability. Similarly, there are intellectual property risks in the use of content generated by AI.

AI is a tool and not a substitute for knowledge, skill and supervision. Therefore, a director must be mindful of their duties of care, diligence and skill in deploying AI solutions, and must ensure that there is appropriate oversight, management and control.

Directors of offshore companies must not view AI as a “black box”, nor should AI be used on a “set and forget” basis. A director must not allow their discretion to be fettered by the use of AI, and must not rely on AI in substitution for exercising their own decision-making. AI should augment, not replace, human judgment, with directors retaining ultimate responsibility for decisions informed by AI outputs.

Privacy

Directors should be aware of the data privacy risks when using AI. Under data protection laws in each offshore jurisdiction, companies have a duty to protect personal data and ensure that it is not mishandled or exposed to risk.

AI systems, such as ChatGPT, save your chat history and data. This includes the input (prompts) you provide to ChatGPT, and all responses. The data remains stored by OpenAI as long as you keep your ChatGPT account open.

Sending confidential information to AI systems could accidentally breach applicable data protection laws, especially if the AI system used does not have fully transparent data handling processes.

Directors should ensure that robust data protection protocols are in place when using AI systems. This could include encryption and data anonymisation.

AI bias

Another factor that directors should consider is the bias of AI. AI systems are trained on vast databases that often contain historical biases. This can influence the AI responses. For example, AI models have shown bias in areas such as gender, race and socio-economic factors.

Directors should be aware that using AI for decision-making could introduce unintended discrimination. This could potentially expose a company to reputational damage.

Practical steps for directors

In order to protect against liability, it is recommended that directors take the following steps when deploying AI solutions:

• ensure directors maintain ongoing education to understand the AI systems used by the company and subscribe to regulatory updates in relation to AI;
• ensure the board actively oversees the company’s AI strategy, aligning it with corporate values, risk tolerance, and legal duties;
• implement and review policies around AI deployment, ensuring they cover data governance (e.g. data quality and privacy), ethical guidelines (e.g. fairness and transparency), compliance with applicable regulations, and procedures for regular system audits;
• exercise due care when outsourcing AI services by conducting proper due diligence on vendors, such as assessing their track record, reviewing the transparency of their AI models, verifying compliance with data protection laws, and ensuring robust cybersecurity measures are in place;
• where AI is used, consider whether disclosures are necessary or required, such as informing shareholders or clients about AI’s role in decision making (e.g. investment strategies) or its potential risks and limitations, particularly for investment managers or fund vehicles;
• if AI is used in a decision-making capacity, document the AI’s recommendations, the rationale for accepting or rejecting them, and the extent of human oversight involved, ensuring a clear audit trail;
• mitigate liability for AI errors by ensuring rigorous testing, validation, and monitoring of systems, and maintaining records of oversight efforts;
• be prepared for future international regulatory developments, such as the EU’s AI legislation, which regulates high-risk AI systems, or guidelines from jurisdictions like the US and Singapore, by implementing horizon-scanning processes;
• examine company directors and officers insurance policies to ensure coverage for AI-related liabilities, such as data breaches or oversight failures, and consider negotiating clauses specific to AI risks; and
• consider ethical implications, ensuring AI systems promote fairness, transparency, and accountability, such as by addressing biases and justifying AI driven decisions.

Conclusion

Directors must be mindful of their duties when using AI solutions. Good governance requires proactive engagement with AI risks and ensuring that appropriate steps are taken to understand and manage such risks.

Where a director fails to act responsibly, there is a risk of facing personal liability for any breach of their duties. Furthermore, the director and the company may face reputational damage, or civil liability, aside from any liability for breach of duties.

Conversely, by promoting a culture of responsible AI use, directors can mitigate against liability, demonstrate ethical leadership, and build stakeholder trust in an AI-driven era.

This briefing will review the statutory procedure for mergers and consolidations in the Cayman Islands ("Cayman"). These are relatively simple, cost-effective, and straightforward mechanisms for restructuring and they provide broad flexibility to meet the commercial aims of merging parties.

The Cayman merger and consolidation regime is governed primarily by the Companies Act, as revised (the "Companies Act") and (specifically in relation to that form of company) the Limited Liability Companies Act, as revised (respectively, "LLCs" and the "LLC Act"). This legislation provides a simple and robust statutory framework for undertaking mergers or consolidations and is by far the most common form of merger/consolidation used for M&A transactions in the jurisdiction.

As Cayman companies and LLCs closely mirror their overseas equivalents (e.g. a BVI limited company or a Delaware LLC), merging/combining with a Cayman entity is an attractive proposition for investors, clients and companies based elsewhere. The statutory merger process is aligned and familiar to commonly used overseas corporate vehicles and statute.

Mergers and consolidations

Vesting the assets, undertakings, property and liabilities of the constituent companies (two or more) into one surviving company, is considered a "merger", while vesting the assets, undertakings, property and liabilities of the constituent companies (two or more) into a new consolidated company (i.e. producing a new company different from the constituent companies) is considered a "consolidation".

The Companies Act allows for: (i) the merger or consolidation of two or more Cayman companies and (ii) the merger or consolidation of one or more Cayman companies with one or more overseas companies. Cayman segregated portfolio companies are ineligible to take part in a merger or consolidation.

The LLC Act provides for mergers and consolidations between LLCs (two or more), as well as permitting Cayman LLCs to merge or consolidate with Cayman exempted companies or overseas companies. An entity with a legal personality (including some trusts or unincorporated business) is included.

Any merger with an overseas company or foreign entity must be permitted by all applicable foreign laws and constitutional documents.

A Cayman company and a Cayman LLC may merge or consolidate.

Statutory procedure

The board of directors of each constituent company (or the managers of an LLC) approve a written plan of the merger (the "Plan").

The Plan must contain:

• the (i) name, (ii) registered office and (iii) designation and number of each class of shares in respect of each constituent company (or LLC Interests in respect of LLCs), and the name of the surviving or consolidated company;
• the names and addresses of the directors (or managers in respect of an LLC) of the surviving or consolidated company;
• the terms and conditions of the proposed merger or consolidation (including how the shares or LLC interests are to be converted), along with the date on which the merger or consolidation is intended to take effect;
• the rights or restrictions attaching to the shares (or LLC interests) of the surviving company;
• any amendments required to be made to the memorandum and articles of association (or LLC agreement) of the surviving company (in the case of a merger) or a statement that no change is required;
• the new memorandum and articles of association (or LLC agreement) of the surviving company (in the case of a consolidation);
• whether any benefit or payment is payable to any director of a constituent, consolidated or surviving company upon the merger or consolidation; and
• details of any secured creditor of the surviving or consolidated company (it is likely that under any financing arrangements, formal consent will be required from any existing secured creditor – see below).

The Plan must be authorised by a special resolution of the members of each constituent company (other than LLCs) and such other authorisation as may be required by the articles of association of the respective constituent company. For a constituent company which is an LLC, two-thirds of the members are required to consent. Members are not required to approve a merger of a Cayman parent with its Cayman subsidiary, provided that the parent owns at least 90% of the voting shares in such subsidiary, and a copy of the Plan is given to each other member of the subsidiary.

The constitutional documents (articles of association or LLC agreement) must permit the merger or consolidation. If not, the constitutional documents will need to be amended by the consent mechanism of that company or LLC.

Every secured creditor of a constituent company (i.e. holding a fixed of floating security interest) must consent to the Plan, unless the court waives consent after an application to the court by a constituent company. It is likely a secured creditor will require specific conditions to their consent.

If a constituent company is regulated or licensed with the Cayman Islands Monetary Authority ("CIMA"), then CIMA must consent to the Plan. If any constituent company is registered or licensed with CIMA, then the consolidated or continuing company will require a similar registration or license.

The Plan is filed with the registrar of companies in Cayman (the "Registrar"), along with:

• all applicable fees of the Registrar (or CIMA);
• a certificate of good standing for each constituent company or LLC;
• a director's declaration (or manager, in respect of an LLC) that the constituent company is, and the surviving company will (immediately after the merger or consolidation), be able to pay its debts as they fall due;
• the merger or consolidation is bona fide and not intended to defraud unsecured creditors of the constituent companies;
• no petition or other similar proceeding has been filed and remains outstanding, and that no order has been made or resolution adopted to wind up the constituent company in any jurisdiction
• no receiver, trustee, administrator or other similar person has been appointed in any jurisdiction and is acting in respect of the constituent company, its affairs, or its property or any part thereof;
• no scheme, order, compromise or other similar arrangement has been entered into or made in any jurisdiction whereby the rights of creditors of the constituent company are, and continue to be, suspended or restricted;
• the assets and liabilities of the constituent company (or LLC) is made up to the latest practicable date before making the declaration; and
• (in the case of a constituent company or LLC that is not a surviving company), the constituent company has retired from any fiduciary office held or will do so immediately prior to merger;
• an undertaking that a copy of the certificate of merger will be given to the members and creditors of the constituent company, and that notification of the merger will be published in the Cayman Gazette; and
• a director’s declaration (or manager, in respect of an LLC), where relevant, that the constituent company has complied with any applicable requirements under the regulatory laws.

Notice of the merger or consolidation is published in the Cayman Gazette.

As soon as the merger or consolidation becomes effective:

• the Registrar will issue a certificate of merger or consolidation and this will constitute, prima facie evidence of compliance with all statutory requirements;
• the rights, the property of every description, including choses in action, and the business, undertaking, goodwill, benefits, immunities and privileges of each of the constituent companies, shall immediately vest in the surviving/consolidated company or LLC;
• subject to any specific arrangements entered into by the relevant parties, the surviving company or LLC shall be liable for and subject, in the same manner as the constituent companies, to all mortgages, charges or security interests, and all contracts, obligations, claims, debts, and liabilities of each of the constituent companies or LLCs;
• in the case of a consolidation, the new memorandum and articles of association filed with the Plan immediately are in force;
• the Registrar will strike off the constituent company or LLC that is not the surviving company; and
• to the extent the surviving company becomes creditor or debtor to the same obligation, such obligation is extinguished by operation of law. For good order, this can be recorded in board resolutions of the surviving company.

Depending on a variety of factors (e.g. foreign law requirements, shareholder meeting notice periods, commercial issues etc.) the process usually takes anywhere from two weeks to three months.

Dissenting shareholders

In certain circumstances, the Companies Act provides members of a constituent company a statutory right to dissent from the merger of a Cayman company, and to be paid a fair value for their shares (judicially determined). The LLC Act contains equivalent provisions, provided that the LLC Agreement provides that the dissenting member is entitled to such payment.

Where the parties cannot agree on price, either party may file a petition with the Cayman court, to determine the fair value. Often, a dissenting shareholder will agree the fair value of the shares with the company prior to the matter being determined by the court.

Conclusion

The statutory merger procedure provides a simple yet effective method to restructure companies or LLCs. As Cayman entities are regularly used in corporate (and exchange-listed) and asset holding structures, the use of the regime is becoming ever more prevalent. If you require advice or information on mergers or consolidations in the Cayman Islands, please contact us.

This briefing is in broad terms and for the purpose of giving general information, it is not to be relied upon in relation to any particular set of circumstances.

The Beneficial Ownership Transparency Act (Revised) (the "Act") and supporting regulations contain the legal framework of the Cayman Islands' beneficial ownership regime.

What entities does the Act apply to?

The Act imposes various statutory duties on "Legal Persons". For the purposes of the Act, the following are Legal Persons:

• a company that is incorporated, formed or registered in the Cayman Islands;
• a limited liability company registered under the Limited Liability Companies Act;
• a limited liability partnership registered under the Limited Liability Partnership Act;
• a limited partnership registered under the Partnership Act;
• a foundation company; and
• an exempted limited partnership registered under section 9 of the Exempted Limited Partnership Act.

In each case, the definition does not include a foreign entity registered under the applicable Cayman Islands legislation.

What are the alternative routes to compliance available to qualifying Legal Persons?

The following categories of Legal Person may apply an "alternative route to compliance":

• a Legal Person that is listed (or is the subsidiary of a listed entity) on the Cayman Islands Stock Exchange or an approved stock exchange;
• a Legal Person that is licensed under a regulatory law, including:
  • Banks and Trust Companies Act;
  • Companies Management Act;
  • Insurance Act;
  • Mutual Funds Act; or
  • Securities Investment Business Act;
• a fund registered under the Mutual Funds Act or the Private Funds Act; or
• a Legal Person that is exempted by the Cabinet.

Such Legal Persons are not required to establish and maintain a beneficial ownership register and report their beneficial owners on an ongoing basis. Rather, they must report limited "required particulars".

In the case of registered funds, the required particulars include contact details of a licensed fund administrator, or another contact person licensed or registered under a regulatory law for providing beneficial ownership information located in the Cayman Islands. This person must provide the competent authority with requested beneficial ownership information within 24 hours of a request being made.

Duty of Legal Persons to identify Registrable Beneficial Owners

Unless an alternative route to compliance applies, a Legal Person has a duty to identify:

• every individual that is a Beneficial Owner (as defined below) of the Legal Person;
• every Reportable Legal Entity (as defined in the Act); and
• the trustees of a trust who are treated as a Beneficial Owner of the Legal Person.

The Legal Person also has a duty to provide in writing to its corporate services provider the current and valid required particulars of Registrable Beneficial Owners (as defined below).

Where a Legal Person (i) knows or has reasonable cause to believe that a person is a Registrable Beneficial Owner, and (ii) has not already been informed of the persons status as a Registrable Beneficial Owner and received all the required particulars, it must give a notice to such person requiring the provision of information.

Who is a "Registrable Beneficial Owner"?

A "Registrable Beneficial Owner" is:

• an individual that is a Beneficial Owner of the Legal Person; and
• a Reportable Legal Entity:
  • that directly holds a relevant interest in the Legal Person or meets one or more of the specified conditions; or
  • through which an individual Beneficial Owner or other Reportable Legal Entity indirectly holds:
    • a partnership interest, shares or voting rights in the Legal Person; or
    • ultimate effective control over management of the Legal Person.

A "Beneficial Owner" in relation to a Legal Person is an individual who meets any of the following conditions:

• the individual ultimately owns or controls, whether through direct or indirect ownership or control, 25% or more of the shares, voting rights or partnership interests in the Legal Person;
• the individual otherwise exercises ultimate effective control over the management of the Legal Person (which includes ownership or control exercised through a chain of ownership or by means of control other than direct control); or
• the individual is identified as exercising control of the Legal Person through other means.

If a trust meets one of the specified conditions, a trustee of the trust must be identified as the contact person.

A professional advisor (such as a lawyer, accountant, or financial advisor, who provides advice or direction in a professional capacity) or a professional manager (such as a liquidator, receiver or restructuring officer) is not a Beneficial Owner.

If there is no individual who meets one of the conditions, the senior managing official (including a director or chief executive officer) of the Legal Person must be identified as the contact person.

Duty to establish and maintain a beneficial ownership register

A Legal Person's corporate services service provider must establish and maintain a register containing adequate, accurate and current beneficial ownership information in relation to the Legal Person.

The corporate services provider must regularly deposit beneficial ownership information on the General Registry's Corporate Administration Portal.

A corporate services provider must:

• review the required particulars provided; and
• take reasonable measures to verify the identity of the Beneficial Owner or Reportable Legal Entity using information obtained from reliable sources.

Duty of Registrable Beneficial Owners to supply information

A Registrable Beneficial Owner has a duty, within 30 days of receiving a notice from the Legal Person, to:

• notify the Legal Person that they are a Registrable Beneficial Owner;
• state the date on which they became a Registrable Beneficial Owner; and
• give the required particulars.

Duty to keep beneficial ownership register current

If a "relevant change" occurs with respect to a Registrable Beneficial Owner, whose required particulars are stated in its beneficial ownership register, the Legal Person has a duty to give notice to the Registrable Beneficial Owner as soon as reasonably practicable (and not later than 30 days after it learns of the change or had reasonable cause to believe that the change had occurred) requesting confirmation of the change.

A relevant change occurs if:

• a Registrable Beneficial Owner ceases to be a Registrable Beneficial Owner in relation to the Legal Person; or
• any other change occurs as a result of which the required particulars are incorrect, incomplete or not current.

Duty to notify relevant changes

In addition to the duty imposed on a Legal Person which learns of a relevant change, a Registrable Beneficial Owner has a proactive duty to:

• notify the Legal Person of a relevant change;
• state the date on which the relevant change occurred; and
• give the Legal Person any information needed to update the beneficial ownership register.

The duty must be complied with within 30 days of the date on which the person discovered the relevant change.

What are the required particulars?

Except in the case of a Legal Person to which an alternative route to compliance applies, the required particulars in respect of an individual are:

• full legal name;
• residential address;
• address for service of notices;
• date of birth;
• nationality;
• information from their unexpired and valid passport, driver's license or other government-issued ID, including:
  • identification number;
  • country of issue; and
  • date of issue and expiry;
• nature in which the individual owns or exercises control of the Legal Person; and
• the date on which they became or ceased to be a Registrable Beneficial Owner.

The required particulars in respect of a Relevant Legal Entity are:

• corporate or firm name;
• registered or principal office;
• legal form of the entity and the law by which it is governed;
• nature in which the relevant Legal Person owns or exercises control of the Legal Person;
• the register in which it is entered and its registration number in that register; and
• the date on which it became or ceased to be a Registrable Beneficial Owner.

Restrictions notices

If a corporate services provider is of the opinion that the Legal Person has:

• failed to comply with its duties to give notice to its Registrable Beneficial Owners or to keep its beneficial ownership register current; or
• has made a statement regarding relevant matters that is false or misleading,

the corporate services provider must give a notice to the Legal Person requiring it to provide missing particulars or a justification and correction in respect of a false or misleading statement.

If the Legal Person fails to comply with this notice, the corporate services provider must issue a restrictions notice to the Legal Person with regard to the shares or other relevant interest.  In addition, the corporate services provider must send a copy of the restrictions notice to the competent authority within 14 days of its issue.

In deciding whether to send a restrictions notice, the corporate services provider must have regard to the effect of the notice on the right of persons in respect of the relevant interest, including third parties, persons with a security interest over the relevant interest and other Beneficial Owners.

The effect of a restrictions notice is, amongst other things:

• any transfer or agreement to transfer the relevant interest is void;
• no rights, including voting rights, are exercisable in respect of the relevant interest; and
• other than in a liquidation, no payment may be made of sums due from the Legal Person in respect of the relevant interest, whether in respect of capital or otherwise.

Access to beneficial ownership information

The competent authority must maintain a search platform by which certain prescribed persons may be provided with access to information on all beneficial ownership registers maintained.

Those persons are:

• the Royal Cayman Islands Police Service;
• the Financial Reporting Authority;
• the Cayman Islands Monetary Authority;
• the Anti-Corruption Commission;
• the Tax Information Authority;
• the Maritime Authority of the Cayman Islands;
• the Civil Aviation Authority of the Cayman Islands;
• the Registrar of Lands;
• an entity undertaking procurement in accordance with the Procurement Act; and
• any other body which:
  • is assigned responsibility for monitoring compliance with anti-money laundering regulations, such as CARA and CIIPA;
  • a licensed financial institution; or
  • a designated non-financial business and profession.

The purpose of the search must be justified by reference to:

• the performance of a statutory function;
• assisting with the prevention and detection of crime;
• furthering the interest of national security; or
• statistics and preparation of statistical reports.

Public access - legitimate interest

Where there is no applicable prohibition from disclosure pursuant to an application granted under the Beneficial Ownership Transparency (Access Restriction) Regulations, 2024, the competent authority may provide access to information on the search platform to a member of the public who applies for access to that information on the basis that the member of the public:

• is a person engaged in journalism or bona fide academic research;
• is acting on behalf of a civil society organisation whose purpose includes the prevention or combating of money-laundering, its predicate offences or terrorism financing; or
• is seeking that information in the context of a potential or actual business relationship or transaction with the Legal Person about whom that information is sought,

and has a legitimate interest in that information for the purpose of preventing, detecting, investigating, combating or prosecuting money laundering or its predicate offences or terrorist financing (a "legitimate interest").

In the case of a journalist, academic or civil society organisation, the application must be accompanied by evidence (i) of the applicant's credentials and identity, and (ii) that the information is sought for a legitimate interest.  In the case of a person seeking access in the context of a business relationship or transaction, the application must be accompanied by evidence (i) of the applicant's identity, (ii) that the information is sought in the context of an actual or potential business relationship or transaction, (iii) of the nature of such relationship or transaction, and (iv) that the information is sought for a legitimate interest.

In the event that an application is successful, the information that may be disclosed by the competent authority, in relation to an individual who is a Registrable Beneficial Owner is:

• name;
• country of residence;
• nationality;
• month or year of birth (or both); and
• nature of control.

An individual may apply to the competent authority to prohibit the disclosure of information on the search platform relating to the individual to any member of the public where the applicant reasonably believes that the disclosure of the information and his or her association with the Legal Person will place the applicant or an individual living in the same household as the applicant at serious risk of:

• kidnapping;
• extortion;
• violence;
• intimidation; or
• any similar danger or serious harm.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

Section 273 of the IA states that "A person aggrieved by an act, omission or decision of an office holder may apply to the Court and the Court may confirm, reverse or modify the act, omission or decision of the office holder". The question of who has standing to hold liquidators to account in a liquidation of a BVI company is an important one.

In Stevanovich v Richardson, the Board ruled that a former director of a company, particularly one facing proceedings for breach of fiduciary duty, does not qualify as a "person aggrieved" in relation to the joint liquidators' decision to admit a creditor's claim in proof of debt. This is so, even in the circumstances of this case, where the company had only been restored, and brought proceedings against that director, as a direct result of the creditor advancing that claim.

In assessing the standing issue, the Board applied the Supreme Court decision in Brake v Chedington Court Estate Ltd [2023] UKSC 29 (a bankruptcy case). Applying the principles of that case by analogy, it held that standing is limited to:

• creditors affected by a liquidator's conduct;
• members or contributories affected by a liquidator's conduct; and
• persons whose rights or interests have been "directly affected" by the exercise of powers peculiar to the insolvency regime

In the case at hand, the former director was denied standing because he could not demonstrate that his rights were "directly affected" by the joint liquidators’ admission of the claim. Although there were proceedings against him (which were factually connected to the proof of debt), the Board held that these did not in themselves establish standing. The former director retained the ability to challenge the claim within those proceedings, but not under section 273 of the IA.

This judgment contains a careful and authoritative review by Honourable Dame Janice Pereira and the Board of the circumstances in which a person can claim to be a person aggrieved within the meaning of section 273 of the IA, which are complex and fact-sensitive. A full analysis falls beyond the scope of this brief update, but the judgment will no doubt be analysed and cited as a leading authority in future cases on this question.

The full judgment is available here for your reference.

As a result, we expect that leadership teams will be looking to review their policies and procedures and consider their training programs to minimise the risk of increased exposure to employment-related claims. 

In this briefing we provide an overview of the changes and provide our thoughts on the action you can take to ensure you are ready when the amendments come into force (which date is yet to be confirmed). 

Increase to the maximum amount to be paid as compensation for discrimination claims

The maximum compensation payable for employment-related discrimination claims will be set at the lesser of £30,000 or 52 weeks' pay, per act of discrimination, with a maximum award of £30,000 for hurt and distress.

Previously, compensation was capped at £10,000, with a maximum award of £5,000 for hurt and distress, so this is an increase of 300% (note that, although significant, it does not go as far as the Employment Forum's recommendation, which was the higher of £50,000 or 52 weeks' pay).  The sum of £30,000 will be reviewed at least every three years.

There is the potential that an employer could face a claim where the award could exceed £30,000, as this sum is the maximum per act of discrimination.

Depending on the nature of the allegations there could be more than one act, e.g. indirect discrimination and harassment. However, it is important to remember that the employee must be successful in their claim and the sum of £30,000 is a maximum amount and will only be awarded in the most serious of cases, likely to be where there has been an ongoing campaign of discrimination not a one-off act. 

Our top tips for employers to reduce exposure are: 

• ensure all employees are aware of their obligations under discrimination legislation and provide suitable mandatory training with regular updates, keeping records of attendance;
• foster a company culture which encourages people to speak up and where there is a zero-tolerance approach to discrimination;
• review and update policies and procedures to ensure they reflect best practice and do not inadvertently put a certain group of individuals at a particular disadvantage;
• ensure policies and procedures and business decisions are applied fairly and consistently across the board;
• provide general training for managers so that they have the skills to equip them to have difficult conversations and resolve conflict; and
• if faced with a potential claim, seek legal advice early on to discuss your options. 

Compensation for unfair dismissal 

The compensation for unfair dismissal will range from four weeks' pay for employees with one year's service to 36 weeks' pay for employees with 15 years' service or more. Previously, these claims were calculated on a sliding scale from four to 26 weeks' pay for employees with more than five years' service. 

In addition, the Tribunal will have a discretion to increase an award by up to 25% where the employer's conduct has been particularly blameworthy, so the range could potentially be five to 45 weeks' pay.  

It has always been open to employers to argue that a potential award to an employee should be reduced on the basis that their conduct contributed to the dismissal.

The Tribunal's guidance notes that in order to satisfy this test, the conduct must be culpable or blameworthy, so the discretion to uplift an award where the employer's conduct is blameworthy balances this out.

Our top tip to avoid this uplift would be to ensure that you follow a fair process prior to dismissal.

The requirement to give written reasons for dismissal

Under the amended legislation, an employer will be obliged to provide an employee with a written statement setting out the reasons for dismissal within seven days of an employee's last day of employment.

If an employer fails to do so, the employee may make a claim to the Tribunal, which may, if the employer has no reasonable excuse, order the employer to provide a written statement and, in addition, make a compensation award of up to eight weeks' pay to the affected employee.

This is a day one right, so it applies to all employees, even those on a probationary period. 

In our experience, employers in Jersey do not typically provide a written reason for dismissal in their standard leavers letters. Therefore, this new requirement is likely to necessitate a change to employers' current practices and could trip employers up and expose them to unfair dismissal or discrimination claims. 

To mitigate this, we recommend that you: 

• ensure you train your managers to have regular review meetings during the probationary period and throughout the employee lifecycle;
• address any performance or conduct issues early;
• be consistent and fair when applying policies and procedures to ensure employees are all treated the same;
• be honest and open in your communication and ensure that the reason you provide to justify any dismissal is unambiguous;
• update your leavers letters and processes to ensure the correct information is provided within the prescribed timeline.

Other changes

• The cap for a breach of statutory rights (e.g. breaches in relation to flexible working requests or certain rights in relation to pregnancy or breastfeeding, amongst others) has been increased from four weeks' to eight weeks' pay, which will result in a range of potential awards from zero to eight weeks' pay. 
• Compensation limits will be regularly reviewed and future changes to the maximum amount that may be awarded will be made by Ministerial Order rather than Regulations.
• The jurisdictional limit for contractual breaches of an employee's rights will be increased from £10,000 to £30,000.

The traditional view of the family office is that of a prudent organization, focused on conservative investment strategies and the preservation of family wealth.  Conversely, venture capital is viewed as high risk, driven by speculative investment, novel technologies and startup failures.  The two sectors seem misaligned, and yet family offices are increasingly engaged with venture capital.

For instance, the JP Morgan Private Bank Global Family Office Report 2023 notes that family offices allocate 46% of their total portfolio to alternative investments (including venture capital).  The World Wealth Report notes that family offices and high net worth individuals now contribute as much as 10% of all capital in venture funds.^[2]

The question then arises, why do family offices invest or engage in venture capital?

The quote above provides some insight.  Equity returns are frequently driven by new business, not old business.  At their core, family offices seek returns.

But this is not the full story.  There are a number of other factors, including cultural alignment between founders and families, the focus of younger generations on technology, and the social objectives of families, which drive family office interest in venture capital.

This article will examine how family offices have historically been involved in the venture capital space, before looking at modern examples of how family offices engage with venture capital.

The historic role of family offices

There is nothing novel about family office investment in venture capital.  In fact, private family wealth was instrumental in creating the VC market.

In VC, An American History, it was noted that “the basic model of VC fundraising revolves around the intermediation of risk capital” and the early nineteenth century whaling industry reflected this intermediation.  The whaling industry was funded by wealthy families, providing finance to distant, high risk ventures, in which they had limited knowledge or experience.  The author noted that in New Bedford, a large amount of venture financing was provided by Quaker families, who were willing to engage in trust based transactions owing to tight social relationships between the families and venture partners.^[3]

Later, in the twentieth century, it was observed that “the first generation of professional VC firms in the US stemmed from earlier funds and personal networks set up by very wealthy industrial families, such as the Rockefeller, the Phipps and the Carnegies”.^[4]  These family funds backed investments into the then nascent industries of aviation, automobiles and photography.

Some family funds would later develop into professional venture capital funds, such as Venrock and Bessemer Venture Partners.  One key example is the VC firm, Kleiner Perkins, which was set up in the early 1970s with an initial $4M investment by the Hillman family office into an new fund.  The first fund, KPCB Fund 1 returned $345M to its investors.  Kleiner Perkins went on to launch a further 18 funds, while making over 1,500 investments over its history.

Modern trends in the venture capital space

There are a number of ways in which family offices engage in venture capital.  Common approaches include direct investment in VC funds, direct investment in startups, or hybrid multi-family offices which launch their own funds.

Direct investment in venture capital funds

As nearly 10% of all capital in venture capital funds is provided by family offices, they are highly sought out by fund managers as a source of capital.  Similarly, family offices seek venture capital investments in order to achieve a balanced portfolio. 

Additionally, some families invest in venture capital as a means of aligning with their social objectives.

In terms of portfolio allocation, venture capital is a risky asset class but can deliver high returns, and is therefore an important part of any balanced portfolio.  A key mandate for any family office is to maintain family wealth and, therefore, venture capital can play an important role in portfolio management.

However, many families also have social objectives, and may wish to contribute to the social and economic development of their communities.  By investing in venture capital, which focuses on the startup sector and new technology, family offices can choose an investment class which aligns with wider social objectives.

For instance, Indonesia is notable for the large number of family groups that invest in the VC space, particularly through direct investments in local venture capital funds.  Some notable examples include:

• A signifiant initial investment by the family-owned Lippo Group in Venturra Capital, a venture capital fund focused on early stage high growth business in Indonesia and SouthEast Asia. 
• A limited partner investment by the family owned Bakrie Group in Convergence Ventures, an early-stage Indonesian-focused venture capital firm. 

There are many other examples, and Indonesia remains one of the most vibrant regional start-up markets in South East Asia.

Direct investment in startups

Another way in which family offices engage in venture capital is by making direct investments in new ventures or by setting up their own venture capital arm.

A number of factors drive families to invest directly in startups and lead founders to seek family office investment.  These include:

Generational change

Generational change is often a catalyst for investment into start-ups.  Younger generations may be more aligned with technology and innovation and seek to invest in the sector.  Furthermore, it may align with family succession needs to invest in start-ups.  One author noted that “often, the next generation of a wealthy family struggles with maintaining the family legacy, while embracing change and modern investment opportunities.  Venture capital provides the next generation, and by extension the family, with access to new technologies and founders who will innovate.”^[5]

Alignment of family and founder values

Startup founders are entrepreneurial in nature, and this frequently finds resonance with families.  For instance, the founders of many families are, themselves entrepreneurial.  The Hong Kong magnate, Li Ka Shing started his career by selling plastic flowers, which were a novelty at the time.  Furthermore, the second or third generation may possess a more entrepreneurial spirit, particularly in relation to technology.

Alignment of family and founder interests

Aside from value alignment, there is also an interest alignment between founders and families.  Founders may prefer to seek family office investment, as opposed to venture capital investment, owing to the short term investment cycle of venture capital.  VC funds usually have a fixed investment cycle, focused on returns within a set period, whereas a family office may take a longer view of the investment, providing stability to the founder.

Social and economic vision

As discussed, social objectives frequently drive family investment in the startup sector.  Looking again at Indonesia, we can see that some family groups have set up tech incubators in order to develop and mentor the next generation of startup founders.  Notable families include the Ciputra Group, which set up the Ciptura GEPI incubator, and Djarum, which set up Merah Putih, Indonesia’s first tech incubator.

As well as investing in startups directly, some family offices establish dedicated arms, designed to invest in new ventures in a more systematic fashion. 

An interesting example is Sattva Ventures, an early to mid stage investment platform established by an Indian family office.  Notably, the investment approach of Sattva Ventures is to invest ‘beyond capital…with a vision that transcends conventional boundaries more than investors; we are partners on a transformative journey’.  Again, we see that values, as much as returns, drives family office investment in the venture capital space.

Multi family office funds

Recent years have seen a growth in hybrid multi-family offices, which provide investment advisory and related services to their family offices.  A number of such offices are increasingly involved with venture capital. 

Perhaps the leading firm in this area is Iconiq Capital, a multi-family office with $80BN of assets under management, which manages the wealth of many leading families, including those of the Silicon Valley and Hollywood elites.  Iconiq is notable for its focus on the venture capital industry, having raised seven growth funds to date.

Given the rise in multi-family offices, one may expect more offices to branch out from pure advisory to a more active fund management role.

A tale of caution

It is clear that venture capital is of increasing interest to family offices, whether in terms of portfolio management, involvement in new markets, social objectives, or a change in generational outlook.  The sector allows for innovation, with the aim of wealth preservation.

However, the area is not without risk for both family offices and their advisors. 

Family offices need to consider economic and portfolio risk.  Venture capital is a speculative industry, heavily exposed to market cycles, with a large failure rate among startups.  Even seasoned veterans get burnt.  For instance, in 2023, Silicon Valley Bank, a dedicated lender to the VC and startup sector, with over four decades of experience, collapsed as a result of various factors, including high interest rates, a collapse in the tech industry, and over concentration on risky assets.

Family offices also encounter inefficiencies, as a result of skills or knowledge gaps, when considering venture capital and startups.  Venture capital is a highly transactional environment, which requires specific insight and experience, both in terms of financial, market and legal knowledge.  Conversely, many family office advisors have historically come from the trusts, taxation and private wealth sectors, and may confront a steep learning curve where families consider venture capital.

A further consideration is the highly relationship based nature of the venture capital and startup markets.  It is a highly networked environment, and VC firms typically have deep and extensive relationships in the sector.  This can be difficult to emulate for family offices, who are exploring the market and may lack the same relationships.

Notwithstanding the risks, it is clear that family offices can and do invest in venture capital firms and startups, or establish incubators, and achieve success in the sector.  Venture capital is a dynamic and changing arena, which provides access to novel technologies new ideas, and the potential to make a change.  Venture capital has a historical relationship with family wealth that continues into the present day.

This article was first published by Hubbis in December 2024.

Where an individual dies holding assets in the Cayman Islands (“Cayman”) in their name, the Succession Act (2006 Revision) provides that no person shall take possession of or in any manner administer any part of their estate without first obtaining a grant of representation in the Cayman Grand Court (the “Court”). The grant of representation appoints a personal representative in Cayman who may thereafter administer the estate of the deceased and, for example, in the case of shares in a Cayman company, validly transmit the shares to those persons entitled under the deceased’s will or intestacy. This memorandum sets out the basic procedure and costs involved in obtaining a grant.

Grant of Probate (Testate Estate)

Where the deceased died testate (leaving a will admissible for probate in Cayman), the documents which must be lodged by the executor(s) with the Court to obtain the grant of probate are:-

Within six months of the date of death:

• The original will or a court certified copy.
• A true copy of the death certificate certified as such by the issuing authority (if the death certificate is other than in English, it will be necessary to submit an official translation).
• The application for the grant.
• The affidavit of executor in support of the application.
• A letter of authorization.
• The grant for sealing.

Within six months of the issue of the grant:

• An inventory of estate.

Within one year of the issue of the grant:

• The affidavit of general accounting which confirms to the Court that the administration of the Cayman estate is complete.

Grant of Letters of Administration (Intestate Estates)

Where the deceased died intestate (without leaving a will admissible for probate in the Cayman), in addition to the documents mentioned above, the Court will require the following to be lodged:

• If the deceased’s domicile is other than the Cayman Islands, an affidavit of law given by a lawyer qualified in the jurisdiction of the deceased’s domicile. This is usually drafted by us based on the written advice of the foreign lawyer and then sworn by the foreign lawyer.
• A bond given by the applicant(s) and a bond of surety given by some third party. These are usually for an amount double that of the sworn value of the Cayman estate.

Application for Special Leave

If an application is filed outside of the six month time period from the date of death, it will be necessary for the executor(s) or proposed administrator(s) to make an application to the Court for special leave to apply out of time. The additional documents which must be lodged with the Court are:

• The application for special leave.
• An affidavit in support explaining why the application is being filed out of time.

Resealing a Foreign Grant

Where a grant of probate or letters of administration has already been obtained from a foreign court in respect of the deceased’s estate, it may be possible for this foreign grant to be resealed by the Court but such grants must be in a similar form to those issued by the Court. The procedure is similar to an application for a grant of probate or letters of administration although it will also be necessary to lodge a court certified copy of the overseas grant.

Additional Affidavits 

The Court may also request supplementary affidavits from any persons upon any matter in connection with the application that is filed.

Examples of such affidavits include:

• Affidavit of Plight and Condition.
• Affidavit of Attesting Witnesses.
• Affidavit of Law by foreign legal counsel.

What do we mean by strategic employment advice?

Strategic employment advice aligns your organisation's strategy and goals with your business objective and combines corporate legal advice with operational HR guidance to deliver tangible results from which you can measure success. 

In the context of an acquisition or merger, strategic employment advice will assist the board:

• to bridge the gap between the merging organisations or businesses;
• to maintain focus on the metrics being used to measure success; and
• to have clarity in decision making (planning, due diligence, restructuring and contractual challenges) and soft skills (communication and engagement) to drive the merged business forward.

How to leverage it within your organisation

Engage experts early: Your local team may not have the knowledge, experience or capacity to plan and execute the transaction efficiently.  An expert can draw on prior experience and knowledge to avoid common pitfalls and will put forward a different perspective or approach when developing strategy.

Do your due diligence: Start with the basics and ensure you have sufficient information to identify all employees working for the business (including 'hidden' employees, e.g. those working remotely and those on zero hour or 'consultancy' contracts – as they could still be in scope).  To understand financial liability and operational risk you will need to know the key contractual terms of employment for each employee.  Don’t forget about benefits, particularly those that are 'discretionary' and remember to assess the quality of the HR record keeping when considering HR files, e.g. absence records and disciplinary issues.  Conducting a gap analysis is a useful way of assessing where terms differ and will allow you to make decisions on next steps and assist you to formulate your plan of action.

Put a plan in place: As a minimum, 90 days before to 90 days post-acquisition, you should have a comprehensive plan in place.  Work backwards, setting out key milestones and longstop dates.  Consider approvals that will be required: local board, group companies, regulatory, finance and government approvals and ensure these are in place, with suitable contingency plans for slippage.  Consider if there are conditions that should be attached to the merger relating to employees. 

Think about the employee experience, engagement and communication: Communication is key, but you may not be able to communicate everything if certain matters are confidential.  It is therefore important to find a balance between engaging with employees in an open and transparent manner while at the same time safeguarding commercially sensitive information.  Think about your use of language, tone and method of communication, ensuring efficient top down, bottom up and peer to peer comms.  Consultation is key and may be mandated if you are planning changes to team structures, reporting lines or individual duties. 

Ensure proper integration: Post acquisition, there are likely to be changes to the operating model and/or job roles.  This could lead to redeployment and there may be a reduction in headcount if duplicate positions are redundant.  Systems and processes may be different and there may be an increased workload in the short term.  Following integration, the terms and conditions of employment for some employees may change permanently as you seek to harmonise these across the new organisation.

Can you afford to ignore it?

A failed integration is a risk to your business and typically leads to low levels of employee engagement and retention, which ultimately impacts the bottom line through:

• lower productivity leading to lost revenue because of change, uncertainty, low morale and job insecurity;
• attrition impacting client service and continuity and revenue (through loss of knowledge and skills); and/or
• damage to reputation which impacts prospective client relationships, future recruitment and, potentially, your relationship with the regulator.

By acknowledging the risk, you can formulate a strategy to minimise disruption and focus on the retention of key people post-acquisition.

Conclusion

In our experience, effective use of strategic employment advice is a win-win as typically it benefits employees, increases revenue, adds value and provides a return on investment for shareholders as well as a competitive advantage for the merged entity.

As many will be aware, the BVI Business Companies and Limited Partnerships (Beneficial Ownership) Regulations, 2024 (the "Law") came into effect on 2 January 2025.

The Law created a statutory obligation for all BVI companies and limited partnerships (with certain exemptions) to collect, maintain, and file with the BVI Registrar of Corporate Affairs, information on their beneficial owners. A six-month transitional period was given to all existing BVI companies and limited partnerships that did not fall within any of the exemptions.

On 7 March 2025, the BVI Financial Services Commission (the "Commission") provided a timeline for key transactions: BO Implementation Timeline for Key Transactions (the "Timeline").

The Timeline is a useful tool for all those involved in ensuring that BVI companies and limited partnerships comply with their statutory obligations.

As an additional helping hand, on the same date, the Commission also published an industry circular (the "Circular"), which provides guidance on the beneficial ownership requirements amid concerns raised by industry practitioners.

We would suggest that anyone involved with collecting and filing the beneficial ownership information read the Circular in full here: Industry Circular 12 of 2025 - Beneficial Ownership Filings: Implementation Update.

Some of the key takeaways from the Circular are:

• batch/bulk filings: given the large volume of filings that some registered agents may need to make, a batch/bulk filing function will be made available, with the release date currently being set for 17 April 2025;
• beneficial owner cannot be identified: where the entity at the top of a structure does not have a clear beneficial owner (e.g. a foundation), a senior official of such entity will need to be entered. The Circular notes that a senior managing official would be noted in the case of a foundation;
• subsidiaries of listed entities exempt: entities which are subsidiaries of listed entities are exempt, however, the filing function required to note such exemption is not available;
• functions not yet in operation: as and when functions become available (as noted in the Timeline), there will be a grace period granted before any penalties are implemented. The grace period will be determined by the Commission;
• registers of members – trustees: where a trustee is the shareholder, they should be identified in the same manner as an individual shareholder -  the legislation does not require them to be identified as a trustee;
• security annotations: as part of financing arrangements, registers of members may need to be annotated and filed. The VIRRGIN system will contain a function to allow the person making the submission to use the "Add Mortgagee/Chargee" option in order to note any security granted over the issued shares of the relevant entity;
• registers of members filed before 2025: a BVI company may have elected to file its register of members before the changes came into effect on 2 January 2025. Unfortunately, this will not be sufficient to satisfy their obligations, and their register of members will need to be filed again in accordance with the provisions contained in the Law; and
• bands of interest: the current regime requires exact percentages to be used when providing beneficial ownership information, with any changes (no matter how small a percentage) triggering the need to make a new filing. The Circular confirms that this is being reviewed, with the intention of establishing bands of interest, which would confirm what percentage changes to the ownership of a BVI entity would trigger the requirement to make a new filing.

Conclusion

Whilst not a perfect system at the moment, the issuance of the Circular and the Timeline guidance is evidence that the Commission is intent on working with industry practitioners to improve processes and to ensure that the British Virgin Islands continue to be a leading offshore jurisdiction.

In the recent case of In the matter of the representation of Z as Trustee of The A Family Settlement [2025] JRC 062, the Royal Court of Jersey has refined its approach to applications where trustees seek approval for decisions regarding litigation. Trustees often seek the court's blessing before initiating, continuing, or discontinuing legal proceedings (traditionally known as a "Beddoe application").

This decision builds on previous case law, including The F Charitable Trust [2017] (2) JLR 26, which suggested the court might take a more direct inquisitorial approach in evaluating such applications, and "be ready to form its own judgment" on the merits of litigation, given the familiarity of the court with litigation generally. While that decision indicated that the court might substitute its own judgment on whether litigation was appropriate, the latest decision confirms that the court’s role remains supervisory. It may scrutinise a trustee’s reasoning more closely, but will not routinely substitute its own judgment for that of the trustee.

The case in question addressed how the court should approach a trustee’s decision concerning legal proceedings, specifically whether to discontinue litigation. The key issue was whether the court should substitute its own judgment or limit itself to ensuring (in the usual way on a blessing application) that the trustee’s decision was made properly.

The court's supervisory role and the non-intervention principle

A key takeaway is that even in a Beddoe context, the court does not take over a trustee’s role. The court still applies the usual test on a blessing application, asking whether:

• a trustee's decision was made in good faith;
• the decision is rational and one a reasonable trustee could make;
• there is no conflict of interest affecting the decision; and
• a trustee has taken into account all relevant factors and disregarded irrelevant ones.

The court emphasised (as in The F Charitable Trust) that where a trustee’s decision relates to litigation, the court will often have greater expertise than the trustee itself. Unlike other trustee decisions, such as investment strategies or family-related distributions, the court is inherently familiar with litigation risks and costs. This means litigation-related decisions will be subject to heightened scrutiny, but the court’s role remains supervisory rather than directive – so long as a trustee's decision is within the reasonable range of decisions, and passes the other tests above, it will be blessed.

This aligns with the long-standing non-intervention principle, which establishes that the court's function is not to replace a trustee’s discretion but to ensure decisions meet certain standards. The court will not substitute its own view unless a trustee's decision is clearly flawed due to irrationality, bad faith, conflict of interest, or a failure to consider relevant factors.

Practical implications for trustees

Trustees considering litigation should take note of the court’s evolving approach:

• if a trustee follows proper legal advice, there must be strong reasons for the court not to bless the decision;
• trustees must carefully document their rationale and legal opinions when making litigation decisions to withstand court scrutiny; and
• trustees should ensure that all relevant considerations, including financial, legal, and practical risks, are properly evaluated.

Conclusion

The court’s latest decision provides greater clarity for trustees managing litigation. While the court will closely scrutinise litigation decisions on a blessing application, it is clear that the ultimate decision rests with the trustee, provided it is made rationally, in good faith, without conflict of interest, and with due consideration of all relevant factors. This clarification should reduce the risk of trustees following all the right processes, only to find that the court simply takes a different view from that of a trustee's lawyers.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

It is a general summary of the law and does not constitute legal advice.  If you have any questions about segregated portfolio companies, please contact your usual Bedell Cristin contact.

Introduction

Any Cayman Islands exempted company (the most common form of company in the Cayman Islands, the operation of which must be conducted mainly outside the Cayman Islands) may be registered as a segregated portfolio company (an "SPC") under the Cayman Islands Companies Act (as amended).  SPCs are commonly used in investment fund structures and the insurance industry, as well as more widely in finance transactions and private wealth structures.

An SPC benefits from the statutory ring-fencing of assets and liabilities as between its different segregated portfolios, which is generally considered preferable to contractual mechanisms such as limited recourse provisions.

An SPC operates by creating one or more segregated portfolios (each, an "SP") in order to segregate the assets and liabilities of each SP from the assets and liabilities of the others or from the SPC's general assets and liabilities.  The SPC is, nonetheless, a single legal entity and no SP constitutes its own legal entity separate from the SPC itself.

Registration

An exempted company may apply to the Registrar of Companies (the "Registrar") to be registered as an SPC when it is incorporated or at a later stage.  An application to be registered as an SPC may also be made at the same time as an application is made:

• to re-register an ordinary non-resident company as an exempted company;
• to register a company by way of continuation; or
• to register as an exempted limited duration company.

A fee of US $610 is payable to the Registrar when applying to register as an SPC.  This is in addition to an incorporation fee payable to the Registrar.

Where an existing exempted company is applying to the Registrar to be registered as an SPC, it must:

• file a declaration made by at least two directors setting out an accurate statement:
• of the company's assets and liabilities dated within the three months prior to the date of the declaration;
• of any transaction or event which has occurred or is expected to occur between the date of the statement of assets and liabilities and the date of registration as an SPC which will cause a material change to the assets and liabilities disclosed;
• of the SPs that the SPC intends to operate, and the assets and liabilities which the company proposes to transfer to each SP;
• that, on registration as an SPC, the company and each SP will be solvent; and that:
• each creditor of the company has consented in writing to the transfer of assets and liabilities into SPs; or, alternatively
• notice in writing is sent to each creditor having a claim against the company exceeding US $1,220 and 95% by value of the creditors have consented to the transfer of assets and liabilities into SPs;
• pass a special resolution authorising the transfer of assets and liabilities into SPs (a copy of such special resolution must be attached to the declaration described above); and
• where the company is licensed by the Cayman Islands Monetary Authority (CIMA), obtain CIMA's consent (a copy of such consent must be attached to the declaration described above).

Annual fees and reporting

In addition to the standard annual registration fee payable to the Registrar, an SPC must pay:

• an additional registration fee of US $2,440; and
• a registration fee of US $365 per SP, up to a maximum of US $1,830.

When filing its standard annual return with the Registrar, an SPC must also give the Registrar a notice:

• containing the names of each SP it has created (other than those in relation to which a notice of termination has been given in a prior year); and
• indicating which of those SPs have been terminated since the date of the last notice.

The penalty for failing to give the Registrar the requisite notice is US $12 per day for every day after 31 March of each year during which the notice is not filed.

Shares and dividends

An SPC may create and issue SP shares, the proceeds from the issue of which shall be included in the SP assets and accounted for in the SP in respect of which the SP shares are issued.  Where shares are not issued as SP shares, the proceeds of the issue of such shares shall be included in the SPC's general assets.

An SPC may pay a dividend or other distribution in respect of SP shares, whether or not a dividend is declared on any other class or series of SP shares or on any other shares.

Subject to any rights of particular shares, SP dividends are paid:

• by reference only to the accounts and the liabilities of the SP; and
• out of the SP assets.

Operation and management

Each SP must be separately designated and each designation must include the words "Segregated Portfolio", "SP" or "S.P.".

Any act, matter, deed, agreement, contract, instrument or arrangement which is to be binding on or to enure for the benefit of an SP shall be executed by the SPC on behalf of such SP, which shall be identified and the execution shall specify that it is in the name of or by or for the account of such SP.  The Companies Act specifies a remedial mechanism if this rule is breached.

The assets of an SPC must either be SP assets or general assets.  SP assets comprise:

• assets representing the share capital and reserves (i.e. profits, retained earnings, capital reserves and share premium) attributable to the SP; and
• all other assets attributable to or held within the SP.

The directors of an SPC must establish and maintain procedures:

to segregate, and keep segregated, SP assets separate and separately identifiable from:

• general assets; and
• SP assets of any other SP; and
• to ensure that assets and liabilities are not transferred between SPs or between an SP and general assets otherwise than at full value.

Segregation of liabilities

SP assets are only available to be used to meet liabilities to creditors of the SPC who are creditors in respect of that SP and no other.

Where a liability of an SPC to a person arises from a matter attributable to a particular SP such liability shall extend only:

• to the SP assets attributable to that SP; and
• to the extent that such assets are insufficient to satisfy the liability, unless specifically prohibited by the articles of association, the SPC's general assets.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

In each of our jurisdictions we have acted on some of the longest running and most complex cases before the courts, as well as in arbitrations.

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A Lasting Power of Attorney is a legal instrument in which someone (the "donor") appoints another person (the "attorney") to act for the donor at a time when the donor is alive but incapacitated.  The advantage that a Lasting Power of Attorney has over an ordinary power of attorney is that it survives the supervening incapacity of the person giving the power.  Whereas wills deal with financial affairs following death, Lasting Powers of Attorney enable attorneys to manage the donor's assets during the donor's lifetime.  Some would argue that Lasting Powers of Attorney are more vital than wills, as they are designed to operate at a time when the donor is alive but vulnerable. 

It is crucial that Lasting Powers of Attorney of Jersey asset owners are registered with the Royal Court of Jersey so that they are ready to be used if they become needed.  Registration will ensure that:

• the attorneys have legal standing to manage the assets in the island; and
• the donor's Jersey financial services providers will be able to take instructions from the attorney.

How to register a British Lasting Power of Attorney in Jersey

If the Lasting Power of Attorney was made in the United Kingdom, Guernsey or the Isle of Man, then Article 13 of the Capacity and Self Determination (Jersey) Law 2016 provides that the application for registration is made by way of Representation by a Jersey lawyer supported by the following:

• the original Lasting Power of Attorney or a certified copy made by an authorised person (such as a lawyer qualified in the place of execution of the Lasting Power of Attorney);
• confirmation that the Lasting Power of Attorney continues to be valid and in force, by way of evidence from the statutory authority within the jurisdiction which first registered the Lasting Power of Attorney (for example, the Office of the Public Guardian of England and Wales or the Office of the Public Guardian (Scotland));
• certified proof of identity for both the donor and the attorney(s);
• details of the Jersey assets; and
• the registration fee of £330 payable to the Royal Court. 

How to register an international (non-British) Lasting Power of Attorney in Jersey

A similar procedure is available where the Lasting Power of Attorney was made outside the British Isles.  In the absence of confirmation of validity from a statutory authority in the jurisdiction where the Lasting Power of Attorney was made (as detailed above), it will be necessary to provide other evidence of its validity by way of an Affidavit of Law made by a practising qualified lawyer in that jurisdiction.

How are Jersey assets managed if the owner is incapacitated but has not made a Lasting Power of Attorney?

The jurisdiction where the asset owner is resident should have a protective regime in place to represent them in relation to their assets in the event of incapacity. Such representatives appointed in that jurisdiction may be termed a Curator, Deputy, Committee, Receiver, Guardian, Conservator or similar. To deal with Jersey assets, the representative must have their authority recognised in Jersey by way of registration in the Royal Court in a similar manner as a Lasting Power of Attorney described above.  However, this process could be more complex as result of differences in language and legal systems.  

Careful consideration should be given as to whether to rely on such protective regimes in relation to Jersey assets:

• the process to appoint a representative may be more cumbersome and costly than putting in place Lasting Powers of Attorney, as it may rely on court proceedings and medical evidence, involving the disclosure of personal health and financial information;
• the representative's power may be more limited or inflexible than a Lasting Power of Attorney;
• as the asset owner may have no control or influence on the choice of representative or how they manage the assets, uncertainty may lead to family disputes.

For the above reasons, Lasting Powers of Attorney may be considered a better option than relying on foreign protective regimes. 

Jersey's legal framework facilitates international financial services to adapt to their private clients' needs throughout their lifetime; with the Lasting Power of Attorney being an optimum tool in the international estate planning toolbox to enable asset owners to exercise their right to self-determination, whatever the future may hold. 

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

The legal mechanism for the proposed inward migration regime effectively mirrors the familiar offshore-style company redomiciliation and continuation process.

Although we do not advise on Hong Kong law, the process (in addition to any transfer out requirements under the company's existing jurisdiction) requires a legal opinion from a legal practitioner who practises the law of the place of incorporation of the company – and given the popularity of British Virgin Islands and Cayman Islands structures in Hong Kong and Asia, offshore counsel will be involved.

The Hong Kong Registrar of Companies will be responsible for administering and approving applications, and they anticipate a two-week approval process.

Key points of the proposed regime include:

• Companies must be solvent, and audited / non-audited financial statements no more than 12 months old will be required as part of an application
• Applications must be made in good faith, and shareholders must have consented either as required by the law of the original domicile or constitutional documents, or by a resolution passed by at least 75% of eligible shareholders
• Companies must have been incorporated for at least one financial year at the date of application
• The redomiciliation regime is "one way" – it allows for inward re-domiciliation only

Redomiciled companies will be regarded as a company incorporated in Hong Kong with effect from the date of re-domiciliation date, and will have the same rights and obligations as any other Hong Kong incorporated company of its kind.

With Cayman and BVI-admitted corporate law specialists in Asia, the Caribbean and Europe who are experienced in corporate migrations and redomiciliations, the Bedell Cristin team is well-placed to support clients in the process of redomiciling offshore companies into Hong Kong.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

Tax regime

The tax regime in Jersey is separate from that of the United Kingdom. The States Assembly, the island's independent parliament, sets out the island's own legislation and policy and the island is self-funded.

Tax rates in Jersey have historically been low. Standard corporation tax in Jersey is 0%, although all companies must file an annual tax return. A rate of 10% may be applicable to businesses conducting certain regulated activities, including some banking, fund administration and insurance business, and a rate of 20% applies to certain businesses, such as telecommunications, gas supply and large retail businesses.

Importantly, financial services businesses are generally not subject to capital gains, value-added or sales taxes.

The island has taken steps to ensure that these relatively low tax rates do not conflict with international tax standards. Jersey is 'whitelisted' for tax purposes by both the Organisation for Economic Co-operation and Development (OECD) and the European Union (the "EU"), whilst also maintaining domestic measures to prevent tax avoidance.

Tax reporting

From an international perspective, Jersey adheres to the US Foreign Account Tax Compliance Act ("FATCA") as well as the Common Reporting Standard ("CRS"), demonstrating its commitment to global tax transparency initiatives and the prevention of cross-border tax evasion. 

Under FATCA and CRS, financial institutions in Jersey (including banks, investment funds and trust companies), must meet reporting and due diligence requirements where an entity is controlled by a US citizen or resident, or any other resident of a CRS-compliant jurisdiction. Reporting must be completed annually, and the information is then exchanged with the Internal Revenue Service in the US or the relevant body in CRS countries.

The island has also signed Tax Information Exchange Agreements with 38 states to facilitate the exchange of relevant information between tax authorities. A full list of the states that Jersey has TIEAs with – including the UK, the US, Switzerland and Ireland – can be found here.

Economic substance

Jersey introduced the Taxation (Companies – Economic Substance) (Jersey) Law 2019 (the "ES Law") in order to ensure cooperation with international standards.

The ES Law applies to all companies, anywhere in the world, which are tax resident in Jersey and which carry on any 'relevant activities' (including banking, insurance and fund management business), requiring them to demonstrate that they have sufficient 'economic substance' in Jersey. The ES Law imposes certain obligations on these companies, such as demonstrating adequate employees, expenditure and physical assets in Jersey.  

For more information on economic substance, please see our detailed briefing on the ES Law.

Financial crime regulation

With a financial services sector dating back decades, Jersey has a well-established, and continually evolving, structure in place to ensure the highest standards of regulation. Thus, those making use of Jersey entities can be confident that they are based in a respected and well-regulated jurisdiction.

The Jersey Financial Services Commission (the "JFSC") is the regulator for financial services in Jersey and has a long history of ensuring that the island's regulatory regime operates to the highest international standards. The JFSC is committed to maintaining Jersey's position as a leading international finance centre, delivering balanced, progressive, risk-based financial regulation.

The Financial Intelligence Unit – Jersey (the "FIU") is an operationally independent organisation, and is responsible for analysing and reporting on financial intelligence. The FIU plays a key role in contributing to the island's robust regulatory systems, so that risks are properly identified and mitigated.

Beneficial ownership

Since 2017, the island has operated a centralised and non-public register of beneficial ownership of Jersey legal persons. Beneficial ownership information must be provided on all companies, foundations, incorporated limited partnerships and limited liability partnerships. Trustees must also hold ultimate beneficial ownership information on trusts. The JFSC also maintains a public-facing register with information on significant persons. This system enables the island to ensure that it remains transparent and continually compliant with international standards. 

Anti-money laundering

In 2024, The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism ("MONEYVAL") published their fifth-round mutual evaluation report on Jersey following a review of the island's anti-money laundering and financial crime prevention measures. MONEYVAL's report found that the island was compliant or largely compliant with 39 of the 40 recommendations set out by the Financial Action Task Force (FATF) and that no 'fundamental improvements' were needed. Overall, the report concluded that the island has a high-quality and comprehensive regulatory regime that effectively combats the risks posed by money-laundering and the financing of terrorism.

Data protection

Jersey, whilst not part of the EU and directly subject to the European General Data Protection Regulation ("GDPR"), has introduced many of the principles of GDPR through the Data Protection (Jersey) Law 2018, which ensures that similar high standards are met for the safety and protection of data. This has led to adequacy decisions from both the UK and the EC, which confirmed that Jersey's data protection and privacy standards were sufficient to safeguard UK and EU personal data, enabling the transfer of personal data without the need for further safeguards or specific authorisation.

Conclusion 

As a jurisdiction, Jersey demonstrates a truly global outlook. The island consistently keeps pace with evolving international standards, ensuring that they are implemented to the highest level.

Accordingly, Jersey is a highly attractive and stable jurisdiction for fund, corporate and trust administration and this overview has touched on just some of the reasons why.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

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1. determine the purpose before implementing any monitoring system;
2. ensure that the purpose falls within the scope of the requirements for a lawful basis and legitimate purpose as required in the Data Protection (Jersey) Law 2018 and/or the Data Protection (Bailiwick of Guernsey) Law, 2017 (the "Law");
3. consider the imbalance of power which is inherent in all employer/employee relationships and whether the purpose requires further explanation and/or explicit consent before employees can determine their position;
4. determine how much personal data (as defined within the Law) needs to be captured for the stated purpose and, in so doing, ensure that only the minimum amount of personal data is captured;
5. consider whether the information captured is reasonable or whether the purpose may be achieved an alternative way without the need to collect any personal data;
6. complete a data protection impact assessment;
7. introduce policies and a privacy notice with clear and accessible language;
8. ensure that all policies and privacy notices are easily accessible by all employees and/or available in other forms which take account of any reasonable adjustments required by the workforce;
9. encourage open dialogue and communication amongst employees and their supervisors about the policies and privacy notices;
10. when onboarding new employees, make sure that all relevant policies and privacy notices are provided to the new employee and/or they are informed where to access such documents;
11. consider the introduction of covert monitoring only where criminality and/or gross misconduct is suspected. It is also recommended that steps 1 to 6 are repeated before implementation of covert monitoring and that periodic reviews are undertaken to ensure that the determined purpose remains relevant at all times of the covert monitoring process;
12. when using third-party service providers, ensure that all contractual documentation includes a data protection clause which ensures compliance with the Law and requires immediate notification of any breach of the Law;
13. limit access to the collected personal data to those who have a specific requirement only;
14. implement and use a retention policy to ensure that personal data is only stored for as long as reasonably necessary and required for the stated purpose; and
15. review applicable policies, notices and procedures regularly and at least upon any change in the Law or business circumstances.

If you are finding navigating the data protection landscape difficult, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

In the context of an employment relationship within the Channel Islands, the applicable data protection laws are the Data Protection (Jersey) Law 2018 and Data Protection (Bailiwick of Guernsey) Law, 2017 (the "Law").

Under the Law, employees are considered data subjects, employers are data controllers, and all data subjects have a statutory right of access to (and rectification, erasure and/or restriction of) their personal data. Data subjects also have the right for their personal data to be excluded from automated decision-making.

"Access" under the Law means the data subject may obtain a copy of their personal data held across any data repository. Such repository will include both hard and soft copy sources. To gain access, a data subject must make a Data Subject Access Request (a "DSAR"). A DSAR may be made in writing or orally and requires a response under the Law within prescriptive timeframes. The Law also prescribes how the data controller must respond to a DSAR. The data provided in response to a DSAR comprises information only (generally, documents do not need to be disclosed).

Frivolous, vexatious, unnecessarily repetitive and/or otherwise excessive DSARs

If a data controller suspects that a DSAR could be manifestly vexatious, unfounded, excessive and/or repetitive, they must first take steps to obtain further information from the data subject. Then, upon receipt of that further information, if the data controller can prove and support their suspicion, they may then utilise this exemption to either:

• exclude or limit a data subject's right of access to their personal data; or
• charge a reasonable fee towards review and production costs.

Given that the onus is on the data controller to prove some form of malintent on the part of the data subject who issued the DSAR, this exemption cannot be used as an automatic exemption to comply with the Law. Also, the data controller must prove that a decision to prevent or limit a data subject's access to their personal data is reasonable, fair and proportionate. Because of this burden, it is not possible to adopt a one size fits all approach – a DSAR must be determined on its individual circumstances alone.

Information required before considering an exemption

A data controller should obtain the following information:

Background

• What circumstances lead to the DSAR?
• What is the possible purpose and potential value of the personal data to the data subject?
• Is there an alternative means for the data subject to obtain that information (through court ordered discovery, for example)?
• Have previous DSARs been made, and a response provided, for the same personal data?
• Does the DSAR come within the data subject's statutory entitlements under the Law?

Motive

• Has the data subject communicated their intentions to a fellow employee before issuing the DSAR?
• Has an employment claim and/or other claim been issued? On its own, this may not trigger the exemption.
• Does it appear that the DSAR was made to cause a disproportionate or unjustified level of disruption, irritation or distress to the data controller, their business or other employees of the business?
• Is the DSAR formulated to extract a specific action, i.e. will the DSAR be withdrawn upon payment of a specific sum or upon conduct of a specific action?

Personal data

• What is the volume of responsive personal data?
• What are the costs of reviewing, formulating a response, and providing access to the personal data?
• Is such a review and response workable from both a staffing and cost analysis?
• Is the data subject willing to refine or collate their DSAR(s) to enable a single response?
• Is the personal data intertwined with another data subject's such that redaction and or permission to share their personal data is required?

Considerations to take when using an exemption

Upon receipt of all relevant information and upon making the determination that a DSAR is frivolous and vexatious, the data controller should:

• determine whether the data subject may be granted access to some but not all their personal data;
• provide a response to the data subject that communicates the decision and thought making process within the timeframes stated in the Law; and
• inform the data subject of their right to issue a complaint to either the Jersey Office of the Information Commissioner or the Office of the Data Protection Authority, as applicable.

Proactive steps to take before receipt of a frivolous, vexatious, unnecessarily repetitive and/or otherwise excessive DSAR

• Prepare in advance - DSARs will happen, so it is imperative that all data controllers have a plan in place for how to deal with these requests. 
• Start as you mean to go on - ensure that all employment, service and third-party contracts and/or policies are up to date with relevant and applicable references to the applicable Law.
• Invest in staff training – make sure all staff are aware of how they should handle personal data, can recognise a DSAR and know what to do if they receive one, and make policies available to all employees by way of a central hub or staff handbook.
• Use a retention policy – take the time to create a retention policy to determine how long personal data is held for, but more importantly, ensure that the retention policy is rigorously applied.
• Monitor culture – the reality is that happy employees do not issue DSARs. It is therefore commercially sound to create a culture of open communication and collective responsibility amongst all employees, no matter their role or level of seniority.

Most importantly - if you don't need the personal data delete it.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

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The recent regulatory guidance on the tokenisation of real world assets published by the Jersey Financial Services Commission (the "JFSC") goes beyond articulating the workings of the Island's new regulatory regime – it also points the way to an interesting potential use case for Jersey structures.

Background

During the initial (and Cayman Islands-dominated) first rush of ICOs and token offerings in the 2010s, the narrative had initially settled on use cases around digital asset funds. The experience was mixed, with some high-profile failures denting market (and regulator) confidence in tokenisation generally.

But was a separate opportunity being missed?

The first generation of ICOs and token offerings was premised on an investment fund-like product, but was ultimately just a refinement of a widely-understood regulatory regime that was already working well (and which had guardrails for good reasons). And, ultimately, you just can't tiptoe a clever path around existing fund regulation.

Use case

Consider the basic selling points of tokenisation:

-      a method of transacting that is smoother with fewer points of friction;

-      a blockchain-based infrastructure that is distributed and irrevocable;

-      transactions that take place instantaneously without brokerage windows; and

-      democratised access that opens up global markets without qualifications to investor status.

All of these benefits would apply equally, and perhaps more usefully, to the securitisation of real world assets - a class that covers anything from real estate to art, from commodities to intellectual property rights.

Tokenisation also solves a problem in the context of real world assets – for investors seeking exposure to anything from fine art to classic cars or beyond, it reduces the high entry costs. Only a small number of global investors can afford a Van Gogh, but there are many more who could afford to own a small fraction of one.

More and more voices are adding to the clamour. McKinsey analysis suggests that total tokenised market capitalisation could reach around $2 trillion by 2030 (excluding cryptocurrencies and stablecoins), and Larry Fink of BlackRock said in January 2024 that "the next step going forward will be the tokenization of financial assets".

Stumbling blocks

This all paints a positive picture, but there are still some issues to be addressed:

-      If blockchain-based tokens are held in a digital wallet, where is that wallet? What laws apply to it, and in which tax jurisdiction does it exist? Does the location of a cloud-based server matter? How can you create security over a token asset? Clear and robust answers will be needed to these questions before tokenisation of real world assets can go mainstream.

-      The enthusiasm and hyperbole around blockchain-related subjects has done a great job of spreading the message and winning converts – but is the tech-bro language effective with institutional investors, who are more accustomed to a colder, clearer articulation of risk and reward?

-      Democratisation is one of the underlying selling points of tokenisation, but, as stated above, there are good reasons for some of the guardrails around investment products – can a reliable gating mechanism be created to restrict token access?

-      It took more planning and courage for Christopher Colombus to sail the Atlantic than it takes the passengers on the 30 or so daily flights from London to New York. Likewise, with the tokenisation of real world assets, the precedents, regulators' comfort level and investor risk perception will change over time, but there will be a regulatory premium for the first few years.

The Jersey guidance

The JFSC guidance issued on 28 August 2024 seeks to set out "a proportionate regulatory framework that upholds investor protection and market integrity".

It states that applications will be dealt with on a case-by-case basis but that some basic requirements will have to be met, including company incorporation in Jersey, compliance with AML/CFT/CPF standards, and published independent verification of underlying assets confirming that the tokens are 100% collateralised and ring-fenced.

It also states that the issuer must appoint and maintain a Jersey-resident director on its governing body, who must be a principal person of the trust company business appointed by the issuer.

Tellingly, the guidance explicitly makes the case for tokenisation, saying it "has the potential to significantly transform asset ownership and investment, enhancing market efficiency and inclusivity".

The road ahead

Tokenisation of real world assets is a space to watch from a global investment perspective. From a Jersey point of view, the legislature, regulator and industry are in the same position as everyone else – grappling with the challenges that accompany the opportunity. However, this latest guidance from the JFSC shows that Jersey recognises not only those challenges but also the potential for tokenisation to transform ownership and access to real world assets.

The Grand Court of the Cayman Islands (the "Court") has supported a professional trustee's application to resign an appointment that it has been trying to vacate for almost five years, despite the sole beneficiary's lack of engagement and failure to appoint a replacement.

The Court has approved the application by X Limited but will set a final hearing to allow the beneficiary to raise any issues or objections before the resignation is finalised.

In the matter of the O Trust was heard on 16 December 2024 by The Hon. Justice Ian RC Kawaley in the Court's Financial Services Division. The Plaintiff, X Limited, acted in its capacity as the trustee of the O Trust, while the Defendant, MC, is the sole beneficiary of the trust.

Facts

The O Trust was established in 1993 as a discretionary trust, with X Limited appointed as trustee in 2008.

X Limited requested that a replacement trustee be appointed in 2019 so that it could resign its appointment, and sought the assistance of the Court in 2023 when no progress was being made.

In November 2024, a fresh summons was issued by X Limited seeking directions, given that MC was no longer represented by Caymanian attorneys and appeared not to be actively engaging in the proceedings.

X Limited informed the Court that MC had declined an invitation to travel to the Cayman Islands for the hearing and did not use a link that would have enabled her to attend remotely. X Limited also informed the Court that MC had made allegations of misconduct against the trustee, but that the allegations had not been pursued legally.

Issues

The key issues before the Court were:

• whether X Limited could resign and be replaced as trustee of the O Trust;
• the implications of MC's lack of representation and engagement in the proceedings on the resignation process; and
• ensuring that MC had the opportunity to pursue any claims of breach of duty or wilful neglect by X Limited.

Decision

The Court decided to facilitate the Plaintiff's resignation, recognising that effective communication and trust between the Plaintiff and Defendant had broken down and noting that "it seemed reasonable to conclude the proposed resignation should be facilitated rather than impeded by the Court". 

In doing so, the Court set out a timeline for X Limited to file and serve further evidence in addition to final accounts, and for MC to respond, before a final hearing in April.

X Limited's appointment as trustee will continue up to that point. The Court noted a decision from the Ontario Superior Court of Justice (in the absence of a relevant Caymanian decision) which held that a trustee entitled to resign could not be held to an appointment in the absence of a new trustee.

Legal framework and cases cited

The relevant legal framework considered includes the Trusts Act (2021 Revision) and Grand Court Rules Order 85, under which the Court provided directions for the trusteeship process.

Cases cited included:

• Evans v Gonder (Ontario SCJ, 12 June 2009): which provided a basis for allowing a trustee to resign without needing a replacement ready, which was significant in deciding the directions for the Plaintiff's resignation process;
• Evans v Gonder 2010 ONCA 127: which affirmed the initial judgment in support of the same principles regarding trustee discharge; and
• Re Smith [2022] EWHC 3053 (Comm): cited to affirm the legal principle regarding the resignation of trustees.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

Background 

The application was brought by the Viscount, whose functions include dealing with individual and corporate bankruptcies (known as "désastre") in Jersey. For more information on Jersey corporate insolvency regimes, see here but, in summary, when a company is insolvent and declared en désastre, the property of the company and the powers of the directors vest in the Viscount.

The Respondent to the application, Thomas McLaughlin, was the sole director and shareholder of Restore Builders Limited (the "Company"), which was incorporated in July 2022.

On 25 November 2022, both the Company and the Respondent in his individual capacity were declared en désastre. This was only four months after the Company's incorporation.

Wrongful Trading

The law on wrongful trading is set out in Article 44 of the Bankruptcy (Désastre) (Jersey) Law 1990 (the "Désastre Law") and similar provisions are contained in the Companies (Jersey) Law 1991 (the "Companies Law") in respect of a creditors' winding up.

These provisions permit the Viscount or a liquidator to apply for an order that a director of a company be held personally liable for the debts of the company if that director:

1. knew that there was no reasonable prospect that the company would avoid a declaration or a creditors' winding up; or 
2. was reckless as to whether the company would do so.

In Restore, the Respondent had accumulated personal debts of nearly £1 million before he incorporated the Company. The Court found that the incorporation of the Company was simply used as a tool by the Respondent to try avoid his impending personal bankruptcy. The Court, therefore, held that the Respondent knew (or ought to have known) that there was no reasonable prospect that the Company would avoid bankruptcy, even at the time of its incorporation.

There is a defence available to a director where the Court is satisfied that they took reasonable steps with a view to minimising the potential loss to the company's creditors. In this case, the Court found that at no time did he take any such reasonable steps. Accordingly, the Court held him to be personally responsible for the debts of the Company.

Disqualification 

The Désastre Law also permits the Viscount to make an application under Article 78 of the Companies Law to disqualify a director. The Court must be satisfied that the director's conduct makes them unfit to be concerned in the management of a company. The maximum period of disqualification is 15 years.

In Restore, there was a discussion about the various brackets of disqualification periods, with the top bracket of ten to fifteen years being reserved for particularly serious cases, for example where a director has previously been disqualified and falls to be disqualified again.

The Court found the Respondent in "flagrant breach" of his obligations and disqualified him from being a director of a Jersey company for ten years.

This is a welcome reminder that the Court is aware of Jersey's status as a reputable finance centre and therefore is keen to ensure that Jersey directors are aware of and comply with their obligations and duties. Evidently, the Court will not shy away from using its powers of disqualification to protect the public from delinquent directors. That said, this was only the second reported disqualification case in over 20 years, the last being in the matter of SPARC Group Limited (in désastre) 2022 (2) JLR 65.

No tolerance for debtors playing "fast and loose with the rules and the Désastre Law"

Restore also serves as a reminder of the importance of a debtor's obligations to cooperate with and to aid the Viscount in the realisation of the debtor's property.   

The Respondent failed to respond to correspondence from the Viscount, failed to attend appointments, failed to make promised payments, left Jersey permanently without providing the Viscount with his new address and misrepresented the value of the assets owned by the Company. In other words, the Respondent failed to provide any genuine assistance to the Viscount.

The Viscount pursued the Respondent by instructing a tracing agent to locate him. Following service of the proceedings, and somewhat ironically given the Respondent's concerted efforts to avoid responsibility, the Respondent sent an "extraordinary" letter to the Court containing what was "tantamount to an admission that he was acting dishonestly in using customers’ deposits not for the purpose for which he received them, but for other purposes entirely".

The Respondent's actions impacted the Viscount's ability to discharge his functions and this case illustrates that the Viscount and the Royal Court will not tolerate Jersey directors playing "fast and loose with the rules and the Désastre Law".

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

There had been some considerable doubt as to whether the doctrine had been compatible with the principles of Jersey law following the earlier decision of the Royal Court in Flynn v Reid [2012] (1) JLR 370 (to which case the Royal Court was referred in Burmingham v Le Hegarat). In particular:

• W J Bailhache, Deputy Bailiff (as he then was) had observed at paragraph 26 of the earlier judgment that: "It is an essential component of proprietary estoppel under English law that the party asserting the benefit of that estoppel must have acted in the belief either that he or she already owned or would obtain a sufficient interest in the defendant's property to justify the expenditure that had been incurred."
• The Deputy Bailiff went on to summarise the problem caused by applying the doctrine in Jersey at paragraph 48 as follows: "The central difficulty with applying the English doctrine of proprietary estoppel – assuming one can adequately define it – in Jersey is that it requires us to accept the principle that there is a theoretical division between the legal ownership of immovable estate in Jersey and its beneficial ownership." (In Jersey it is well established that there cannot be a division between the legal and beneficial interests in real property).
• He concluded (at paragraph 50) that: "For these reasons, we do not think that the doctrine of proprietary estoppel forms part of Jersey law if its effect is to create an equitable interest in land that exists in parallel with the legal interest which, as we understood it, was the bedrock of the plaintiff's claim."

In Carry v Liston [2017] JRC 144, the Royal Court (R J McMahon, Commissioner) conducted a very detailed review of the differing authorities and concluded in favour of the view in Flynn v Reid, to the effect that the doctrine of proprietary estoppel was not available in Jersey.

The Royal Court in Burmingham v Le Hegarat did not refer to Carry v Liston, but was mindful of the concerns expressed in Flynn v Reid. However, it did not consider them fatal to the recognition of the doctrine in Jersey. At paragraph 35 of the judgment, Commissioner Binnington reasoned as follows:

"Once the necessary elements are made out, the Court has a wide discretion as to remedy and it may well be that at that stage the remedies available to a Jersey Court will be fewer than those available to an English Court by reason of the rules of Jersey law applicable to immovable property. One obvious example is the inability of a Jersey Court to make an order for specific performance of an agreement to create an interest in land, as in Felard Investments Limited v Church of Our Lady, Queen of the Universe (Trustees) [1979] J.J. 19 or, as in Flynn v Reid, the recognition of an equitable interest in immovable property in parallel to the legal interest. The absence of those particular remedies does not, in our view, prevent the Royal Court recognising the doctrine of proprietary estoppel and, where appropriate, applying a remedy for the relevant unconscionable behaviour which does not offend against established Jersey law principles."

On the particular facts of the case, the Royal Court did not consider that proprietary estoppel was applicable because the Defendant could not establish that:

• there had been a promise by his parents that he would inherit a farmstead and land to the exclusion of his sisters (or in other words that he "had a belief, which was known to and encouraged by either of his parents, that he either had or was going to be given a right in or over the land"); nor that
• he relied upon or acted to his detriment on the faith of such a belief.

The decision potentially reopens the door for claims where those elements can be made out, although the question of what remedy could be granted in such claims which would be compatible with the law of Jersey will no doubt continue to cause problems in the future.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

In 1769, a group of hungry islanders stormed the Royal Court. They demanded legislative action to reduce the cost of wheat. The following year, the Crown sent an expedition headed by Colonel Bentinck to re-establish order and address the islanders' concerns. 

This enquiry produced the Code of Laws for the Island of Jersey (1771) (the "Code"). As the first comprehensive written compilation of Jersey's laws, the Code (in the words of Bentinck) hoped to prevent islanders from living in "continual dread of becoming liable to punishments" by "disobeying Laws [that] it was morally impossible for them to have the least knowledge of". Despite Bentinck's promises, the Code retained some measures that might seem draconian by today's standards: for example, you could receive eight days imprisonment, on bread and water, for clearing sand dune rushes. Regardless, the Code was paramount in defining Jersey's legal and constitutional authority.

Amending customary law

The Code declared that "all other political [i.e. customary] and written laws heretofore made in Said Island, and not included in Said Code… shall be henceforward of no force and validity". This was hugely significant in establishing that legislation had the power and seniority to abolish customary law. Equally, it introduced the precedent that statutory provision was required to override an element of custom.

That being said, the Code expected future Laws and Ordinances to "become part of the Code of the Political Laws". This is important for underlining that the Code never intended to abolish the customary "Charters and Privileges" of Jersey. Instead, it looked to rationalise and compile diffuse pieces of custom and Acts of Council.

The abolition of interest caps in 1962 was one such legislative milestone influenced by this precedent. The customary limitation was influenced by islanders' experiences of usury and wider medieval Christendom's concerns with the linkage between moneylending and sin. In removing this restriction, the way was paved for the explosive growth of Jersey's finance industry - which remains the island's primary economic engine.

Defining Jersey's legislature

The Code also played a key role in defining the relationship between Jersey's domestic institutions. It transferred legislative authority from the Royal Court to the States Assembly (the "States"), creating a separation of powers between the judicial and legislative arms of government. This change introduced a cornerstone of modern democratic principles to Jersey. The Code also formalised the mechanisms of legislation. Going forward, Laws were to be passed by the States, confirmed by the Sovereign in Council and then 'registered' in the Royal Court before promulgation. This process allowed for local appeal and, importantly, meant that legislation did not come into effect until it had obtained the Crown's assent.

The Code's changes presented a mixed image for Jersey's legislative autonomy. Independence was curtailed to some extent; Local Ordinance, without the sovereign's renewed approval, became invalid after three years. Conversely, the Crown could directly legislate in Jersey through Orders in Council, although said Orders had to undergo the process of 'registration' before taking effect.

Affirming Jersey's sovereignty

The stringency with which these provisions were observed varied considerably. The restrictions on Local Ordinance were largely ignored, whilst the requirement of 'registration' was used to seriously impede the Royal Prerogative. In 1891, Her Majesty in Council amended Jersey's prison board constitution to grant the Lieutenant-Governor (the Crown's representative) a deciding vote. The decision, however, was made without the consent or awareness of the States. In the ensuing Prison Board case, the States appealed this decision, using the Code to argue that 'registration' was a substantive act of mutual assent, and an integral part of legitimating legislation in Jersey. The decision was repealed in 1894, thus affirming Jersey's constitutional independence from the United Kingdom.

The Code today

Indeed, the Code is still referred to by islanders today. In Buckley v Minister for Treasury and Resources and Ors [2024] JCA 288, a recent Jersey Court of Appeal case, the Appellant requested leave for a judicial review. The Appellant suggested that the introduction of higher Land Transaction Tax and Stamp Duty rates under the Finance (2023 Budget) (Jersey) Law 2023 was unlawfully retrospective and discriminatory (under the Human Rights (Jersey) Law 2000). The Code's role in defining Jersey's constitutional history was important for dismissing the Appellant's basis for judicial review. The Royal Court affirmed that once legislation had passed registration, it had no right to impinge on the States' legislative competence – a separation of powers indebted to the Code.

Conclusion

Ultimately, the Code offers a window into the development of Jersey's unique constitutional and democratic history. The legislative precedent set by the Code remains pertinent to this day.

The background to the debate is that in mid-2024, the Jersey Employment Forum recommended to ministers that the maximum awards for unfair dismissal, discrimination-related claims, statutory and contractual breaches all be increased. See our previous briefing here.

The current limit on compensation for discrimination claims is £10,000, with a maximum award of £5,000 for hurt and distress. The proposal from the Social Security Minister, in line with the recommendation from the Employment Forum, is that this should be replaced with a cap of whichever is greater of £50,000 or 52 weeks' pay, of which up to £30,000 may be awarded for hurt and distress.

Other changes have been recommended for compensation limits for unfair dismissal, breaches of statutory rights and contractual breaches.

The proposed recommendations were due to be placed before the States Assembly for debate before the end of January 2025. However, the debate has now been postponed to 4 February, following the tabling of an amendment to set the maximum limit for compensation awards in relation to employment-related discrimination claims at £30,000 rather than £50,000. 

According to the report on the proposed amendment, the rationale for amending the maximum compensation appears to be predominantly commercial: 

• the current proposal to increase the maximum compensation to £50,000 may be excessive when considering the inflation figures for the past decade;
• fixing a compensation limit at £50,000 could place an undue financial burden on businesses as it would increase their potential liability for employment-related discrimination claims substantially; and
• the proposed increase to £30,000 would be aligned with the jurisdiction of the Petty Debts Court which is regarded as an appropriate benchmark. 

The full report can be found here. 

DPAs are an alternative to criminal or regulatory action through which a prosecutor and a corporate can agree to settle allegations of criminality without a prosecution, which is then subject to a review by the Court.

While the case of AG v Afex Offshore (Jersey) Limited is an unusual one, there are some points from the Court's judgment that will be of interest to individuals working in regulated financial services providers in the Jersey.

Key points

• The financial penalties set out in DPAs submitted to the Court will be scrutinised – in this case, the Court was particularly interested in:
  • an additional "discount" that had been applied beyond the usual 1/3rd discount for a guilty plea in a criminal matter;
  • whether penalties for separate counts should be treated individually or cumulatively; and
  • the impact of a financial penalty on a defendant's solvency.

The Court has made clear that this is not a rubber-stamping exercise.

• The Court (and the AG) are mindful of the impact of a DPA on those named in it – in this case the AG sought to redact names of certain individuals because of ongoing criminal investigations, the names of certain trust companies whose policies and procedures the defendant had failed to review and the names of employees of the defendant who were not at fault and who were working in non-public roles under the instructions of others.
  • The case was unusual – the defendant was already being investigated when the Criminal Justice (Deferred Prosecution Agreements) (Jersey) Law 2023 (the "DPA Law") came into force in March 2023, at which point the defendant proposed discussion about a potential DPA. The Court made it clear that "ordinarily, an entity already under investigation is not able to avoid the effect of a prosecution simply by filing a self-report".

About DPAs

DPAs take the form of agreements between the AG and a corporate that must be approved by the Court. The DPA Law sets out that a DPA may include a fine, a compensation plan, a commitment to implement or amend a compliance programme, a contribution to the AG's costs, and the remuneration of an independent monitor to report on compliance with the DPA while it is in force.

Once the AG and the corporate agree on the terms of the DPA, the AG will apply to the Court for it to be approved – the Court may approve it, refuse to approve it or indicate that it would approve it under different terms.

The judgment in AG v Afex quotes from the AG's DPA Guidance, which states that a DPA:

"is a discretionary tool which enables a corporate to make full and carefully structured reparation for its criminal conduct and avoid the damaging consequences of a conviction. In a small jurisdiction, the harm caused to the reputation of a corporate as a result of a conviction is likely to be significant. In addition, a corporate that enters into a DPA with the Attorney General may avoid a complex, lengthy and costly trial".

The facts

Afex Offshore (Jersey) Limited ("Afex") arranges foreign exchange and cross-border payments on behalf of its clients. It is owned by a US company.

Since 2022 Afex had been under criminal investigation and a production order had been granted in July 2022 in respect of services it had supplied to a client who opened an account with them, received payment of just over 3m Euros and paid it out to various people and entities.

Very soon after the DPA Law came into force, Afex contacted the AG about the possibility of a DPA. Afex filed a self-report about the conduct that led to charges 1-5 on the indictment, covering the services described above, relating to failures to verify identification measures and failures to properly scrutinise related money laundering risks.

The Court described the omissions as "serious failings".

In response to certain queries from the AG in relation to the first self-report, a follow-up self-report was issued which became the basis of charges 6-11 on the indictment, which cover Afex's reliance on clients' own AML identification measures and Afex's failure to test and scrutinise those AML processes.

The decision

The Court approved the DPA, noting that the conduct that gave rise to it was "a serious failure in corporate governance driven by individuals within the Defendant acting recklessly", but significantly it also found that "had the Defendant’s procedures been applied properly, the transaction at the heart of the events would not have occurred and the relationship terminated".

The financial penalty of £408,240 was approved (along with a £60,000 contribution to the AG's costs), despite some consideration by the Court on the level of "discount" that should be applied to the starting point of £850,000 for engaging in the DPA process.

Conclusion

The fact that it has taken more than 18 months since the introduction of the DPA Law for the first application to come before the Court shows that it is not a fast-track process for avoiding prosecution. The scrutiny that the Court applied to the financial penalty also demonstrates that it will not rubber stamp applications without consideration.

Bedell Cristin's dedicated regulatory team is ranked in the top tier by Legal 500 and advises regulated financial services providers on the full range of regulatory challenges and disputes.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

• the identity of the persons who are responsible for administering the shares; and
• the beneficiaries of the shares,

after the testator's death.  It can also considerably reduce the time and cost of administering the shares.

This briefing explains the rules applicable to the validity of wills in the British Virgin Islands where an individual is the holder of shares in a BVI business company and is domiciled outside the British Virgin Islands.

Validity of wills

A will is formally valid (and is admissible to proof) if its execution conforms with the formalities prescribed by the law of the place where:

• it was executed; or
• at the time of its execution or the testator's death, the testator was domiciled, habitually resident or was a national.

A share in a BVI business company (the most common form of company incorporated under British Virgin Islands law) is movable property.

For purposes of determining matters relating to title and jurisdiction, the situs of the ownership of shares of a BVI business company is in the British Virgin Islands.  When the holder of shares in a BVI business company dies, the only person who has power and authority to deal with the shares is the personal representative of the deceased shareholder.  The personal representative is the person in whose favour:

• the Eastern Caribbean Supreme Court has granted probate or letters of administration; or
• a court of probate in a recognised jurisdiction has granted probate or letters of administration, if that grant has been resealed by the Eastern Caribbean Supreme Court.

For more information on obtaining grants of probate and letters of administration on the death of a shareholder, see our separate briefing here.

Where a deceased shareholder leaves a will in the English language which is admissible to proof, a grant of probate may be made to the executor named in that will.

In addition, the validity of the gifts of moveable property contained in the will is governed by the testator's domicile at the time of his or her death.  A will cannot be used to avoid the forced heirship rules of the testator's domicile.

Alternative succession planning structures

Trusts

The formal and essential validity of a gift of shares in a BVI business company (and the capacity to make the gift) are determined in accordance with British Virgin Islands law.  Further, heirship rights conferred by foreign law in relation to the property of a living person shall be disregarded when determining rights of ownership of property subject to trust which is governed by British Virgin Islands law.  In other words, the gift of shares of a BVI business company to the trustee of a trust which is governed by British Virgin Islands law protects those shares from foreign forced heirship rules.

We have a number of client briefings on British Virgin Islands law governed trusts:

-      Reserved powers trusts in the British Virgin Islands;

-      Purpose trusts in the British Virgin Islands; and

-      BVI VISTA trusts.

Joint tenants

A share in a BVI business company may be held by more than one person as joint tenants.  Upon the death of the first joint holder, title to the share vests in the surviving holder.

Share classes

A BVI business company may issue more than one class of shares.  Further, shares may confer:

• no rights or preferential rights to distributions;
• conditional rights; and
• voting rights or no voting rights.

In principle, a BVI business company may issue shares carrying voting rights and rights to distributions (the "A Shares") to the present shareholder (the "Parent").  Additional shares (the "B Shares") may be issued to the shareholders' children (or other intended beneficiaries) carrying voting rights and rights to distributions which are conditional upon the death of the Parent.  Upon the Parent's death, the A Shares may be cancelled and the B Shares immediately carry voting rights and rights to distributions.

Reserve director

Where a company has only one shareholder and that individual is also the sole director of the company, that sole shareholder/director may, by instrument in writing, nominate a person who is not disqualified from being a director of the company as a reserve director to act in the event of the shareholder/director's death.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

Workplace legislation continues to develop at pace in the Channel Islands – 2024 saw the first phase of Guernsey's anti-discrimination legislation introduced, and changes to minimum wage, flexible working and redundancy payments in Jersey.

The pipeline for 2025 is, if anything, more ambitious: secondary pension schemes, the gender pay gap and whistleblowing legislation are all likely to be hot topics, in addition to keeping a close eye on developments in the UK as the Labour government works to reform various elements of employment law.

Below is a review of key developments from 2024 from the Bedell Cristin employment law team, and a look ahead to the likely key topics and milestones in 2025.

Key developments in Guernsey employment law

• Discrimination - In late 2023, Phase 1 of Guernsey's anti-discrimination legislation was introduced, prohibiting discrimination on the grounds of disability, carer status, race, religion and belief, and sexuality. This is a developing area of the law, with the States of Guernsey requesting feedback on the law in its current form. Phase 2, which we anticipate may introduce 'age' as a protected ground, is due to be introduced in 2025 (or 2026). More information on the current anti-discrimination legislation can be found here. 
• Minimum wage increase - In October 2024, the prescribed minimum wage for adult employees (i.e. aged 18 and over) increased to £12 per hour, with that for under-18s (i.e. 16- and 17-year-olds) increasing to £10.80. More information can be found here.
• Offset - The statutory maximum figure which can be 'offset' for accommodation, or accommodation and food, provided by an employer has also been increased: accommodation offset against wages was set at £109.00 per week and accommodation and food offset against wages was set at £152.00 per week. The 'offsets' allow a notional amount to count towards an employee's minimum wage pay. More information can be found here.
• Feedback on Discrimination Ordinance - Employment & Social Security is inviting feedback on the Prevention of Discrimination (Guernsey) Ordinance, 2022 and associated services. Anyone wishing to provide feedback is invited to email equality@gov.gg by midday on Monday, 20 January 2025.

Key developments in Jersey employment law

• Scrappage of trainee wage - At the start of 2024, trainee wages were scrapped. Instead, the minimum wage now applies to all employees, regardless of whether they're a trainee or not.
• Increase in minimum wage - The minimum wage is currently set at £11.64 an hour with further increases to occur in 2025. For an employee working 35 hours a week, this equates to £407.40 a week and £21,184.80 a year.
• Bereavement leave - There is now a day one statutory entitlement to two weeks of unpaid bereavement leave in the event of the death of a child. More information can be found here.
• Flexible working requests - Article 15A(5) of the Employment (Jersey) Law 2003 was amended to enable an employee to make two applications to request a change in their terms and conditions of employment in any 12-month period.
• Compensation limits - In June 2024, the Jersey Employment Forum released recommendations for an increase in compensation awards by the Employment and Discrimination Tribunal. Full details can be found here. These recommendations were accepted by the Social Security Minister and a proposition has been lodged with the States Assembly for debate on 21 January 2025. 
• Increase in redundancy cap - Effective from 24 September 2024, the statutory redundancy payment cap increased to £1,000.00 per week for each full year of service.
• Covert recording and without prejudice communication - On 21 November 2024, the Jersey Employment and Discrimination Tribunal reiterated their position in relation to covert recording and without prejudice communications. The full Judgment can be found here.

Employment trends from around the world

In the UK a series of pro-employee trends emerged with:

• the introduction of the Employment Rights Bill - information as to how this could affect Channel Islands employers can be found here;
• a new preventative duty on sexual harassment in the workplace - more details can be found here;
• the issuance of a record-breaking compensation award of approximately £4.6 million in respect of claims for disability discrimination, harassment and dismissal - more information here; and
• the Employment Tribunal issued guidance on how to handle workplace stress, disability and discrimination claims - full details here.

In July 2024, and in response to staff shortages, Greece introduced new legislation to allow a six-day working week for industries that operate on a 24-hour basis. The new legislation allows employees to work up to 48 hours in a week as opposed to 40. Such a working arrangement is optional for workers, with those choosing to opt in getting paid an extra 40% for any overtime carried out. 

The right to disconnect emerged in France following a decision on 2 October 2001 of the Labour Chamber of the French Supreme Court.  This right enables an employee to refuse work and/or to disengage from workplace communication of any sort outside of their contractual hours. To bring work-life balance into this digital era the right to disconnect is slowly gaining worldwide recognition, with countries such as Germany, Italy, Slovakia, Belgium, Portugal, Ireland and Canada introducing either voluntary codes of practice and/or statutes to bring this right into effect. Australia followed in 2024. In the UK there is currently no specific legal right to disconnect, although proposals have been made for its introduction. 

The Bedell Cristin employment team

Two employment law specialists joined Bedell Cristin's pan-Channel Islands employment team in 2024: Marianne Russell, our new Head of Employment, and Associate Devon Jenkins. The pair have a combined ten years' experience in the Channel Islands market, as well as a further ten years working onshore, having both worked in private practice with international law firms and in senior in-house roles.

Key dates for 2025

^{*An employer may defer the enrolment of an employee for up to three months provided they have given written notice in advance to the Designated Employee. Such notice must also provide information of when the Designated Employee will be enrolled in the scheme.}

We focus on forming deep and direct relationships with clients, travelling regularly to Asia, the Middle East, Latin America and East Africa, as well as the key intermediary markets in London, Switzerland and the US.

Unlike many offshore firms, we are fully independent – we are not tied to a trust company or set of services.

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Our partnership in Guernsey includes three experienced Advocates who are admitted as Notary Publics by the Island’s ancient ecclesiastical court, enabling them to certify true copies of documents, to witness the signing of documents, to authenticate company and business documents and transactions, and to arrange for legalisation of documents.

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However, Asia has a diverse range of laws, cultures and political systems, presenting investors with uncertainty, complexity and risk.  To mitigate such risks, investment structuring is critical, and the choice of jurisdiction for the investment vehicle is a key consideration.

Investment in Asia can take many forms, ranging from initial funding in the start-up phase, late-stage investment, or acquisitions of regional targets.  Alternatively, investment can be structured through collaboration with local partners, and joint ventures are a popular means of investing in Asia.

Some key reasons for structuring investment through a joint venture include:

Lack of familiarity with the local jurisdiction

Many international investors may have a lack of familiarity or experience with the target jurisdiction.  Consequently, an investor may wish to invest through a joint venture, by partnering with a local enterprise.  This permits access to local talent and allows the investor to benefit from their partner's market knowledge and customer base.

The need for access to international markets and experience

Many Asian enterprises have constraints on growth, either through local or regional market limitations, or a lack of international experience or technology.  An international partner can provide the local firm with capital, knowledge and access to new markets.

The need for legal certainty 

Asia is a diverse continent, with differing laws (both civil and common law), languages, regulations and standards.  Given the cultural and legal diversity, investors prefer to structure investments through an offshore company, which is more familiar to investors and provides certainty and predictability based on common law principles.

Local investment restrictions

Many jurisdictions may have local investment restrictions in place, which may restrict or prevent a majority interest or full acquisition.  Joint venture vehicles are often chosen as an alternative means of investment, allowing control and oversight to be established at the joint venture level.

Commonly, when forming a joint venture in Asia, a BVI company is the joint venture vehicle of choice.

Advantages of BVI companies for Asian joint ventures

There are many ways of structuring a joint venture, such as through an informal contractual relationship, a partnership or a corporation.  Ordinarily, a company is chosen to structure the investment, and this briefing will therefore focus on the use of companies. 

A BVI company is frequently used for the following reasons:

Cost effective and tax neutral

A key consideration in setting up a joint venture is that the vehicle does not give rise to high administration costs or result in additional layers of taxation. 

A BVI company is inexpensive to incorporate and maintain, thereby providing cost efficiency.  Furthermore, a BVI company is tax neutral, with no additional layer of tax being applied on dividends, transfers or disposals.  This allows the joint venture parties to structure their investment in a cost neutral and tax efficient manner.

Flexible structuring

Joint venture parties frequently have deal specific structuring needs.  They require a vehicle which is capable of being tailored to the deal. 

There is minimal prescription under BVI corporate law as to the structure or administration of a BVI company.  Consequently, the parties can tailor the constitutional documents to reflect the commercial terms of the venture.  The constitutional documents of BVI companies can provide for different share classes, rights and restrictions on transfer, voting and economic rights, reserved matters, and termination provisions, with minimal statutory prescription.  As such, parties can form and operate a BVI company in a manner that reflects their commercial intent.

Legal certainty

Given the multitude of legal systems in Asia, it is critical that the joint venture parties establish a vehicle which provides clarity, certainty and legal protection.

The BVI is founded on common law principles, with a dedicated commercial court.  The ultimate court of appeal is the UK Supreme Court.  As such, the BVI provides a legally certain framework for the operation of companies and resolution of disputes.  By structuring a joint venture vehicle in the BVI, the parties have certainty as to remedies and due process.

Light touch regulation

When structuring a joint venture, it is essential that the vehicle does not impose additional layers of administrative or regulatory burden. 

In many cases, it is unrealistic to utilise a vehicle incorporated in the UK, US or EU, as this would risk importing additional layers of regulation or taxation into the structure at the joint venture level.  This may not be commercially viable in the context of an Asian joint venture.  As an incorporation jurisdiction, whose purpose is to serve international markets, the BVI offers a light touch regulatory platform and does not impose heavy layers of additional regulation.

Flexible accounting treatment

Joint ventures are frequently driven by financial and accounting considerations, which may impact on the ultimate choice of vehicle.

BVI companies offer considerable flexibility at the accounting level, permitting free choice of accounting standards, with no requirement to consolidate accounts at the BVI level.  This provides joint venture parties, who may have different jurisdictional and/or economic requirements, to employ a level of accounting flexibility in structuring their investment.

Flexible investment structure

Joint venture parties frequently need to consider the manner of investment, for instance, whether they will be contributing assets or cash, and whether any funding is provided by loan or equity.

Unlike many other jurisdictions, the BVI does not have any thin capitalisation rules or capital maintenance requirements.  Consequently, there is considerable flexibility as to the nature and extent of the investment, and parties can structure their contributions in line with their needs.

Flexible share structure

Joint venture parties frequently need to consider financial matters when subscribing for equity in the joint venture, and do not wish to be constrained by needless red tape.  Issues may arise in jurisdictions which have legal prescriptions on valuation (such as in the case of contributions) or have prohibitions on issuances at a discount.

There is no concept of share capital in the BVI and companies are permitted to issue minimal or no par value shares.  This provides the parties with a level of freedom, as it may simplify questions about valuation, non-cash contribution, or issuing shares at a discount.

Minority protections

Where a joint venture reflects a power imbalance between the parties, the minority shareholder will seek to ensure that they have protection, whether under contract or the corporate laws of the jurisdiction of formation.

It is common practice to build shareholder protections into the joint venture agreement and/or constitutional documents of a BVI company.  Such protections can take an array of forms, ranging from anti-dilution rights, corporate governance rights, or shareholder restrictions in relation to certain reserved matters.  Similarly, the BVI corporate statute provides for a suite of shareholder remedies, including unfair prejudice actions and derivative actions, supported by a strong body of case law.

Ease of distributions

The joint venture parties will wish to ensure that they can realise value and a return on their investment.

BVI companies are designed to facilitate the return of capital with ease, as distributions can be made from any source, and may either be in cash or other property, under very simple and understandable rules.  Additionally, there are no foreign exchange restrictions in the BVI, meaning that funds can be returned without impediment at the BVI level.

Ease of migration

A joint venture may last for many years.  This can raise the risk of changes in regulation, taxation or the commercial environment during the investment period, all of which may impact on the joint venture structure.

Unlike many jurisdictions, it is possible to re-domicile a company both into and out of the BVI (many other jurisdictions prohibit both, or only permit migration in).  This permissive approach provides for operational flexibility, should the need to change the jurisdiction of the joint venture arise, as a result of adverse legal, financial, regulatory or commercial changes.

Ease of termination

A critical consideration for joint venture parties is when, or under what circumstances, the joint venture will terminate, and how the assets will be realised. 

A company may be wound up efficiently in the BVI with minimal administrative restrictions, thereby allowing for the fast and efficient realisation of value on the conclusion of the joint venture.

Permissive choice of law

For transactional reasons, the parties may wish for the joint venture agreement to be governed by the laws of another jurisdiction.  Similarly, the parties may have a preference to resolve disputes in a specific forum.

The BVI permits free choice of law in entering into contracts and, additionally, the constitutional documents of a BVI company can be made subject to arbitration.  This enables parties to deploy their preferences as to the choice of contract law or their desired forum. 

English language

English is commonly used in international business transactions, and joint venture parties will wish for documentation and/or dispute resolution to be held in the English language.

As an English language jurisdiction, contracts can be drafted in English.  The parties therefore have certainty as to the terms of their agreement and the resolution of any disputes. 

Practical legal considerations 

When forming a BVI joint venture, it is essential to engage counsel at an early stage.  A non-exhaustive list of matters that require legal advice will include:

• The joint venture agreement.  As the joint venture or shareholder agreement will set out the contractual relationship between the parties, it is essential to engage BVI counsel at an early stage, to ensure that the agreement adequately captures the terms of the commercial deal and protects the parties or (where the role of BVI counsel is to review the agreement) to ensure that it complies with BVI law.
•  The memorandum and articles of association.  The constitutional documents of the company will contain the critical terms of the venture, particularly in relation to share rights and corporate governance.  It is therefore critical that the constitutional documents reflect and are aligned with the joint venture agreement, to avoid any risk of ambiguity or conflict between the documents.
• Ancillary documents.  Each joint venture is different and may require further contractual documentation to ensure the success of the venture.  This may include the initial term sheet or memorandum of understanding, as well as substantive contracts, such as management agreements, licensing agreements, service agreements, supply agreements or property agreements.  In each instance, the advice of counsel should be sought at an early stage.
• Protection of technology, trade secrets and intellectual property.  A joint venture involves a degree of good faith between the venture parties, as well as the possible sharing or transfer of knowledge.  It is therefore critical to consider areas of legal risk and what protections may be required, as well as what form of confidentiality restrictions may be needed.
• Reporting and oversight.  Although the joint venture can be carefully constructed at the BVI level, investors should be mindful of risks at the local level.  These can include risks relating to the acts of agents or the risk of dissipation. It is therefore critical to consider whether reporting or oversight provisions are required, and whether any specific contractual sanctions or protections will be needed.
• Compliance undertakings.  A frequent concern for international investors is that the local joint venture party complies with international standards, such as any applicable anti-bribery legislation.  This may be a concern where the local party has different cultural norms and standards.  In such cases, consideration should be given to potential risks, and mitigation strategies.  This can include educating the local venture party or instituting policies or controls (the latter of which, if documented and enforced, may serve as a defense to the investor in the case of breach).

Although it is possible to mitigate risk, protect the parties, and record the terms of the venture at the BVI level, any Asian joint venture will necessarily require the advice of local counsel in the target jurisdiction. 

A non-exhaustive list of matters which may require local guidance are:

• due diligence on the local venture partner;
• due diligence on any local property that may be contributed or acquired, and analysis of any related rights or restrictions;
• review of any regulations that may be triggered by the joint venture or approvals that may be required;
• an analysis of any foreign exchange controls;
• guidance on the powers and rights of any local manager (including whether there is a company seal and who controls the seal); and
• guidance on rights, remedies and enforcement under the laws of the local jurisdiction.

Bedell Cristin has been operating in Asia for over 12 years.  We have significant expertise in forming joint ventures for Asian clients, as well as a deep understanding of the region.  Additionally, we have a wide network of relationships with local and international law firms, and work in close conjunction with Asian counsel on a wide array of corporate, finance, funds and regulatory matters, including the formation of joint ventures.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

When it comes to practical matters, rather than simply applying the letter of the law, we are able to use our experience to make innovative proposals and find effective solutions. With that experience, we are able to help clients design and implement effective estate plans, which make sure that their loved ones benefit from the wealth that they have worked hard to build over a lifetime.

To find out how Bedell Cristin can help you please contact Fraser Allister.

This briefing outlines different types of partnerships available in Jersey, explores their key features, and considers the situations in which they are most useful.

Although the different types of partnerships have different features and are used in different ways, they have some basic similarities:

• Confidentiality: Jersey's regulatory environment ensures a high level of confidentiality, particularly for limited partnerships, where only limited details are public.
• Tax neutrality: Partnerships are tax-transparent vehicles, meaning that the partnership itself is not subject to tax, and profits or losses flow through to the partners.  Non-Jersey based partners will not be taxed in Jersey.
• Flexibility: Jersey partnerships offer flexible management, investment and operational structures, allowing partners to define roles, responsibilities and profit-sharing ratios in partnership agreements.
• Regulatory clarity: Jersey has a well-established legal framework for partnerships, which is supported by guidance from the Jersey Financial Services Commission ("JFSC"), ensuring regulatory clarity and certainty.

The features and uses of the different types of Jersey partnership are explored below.

Limited Partnership

Overview:

The Jersey Limited Partnership ("LP") is the longest established and most used type of partnership for investment and fund structures.  The Limited Partnerships (Jersey) Law 1994 (as amended) (the "1994 Law") provides the statutory basis for LPs. 

An LP consists of one or more general partners with unlimited liability (typically, a limited company acts as general partner) and one or more limited partners whose liability is capped at the level of their contribution to the partnership. The general partner is responsible for the management of the partnership, with limited partners typically being passive investors who do not engage in management.

Key features:

• Limited liability: Limited partners are only liable up to the amount they have invested, unlike general partners who have unlimited liability.  The 1994 Law provides both statutory confirmation of limited liability, as well as a set of 'safe harbours' in terms of activity that limited partners can conduct in relation to the partnership without prejudicing their limited liability status.
• No separate legal personality: A limited partnership does not have separate legal personality, making it distinct from the partners themselves, with contracts being entered into and assets being held by the general partner on behalf of the limited partnership.
• Flexibility: Partnerships can be structured flexibly, including as to matters relating to profit distribution and decision-making in the partnership agreement.
• Private arrangement: The limited partnership agreement is private, and only basic details (like the name and general partner) need to be registered.
• Tax transparency: The partnership is tax transparent and is not taxed in Jersey, with profits flowing through to the partners, allowing for tax-efficient structures.

When useful:

• Private equity and venture capital funds: the LP is a common structure for investment funds, especially private equity, venture capital and other alternative investment funds. 
• Real estate and property investments: the LP can be ideal for large-scale real estate investments, where the general partner takes on management, and limited partners are passive investors with capped risk.

Separate Limited Partnership

Overview:

A Separate Limited Partnership ("SLP") functions similarly to an LP, but has separate legal personality by default, although it is not a body corporate.  Like the LP, an SLP it consists of one or more general and limited partners.

Key features:

• Legal personality by default: The key difference from LPs is that an SLP has legal personality. This means that the SLP has the capacity to enter into contracts and hold property in its own name.  That said, the law still allows the general partner to hold property on behalf of the SLP, if desired.
• Limited liability: As with LPs, limited partners have limited liability, with various protections built into the law.
• Flexibility and privacy: SLPs offer similar flexibility and privacy as LPs.
• Tax transparency: Like LPs, SLPs are tax transparent in Jersey.  They may be treated differently for tax purposes in other jurisdictions.

When useful:

• Funds and investment vehicles: Like LPs, SLPs are commonly used for private equity, venture capital, and real estate investments.
• Family office structures: SLPs can be useful for managing family assets across multiple jurisdictions in a tax-efficient and flexible manner.

Incorporated Limited Partnership

Overview:

An Incorporated Limited Partnership ("ILP") is similar to an LP, but has both separate legal personality and is an incorporated entity – that is, an ILP is a body corporate.  Like an LP, it has at least one general partner and one or more limited partners, with limited partners enjoying limited liability.

Key features:

• Legal personality: As it has legal personality, an ILP can hold assets, enter into contracts, and sue or be sued in its own name, making it more akin to a company.  The ILP is also an incorporated entity.
• General partners: Although the ILP is an incorporated entity, it must still be managed by a general partner, as with LPs, and the general partner has unlimited liability, as with other types of partnership.  The general partner acts as agent of the ILP and is subject to certain statutory duties to act in the best interests of the partnership, similar to those imposed on directors of companies.
• Limited liability: As with other types of limited partnership, limited partners have limited liability, with various protections built into the law.
• Flexibility and privacy: ILPs offer similar flexibility and privacy as other types of partnership.
• Tax transparency: Like other types of partnership, ILPs are tax transparent in Jersey, despite their incorporated status.  They may be treated differently from either LPs or SLPs for tax purposes in other jurisdictions.

When useful:

• Private equity or real estate structures: ILPs are useful for fund structures where legal personality and incorporated status is desirable, which can provide flexibility for cross-border deals.
• Cross-border transactions: ILPs can be useful where the partnership needs to own assets or enter into agreements in its own name while limiting the liability of investors.

Limited Liability Partnership

Overview:

A Limited Liability Partnership ("LLP") is a hybrid structure that combines the flexibility of a partnership with the limited liability of a company.  All partners (also known as members) enjoy protection from personal liability.

Key features:

• Limited liability: Members are not personally liable for the debts or obligations of the LLP, beyond their contribution to the partnership, save that they are responsible for any losses of the LLP caused by them personally.  Unlike other forms of partnership, partners in an LLP can participate in the management of the LLP without jeopardising their limited liability status.
• Separate legal entity: An LLP is a separate legal entity from its members, capable of owning property, entering into contracts and being sued in its own name.  Like SLPs, LLPs are not bodies corporate.
• Flexibility: LLPs allow members to determine their roles and responsibilities, typically set out in an LLP agreement.
• Formalities: LLPs must be registered with the Jersey Registrar and an annual return must be filed.  Regulations set out the procedures to be followed in order to wind up an LLP, which are similar to those for companies.
• Tax transparency: Like other types of partnership, LLPs are tax transparent in Jersey. 

When useful:

• Professional service firms: LLPs are popular for law firms, accountants, architects and consultants who want limited liability but the flexible structure of a partnership.
• Joint ventures: LLPs can be used in complex joint ventures where participants wish to manage risks while still maintaining a high degree of operational flexibility. 

Summary

Jersey offers a selection of partnership structures with subtly different features.  The choice of partnership structure in Jersey depends largely on the goals of the partnership and the desired legal status, operational features and tax treatment.  For small businesses and professional services firms, an LLP might be appropriate, while investment funds and real estate ventures typically use LPs, SLPs or ILPs for their flexibility, limited liability and tax neutrality.

For more information or to discuss the best partnership structure for your specific needs, please contact our team.

Put simply, sexual harassment refers to conduct which has the effect of violating a person's dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment. 

Sexual harassment in the workplace is prohibited in the UK under the Equality Act 2010. Similarly, existing anti-discrimination legislation in Guernsey and Jersey prohibit harassment in the workplace when an employee is subjected to unwanted conduct related to a Protected Characteristic that violates their dignity or creates an intimidating, hostile, degrading, humiliating or offensive environment for the employee. However, with effect from 26 October 2024, all UK employers are now required to proactively prevent sexual harassment in the workplace and there is no requirement for a Protected Characteristic before such protection comes into force. This is known as a preventative duty and was introduced with the passing of the Worker Protection (Amendment of Equality Act 2010) Act 2023. 

UK legislation does not directly apply in the Channel Islands ("CI") and, as a result, there is currently no legal duty on a CI employer to proactively prevent sexual harassment. That being said, CI employers, just like their UK counterparts, are subject to the same risks which may arise due to the poor management of incidents of sexual harassment, including:

• disruptions to business operations/loss of productivity;
• legal liability (monetary awards and/or criminal prosecution);
• reputational damage; and
• destabilisation of the workforce as a whole.

It is also important to note that victims of sexual harassment may experience considerable psychological and physical trauma which, in turn, can have a significant impact on them both personally and professionally.  If not dealt with appropriately, a victim of sexual harassment may experience a range of mental health disorders including acute stress, anxiety, depression and post-traumatic stress disorder (any impairments which fall within the definition of 'disability' under the applicable Guernsey or Jersey anti-discrimination law could give rise to an independent disability discrimination claim and/or a personal injury claim) and/or a victim may feel that they have no other option but to leave their employment (which may also give rise to a constructive unfair dismissal claim).

In light of the preventative duty, the EHRC introduced amendments to its technical guidance on sexual harassment and harassment at work and published an eight-step employer guide setting out what employers can do to prevent and deal with sexual harassment in the workplace (the "EHRC Guide").

In summary, the EHRC Guide sets out the following pertinent steps:

Step 1: Developing an effective anti-harassment policy 

A comprehensive anti-harassment policy should be developed and implemented which ensures that all employees are aware of their responsibilities and rights under the law.

Step 2: Engaging with employees

Employers should take steps to ensure that employees understand the scope, purpose and import of the anti-harassment policy.

Step 3: Conducting a workplace assessment 

Employers must consider factors that might increase the likelihood of sexual harassment and the steps that can be taken in mitigation. 

Step 4: Developing a reporting system

Employers should implement a reporting system (such as an online or independent telephone-based service) that allows employees to raise an issue.

Step 5: Training

All employees, including managers and staff, should receive periodic training on the company's anti-harassment policy and procedures.

Step 6: Action plan to deal with complaints 

There should be a clear plan of action for dealing with sexual harassment complaints.

Step 7: Dealing with harassment by third parties

Employers should take steps to prevent harassment by a third party, such as a customer, client, patient or supplier.

Step 8: Continuous monitoring 

The effectiveness of the employer's sexual harassment policy and procedure must be evaluated at regular intervals.

A copy of the EHRC Guide can be accessed here.

It would be valuable for CI employers to consider the EHRC Guide and establish whether their own policies are aligned with what may be best practice in dealing with sexual harassment in the workplace.

If you would like any further information or guidance, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

If you decide to terminate the Company, action should be taken immediately to get rid of it before the 2026 annual fees are incurred. There are two routes to achieve this, and both involve a series of requirements that take time to complete.

The two ways a solvent Company can be dissolved are (i) voluntary liquidation or (ii) a strike-off. When contemplating the winding up and dissolution of a Company it is important to consider the procedure for and effect of the two processes.

Voluntary liquidation

Voluntary liquidation is a straight-forward process that is well-honed and is the only way to ensure that any future liability for officers, directors and other stakeholders in the company is eradicated. Dissolution by this process is highly recommended for a Company that has engaged in trade, operations, or commercial transactions throughout its life cycle but really makes sense for all Companies. Once voluntary liquidation is completed there is no way for the Company to be brought back through reinstatement, except in very limited circumstances. 

The process for a voluntary liquidation takes two to three months and the fees involved are between US$7,500-15,000 (depending on the law firm and liquidator involved and the nature of the Company's business). The Cayman Islands Registered Office, Cayman Islands Government and Cayman Islands Gazette (the "Gazette") advertising fees range from US$3,000-4,000 are payable in addition.

At Bedell Cristin we can take care of the whole process once all the required resolutions and other documents are signed and closing accounts provided and for a no asset/no liability Company legal fees would not exceed US$8,000. Below is a brief guide to what is involved:

• directors of the Company will sign a declaration of solvency confirming the solvent financial position of the Company and will recommend to the shareholders that the Company be placed in voluntary liquidation and pass any necessary resolutions;
• shareholders pass special resolutions putting the Company into voluntary liquidation and appoint the voluntary liquidator;
• notify the Registrar of Companies (the "Registrar") of the voluntary liquidation and the appointment of the voluntary liquidator(s);
• publish a notice of the voluntary liquidation and appointment of the voluntary liquidator(s) in the Gazette;
• file notice of the final general meeting in the Gazette;
• appointed voluntary liquidator(s) will collate the final financial statements of the Company indicating how the assets have been distributed and prepare a report of the voluntary liquidation for the shareholders;
• voluntary liquidator(s) hold the final general meeting and the shareholders sanction the actions of the voluntary liquidator(s);
• voluntary liquidator(s) notifies the final general meeting to the Registrar and request for the Certificate of Dissolution; and
• Certificate of Dissolution is issued (usually within seven days although the deemed legal dissolution of the Company will take a further three months). 

Strike off

Some companies who are no longer carrying on business or cease operations choose to dissolve the Company through asking that the Company be struck off the Cayman Islands register of companies. The process for a strike off takes up to three months, as a Company will only be struck off as at the end of a calendar quarter (March, June, September and December - see strike off dates and deadlines) and fees involved are between US$5,000-7,000 (depending on the law firm involved). The Cayman Islands Registered Office and Cayman Islands Government fees in the range of US$2,000-3,000 are payable in addition. Below is a brief guide to what is involved:

• directors will pass a resolution that the Company has no assets or liabilities and is in a solvent financial position, no actions have been taken which would impact the application for strike off, that the Company has ceased trading and that a director will swear an affidavit in support of the application for strike off;
• one director swears an affidavit containing the information about the Company contained in the resolution;
• application is made to the Registrar for strike off; and
• if satisfied, the Registrar will issue a Certificate of Strike Off on the next quarter date.

Using strike off for dissolution carries the risk that, for a period of up to ten years after the strike off, creditors, shareholders or other claimants can revive the struck off Company by applying to the court for reinstatement, even if only to seek satisfaction of a claim. Claims could include claims against directors and officers of the Company. The court will not give too close a scrutiny of the merit of any claims said to exist so there is a danger that the reinstatement process may be used to seek to achieve some kind of leverage over those who were involved in the Company.

Decisions, decisions!

The primary difference between a strike off and voluntary liquidation is that a Company which is struck off can be restored for up to ten years so directors can be exposed to the possibility of claims for that long.

Unless the Company has been owned and controlled by the same person and was used to hold an asset of a type in which there could never be liability, a voluntary liquidation dissolution buys total peace of mind for those involved in the Company at a very modest additional cost compared to a strike off dissolution.

For further detailed advice on our liquidation and dissolution services, please do not hesitate to contact the listed contacts.

In a recent case, In the matter of the representation of IQ EQ (Jersey) Limited [2024] JRC 210, where a settlor had been irrevocably excluded, the trustees sought to vary the trust to add the settlor back in as a beneficiary, and sought the court's blessing to approve a distribution of the entirety of the trust assets to him. Of particular interest, were two points:

• whether HMRC should be notified in such a case; and
• whether this course of action was in the interests of the minor and unborn beneficiaries.

Background facts

This case involved a settlor's request to be reinstated as a trust beneficiary, despite having been previously irrevocably excluded, and to receive a distribution of the entire trust fund. His aim was to manage the assets more tax-efficiently to benefit his family, including his children who were also beneficiaries and had recently become UK residents – a factor introducing significant UK tax implications for the trust in the future.

This application raised two complex issues for the court:

• deciding if HMRC should be notified despite the lack of an immediate tax liability; and
• determining whether such a variation could still be viewed as "beneficial" for minor and unborn beneficiaries, who would lose their interest in the trust upon its distribution in full.

HMRC notification

It is well established that in Hastings-Bass or mistake applications, HMRC notification is standard practice. However, the point has not been formally considered in Jersey authorities on variation applications.

In this case, the court required HMRC to be notified of the variation application, even though no immediate tax liability existed. The rationale was that, should the variation be approved, it would likely impact future UK tax liabilities by allowing the settlor to make more tax-efficient provisions for family members.

In our view, as a result of this judgment HMRC notification will now be considered standard practice in Jersey for variation applications where the proposal has a potential effect on tax.

Benefit for minors and unborns

The Royal Court often wrestles with the question of benefit for minors and unborns where a distribution of some or all of the trust fund is to be made to a relative or relatives, thus reducing or extinguishing the assets of a trust of which they are beneficiaries. This case is perhaps the most extensive discussion in Jersey of such a scenario.

The question for the court was to determine what constitutes "benefit" for minor and unborn beneficiaries, especially in cases where a variation may appear, at first glance, to disadvantage them. In this case, the beneficiaries stood to lose their trust interest entirely if the trust was fully distributed to the settlor.

The court sought to balance the apparent loss of these beneficiaries' trust interests with the broader, practical advantages of allowing the settlor to re-assume beneficiary status and receive the trust's assets, to allow him to manage the assets more tax-efficiently. To address this, the court emphasised two points:

• Despite the immediate loss of a trust interest, the variation could indirectly benefit the minor and unborn beneficiaries by preserving the family's wealth through tax-efficient management. If the settlor could hold and distribute assets more tax-efficiently, the minors might indirectly benefit from his increased ability to provide for them during his lifetime or through inheritance.
• In evaluating benefit, the court also took into account the settlor's original purpose in establishing the trust, which was to preserve wealth for future generations, and his continued commitment to benefiting his family. The court noted that, historically, the settlor had acted in the best interests of his children and would likely continue to do so, especially given their consent to the proposed variation.

Ultimately the court considered the available evidence and was satisfied, on the balance of probabilities, that this indirect benefit was more likely than not to come to the minors and unborns in due course.

The judgment confirms that the concept of "benefit" in trust variations may include a broader, pragmatic assessment of family welfare and tax efficiency. It is likely to be a key reference point in future cases where trustees are wrestling with a similar decision.

Conclusion

This case shows Jersey's progressive approach to trust law, balancing tax planning and the protection of beneficiary interests in a pragmatic way. By requiring HMRC notification and supporting a broader interpretation of "benefit" under Article 47, the Jersey court sets a precedent for transparency and practical family-focused solutions in trust management.

This was the result of a long process involving unclaimed investor funds from a portfolio of assets held by a company who appointed PricewaterhouseCoopers CI LLP ("PwC") as liquidators to trace and repay 4,491 investors of a long-standing fund with an aggregate value of over £180 million.

Despite extensive efforts by PwC, investors could not be found. As a result, in accordance with legal procedures, the unclaimed funds are now set to be transferred to the Crown. 

Bedell Cristin represented the Joint Liquidators, Neil Howlett and Christiaan van den Berg of PwC, providing guidance throughout this complex case. This briefing outlines the background of the fund, PwC's efforts as liquidators and the final procedural transfer of unclaimed assets to the Crown. Read on for an in-depth look at how PwC navigated the challenges of investor tracing, addressing intricate legal considerations and ensuring a compliant resolution to this unique case.

The Court's Decision

On 17 October 2024, the Court authorised the transfer of almost £25 million to His Majesty's Receiver General ("HMRG") from the Joint Liquidators of a company (the "Company") which held a portfolio of assets comprising the Sterling Bond Fund (the "Fund").

The Joint Liquidators sought the Court's approval for the significant transfer because, despite considerable efforts by the Company pre-liquidation and by the Joint Liquidators and tracing agents instructed on their behalf during the course of the liquidation, due to various complications, the Joint Liquidators were unable to trace and repay all investors of the Fund, to enable it to be closed and the Company dissolved.

Facts

The Fund attracted a diverse range of investors located in over 100 countries. In 2019, after approximately 30 years in operation, the decision was made to close the Fund. The Company, along with its various service providers, consequently endeavoured to trace and repay investors to enable the closure.

Despite those efforts, the Company was unable to locate and repay all investors and a decision was made to wind up the Company by summary winding up, and to appoint the Joint Liquidators. Upon their appointment on 9 November 2020, the Joint Liquidators inherited 4,491 investors with an aggregate value of over £180 million.

The Joint Liquidators made significant progress in distributing monies to the remaining investors with the assistance of external specialist third party tracing agents. However, due to various complications, by October 2024, roughly 1,770 investors remained unpaid.

One of these complications related to the age profile of the remaining investors. In 2017, it was recorded that 79% of the investors were over the age of 65 and 37% were over the age of 80, and, therefore, a large number of investors became unresponsive or passed away. Other complications included payment difficulties in high-risk jurisdictions, incomplete Know Your Client or Anti-Money Laundering documents, and little or no information recorded for some investors.

The Joint Liquidators therefore sought orders from the Court to allow the funds allocated to, and details relating to, the remaining investors to be passed to HMRG, in two tranches. The majority of the investors would pass to HMRG in the first tranche, but there was a smaller number of investors who were in contact with the Joint Liquidators and in the process of being paid, as well as a number of investors who had passed away and their next of kin and/or personal representatives were in the process of going through probate. This smaller number of investors were afforded an additional six months to provide the necessary documentation to enable the investors to be paid and, if not completed within that timeframe, the Court ordered that their money would also pass to HMRG.

Legal Principles

The Joint Liquidators sought the substantive relief pursuant to article 186A of the Companies (Jersey) Law 1991, an article under which the Court possesses a wide discretion to determine questions referred to it. 

Monies treated as bona vacantia (which literally means "ownerless goods") can be claimed by the Crown by virtue of the Royal Prerogative. However, usually HMRG will hold assets for 10 years before they are claimed absolutely by the Crown.  That equates to the 10 year period within which a dissolved company can be restored to the register. In this case, the monies belonging to the investors who could not be traced despite substantial efforts are considered as monies which have no owner.

Liquidators have a duty to complete a winding up in a timely manner. Matters cannot drag on for ever. Where circumstances arise which prevent them from being able to distribute all assets as part of the winding up, these unclaimed assets must be dealt with in a cost-effective way. Best practice for liquidators after ensuring that all reasonable methods are pursued (such as advertising etc.) is to request that HMRG accept the assets to enable the liquidators to conclude the winding up.

Conclusion 

There is an expanding bank of decisions in Jersey where assets have been passed to HMRG. Most involve liquidations, although another significant recent case involved a bank administering an employee benefit trust, in which the Trusts (Jersey) Law 1984, as opposed to provisions of the Companies (Jersey) Law 1991, was applied. There may be cases in which a liquidator deals with trust assets not belonging to the company, in which case both sets of provisions could apply. This case involved the largest transfer of funds recorded in Jersey and therefore serves to illustrate the rule that, even where the value of assets is significant, the Court will approve a transfer of assets to HMRG if extensive steps have been taken to locate the investors.  

If liquidators, companies, funds or trusts find themselves in a similar situation, they can refer to a number of helpful steps taken by the Joint Liquidators in this case, which have no doubt assisted in reaching the desired outcome at Court: 

• balancing their duties set out above, the Joint Liquidators instructed specialist tracing agents to trace investors who had invested more than £5,000, where the threshold was adopted to ensure that the tracing exercise remained proportionate;
• the Joint Liquidators also kept the Jersey Financial Services Commission updated throughout the course of the winding up;
• an Amicus Curiae was appointed to represent unpaid investors and to reassure the Court that appropriate steps had been taken to locate such investors; and
• the Joint Liquidators entered into early discussions with HMRG to ensure that he was comfortable accepting the money and holding it for the period of 10 years.

The proposals have been developed following engagement with a working group run by Jersey Finance, and the specific proposals on creditors' winding up and administration were developed partly by Jersey's Association of Restructuring and Insolvency Experts. The amendments in the consultation are intended to achieve maintenance, clarification and modernisation of the Law.

While the consultation includes a significant number of potential changes to the Law and certain related amendments to other laws, some of the more notable proposals are as follows:

• Abolishing 30 shareholder rule: Private companies with more than 30 shareholders are currently deemed, subject to some exceptions, to be public and subject to more onerous requirements under the Law. It is proposed to abolish this rule, allowing companies with a large shareholder base to maintain private status.
• Simplified ratification of distribution: Before a Jersey company makes a distribution to its shareholders by way of dividend or otherwise, the directors who approve the distribution must make a solvency statement in a form prescribed by law. Where the required solvency statement is not made, an application must be made to court to ratify the distribution. It is proposed that directors would be allowed to ratify a distribution without applying to court in certain circumstances where a company is solvent.
• Abolishing headcount test for members' schemes of arrangement: The Law currently includes a "headcount" test to approve a members' scheme of arrangement, which can result in the blocking of a scheme even where the holders of 75% of the voting rights are in favour. It is proposed to abolish the headcount test, a welcome change which has already been made under Cayman law. 
• Direct voting: The consultation proposes that direct voting by shareholders should be expressly permitted, allowing shareholders to send a voting form rather than having to appoint a proxy to vote on their behalf. Direct voting is currently allowed in some other jurisdictions, including Australia.
• Removal of need for solvency statement and shareholder approvals on repurchase/redemption of shares for nil consideration: The Law currently requires solvency statements to be made by directors on any redemption or repurchase of shares, and for shareholder approvals in respect of a repurchase. Where a redemption or repurchase is made for nil consideration, the proposals seek to facilitate the process by removing the need for solvency statements and, in the case of a repurchase, shareholder approvals.
• Extending accounts and audit exemptions: Broadly, Jersey companies with shares listed on exchanges outside the EU or UK must satisfy certain Jersey-specific accounting and audit requirements in addition to those applicable to the relevant exchange. To avoid duplication, it is proposed that companies listed on regulated exchanges in the USA, Australia and Canada (and potentially elsewhere) would effectively be exempted from the relevant Jersey-specific requirements, leaving them to comply only with those of the foreign exchange.
• Clarifying alteration of capital provisions: The consultation proposes to simplify and clarify the provisions of the Law which address alteration of share capital, including to expressly cater for redesignation of shares between different classes.
• Disapplication of requirement to issue share certificates: It is proposed that the Law is updated to allow a company to disapply the requirement to issue share certificates, recognising that these are frequently not issued in practice.
• Digital changes: The consultation also makes certain proposals to facilitate or confirm digital administration and governance practices, including expressly permitting internet voting in meetings unless the articles of the company provide otherwise, confirming that a register of shareholders can be held in Jersey in electronic form and allowing electronic company seals.

It is also proposed that a number of helpful clarifications and updates are made to the creditors' winding up regime and to the provisions of the Law regarding statutory mergers and continuance (also known as migration).

New administration regime

The proposed regime - like UK administration and Chapter 11 proceedings in the USA - aims to fill a perceived gap in the current law by adding a process which assists a company to recover when it is essentially viable, but technically insolvent due to cashflow issues.

It is proposed that applications to place a Jersey company into administration would be made to the court and, to be successful, the court would have to be satisfied that the administration is reasonably likely to support either the survival of the insolvent company or a more advantageous realisation of the company's assets than would otherwise be achieved.

An administrator would be tasked with reviewing the company's operations and setting out a plan for a return to solvency. During the administration, no legal action would be permitted against the company, but the rights of secured creditors would be preserved.

Comment

Overall, the consultation proposes many helpful changes which recognise and build on current practice in Jersey and elsewhere and, if implemented, will further modernise Jersey company law and streamline corporate practice. The proposed administration process would in particular be a welcome addition, providing an express recovery regime that will be familiar to the international business community while maintaining secured creditor protections.

Our experience shows that PE, VC, Real Estate, Debt, Infrastructure and other alternative asset funds have used the NPPR route through Guernsey and Jersey to gain access to European capital through a cheaper, more efficient and less burdensome regulatory regime.

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We have full rights of audience in the jurisdiction, with BVI law-admitted lawyers covering all global timezones, and with Mandarin and Taiwanese speakers in the team. Our practitioners are regularly ranked in the top tiers of the leading independent legal directories

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Put simply, a statutory demand is a written request for payment and would be of interest to creditors of defaulting BVI companies.

What must a statutory demand comprise?

A statutory demand must comply with requirements set out in the Act as well as the BVI Insolvency Rules, Revised 2020 (the "Rules").

It must:

• be for a debt of US$2,000 or more, which is due and payable at the time the demand is made;
• be in writing and specify the nature and amount of the debt;
• be dated, signed by (or on behalf of) the creditor;
• require the debtor to pay the debt or secure or compound it to the reasonable satisfaction of the creditor within 21 days of the date of service;
• state that, if the debtor does not comply with it, the creditor may apply to the BVI High Court (the "Court") for a liquidator to be appointed; and
• state that the debtor has the right to apply to have it set aside.

In instances where the creditor making a statutory demand holds security for the debt, the statutory demand must:

• specify the full amount of the debt;
• specify the nature of the security and the value which the creditor places on the security interest on the date of the statutory demand; and
• claim the full amount of the debt less the amount specified as the value of the security interest (this amount claimed must be equal to or greater than the prescribed minimum amount of US$2,000).

How can a statutory demand be a useful tool for you?

Resulting from the issue of a statutory demand, the debtor may pay the debt within the 21 days prescribed by the Act. This would be the best result for a creditor.

Alternatively, the debtor/defaulting company may apply to set aside the statutory demand under section 157 of the Act. It is important to note that the 21-day period to comply with a statutory demand will cease to run from the date on which an application to set it aside is filed.

However, if a statutory demand is not set aside, section 8(1)(a) of the Act will apply and the debtor/defaulting company will be deemed insolvent.

This would entitle the creditor to apply to the Court to have liquidators appointed over the debtor/defaulting company. The liquidators can then gather in the assets of the company, potentially paying some or all of the debt owed.

Though issuing a statutory demand can be a useful tool, it is important to be wary of using it as a means of simply putting pressure on a debtor to pay a debt, as (depending on the circumstances) a court may regard that as an abuse.

What does the application to set aside a statutory demand entail?

Section 156 of the Act provides a right for a person who has been served with a statutory demand to apply to the Court to have it set aside.

The application to set aside must:

• be filed within 14 days of the date of service of the statutory demand (the Court cannot extend this period);
• be supported by an affidavit specifying the date when the statutory demand was served and the grounds on which the debtor claims that the demand should be set aside; and
• exhibit the statutory demand to the affidavit.

The debtor/defaulting company applying to set aside a statutory demand must give the creditor seven days' notice of the hearing of the application.

When will the Court set aside a statutory demand?

The Court will set aside a statutory demand if it is satisfied that:

•  there is a substantial dispute as to whether:
  • the debt is owing or due; or
  • a part of the debt (which would reduce the undisputed debt to less than the prescribed minimum of US$2,000) is owing or due;
• the debtor has a reasonable prospect of establishing set-off, counterclaim or cross claim in an amount equal to or greater than the amount specified in the demand less the prescribed minimum of US$2,000; or
• the creditor holds security for the debt and the unsecured portion of the debt claimed is less than the prescribed minimum of US$2,000.

The Court may also set aside a statutory demand if it is satisfied that there would be substantial injustice because there is a defect in it or for some other reason.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

Exempted companies

A Cayman Islands exempted company is a type of company that is commonly used to undertake business activities exterior to the Cayman Islands. It is not permitted to conduct local business in the Cayman Islands, unless it holds a licence to do so.

An exempted company is incorporated by the subscription (signature) of the initial shareholder(s) to the memorandum of association.  In practice, the appointed incorporating agent would typically provide a nominee subscriber for the initial incorporation, which subscribes the memorandum and articles of association. 

There is an incorporation fee payable to the Cayman Islands Registrar of Companies ("RoC") which varies depending on the share capital of the exempted company.  As part of the incorporation process a declaration is also signed by the subscriber which confirms that the exempted company will not carry on business in the Cayman Islands unless it holds a licence to do so.  Once the memorandum and articles of association, declaration and incorporation fee are submitted to RoC, a certificate of incorporation is issued which serves as evidence that the exempted company has been incorporated and registered in accordance with the Companies Act (As Revised) of the Cayman Islands (the "Act").

Cayman Islands law does not impose direct tax of any kind.  Stamp duty may be payable on original documents executed or otherwise brought into the Cayman Islands certain circumstances but the charges are generally nominal in nature.  An exempted company may obtain an undertaking from the Cayman Islands Government that, in the event that direct taxation were ever introduced in the Cayman Islands, the company would be free from such taxation for a period not exceeding 30 years from the date of the undertaking. An exempted company is not able to offer its shares to members of the public of the Cayman Islands.

Framework

The principal legislation in the Cayman Islands relating to the operation and governance of Cayman Islands exempted companies is the Act. Regard must also be had to the common law, the memorandum and articles of association of the company and any applicable contracts e.g. a shareholders' agreement.

Memorandum of association and articles of association

The constitutional documents of an exempted company comprise the memorandum of association and the articles of association. These are two separate but connected documents. The memorandum of association sets out the objects and powers of the company and the articles of association set out the internal rules and regulations of the company encompassing such matters as the powers of the board of directors, the procedures for holding and conducting director and shareholder meetings and the rights and restrictions attaching to shares. The articles of association constitute a statutory contract between the shareholders and the company.

Limited liability

Subject to a narrow range of exceptions, the liability of shareholders in an exempted company is limited to the amount of unpaid on their shares. In the absence of fraud, the company being a sham or similar circumstances in which the court would not respect the limited liability of the shareholders, once a shareholder’s shares are fully paid, he or she has no liability to the company's creditors.

Share capital and shares

Cayman Islands law distinguishes between authorised share capital and issued share capital. Authorised share capital represents a ceiling on the amount of share capital that a company may issue. Once all of the authorised share capital has been issued, the authorised share capital must be increased by shareholder resolution before further shares can be issued.

In the Cayman Islands, the annual government fee paid by an exempted company is based upon the authorised share capital rather than the issued share capital. The lowest government fee band is for authorised share capital up to US$50,000 (or currency equivalent).  A company's memorandum may permit shares of nominal value of a fraction of a dollar or even a fraction of a cent. It is therefore not unusual for the authorised share capital, for example, to be US$50,000 divided into 5,000,000 shares of US$0.01 nominal value each.

If permitted by its articles of association, a company may redeem or repurchase shares and, with or without court approval, reduce its share capital.

Whilst an exempted company may have shares without par value, this is unusual and it is more common for an exempted company to have shares with a par (also called 'nominal') value. Where a shareholder subscribes for shares in an exempted company at a premium to their par/nominal value (e.g. US$100 for a share of a nominal value of US$1), the premium must be transferred to a share premium account (which is an internal account of the company). It can be useful to create a healthy share premium account because the Act permits an exempted company to pay dividends or make other distributions out of share premium account provided that the directors are satisfied that the company can pay its debts as they fall due in the ordinary course of business i.e. the company is solvent on a going concern or cash flow basis.

The means by which shares in an exempted company may be transferred will be set out in the articles of association. Articles of association frequently provide that any transfer of shares is subject to the approval of the board of directors.

Dividends

The articles of association will generally contain provisions dealing with the payment of dividends by an exempted company. Usually, an exempted company will be permitted to pay dividends out of profits and, as mentioned above, out of share premium account provided that the company is solvent. If permitted by the articles of association, an exempted company may also pay a dividend in specie i.e. satisfying the dividend by a transfer of one or more of the company’s assets to the shareholders rather than by making a cash payment.  

For further details, please see our separate article on the payment of dividends.

Directors and shareholders

Whilst the shareholders own shares in the capital of an exempted company, the day-to-day management and control will be in the hands of the board of directors. The directors act collectively as a board rather than individually (except to the extent that the board has delegated specific functions e.g. to a managing director or has otherwise resolved that one or more directors have authority to act on behalf of the Company in connection with a particular transaction) and have the authority to manage the company in the company’s best interests. It is therefore important that transactions and associated agreements and documents are approved by the board at a quorate board meeting or by written resolution signed by all directors. It is not appropriate for a single director to approve or sign unless authority to do so has been conferred upon him at a board meeting or by written resolution signed by all directors.

The first director(s) of the company will generally be appointed by the subscriber to the memorandum of association. Thereafter, directors will generally be appointed by a resolution of the shareholders or a resolution of the directors. Depending upon what the company’s articles of association provide, directors will either serve indefinitely or for a specified term after which they may be eligible for re-election to the board.

The directors are subject to fiduciary duties, including a duty of care and skill. In contrast, a shareholder is generally not subject to duties of this sort and can vote in his or her own personal best interests.

Most articles of association provide that all powers of the company are vested in the directors except for those specifically reserved to the shareholders either under the Act or under the articles of association.

The Act sets out a number of more material decisions (e.g. amending the articles of association or winding up the company) which must be passed by a resolution of the shareholders. Some such decisions must be passed by a special resolution of the shareholders (unless varied by the articles, this is resolution passed by a two thirds majority of shareholders present in person or by proxy at a general meeting or a unanimous written resolution of the shareholders).

A director may also hold an office with the company (e.g. president or vice president). However, under Cayman Islands law, such office does not confer any particular authority.

A company must notify the RoC of any change in its directors or officers, including a change of the name of such directors or officers, within 30 days of any such change.

Directors meetings

The Act does not prescribe the frequency with which board meetings must be held. The company’s articles of association may specify the notice that must be given of a board meeting. In the absence of any provision in the articles, reasonable notice must be given.

Subject to the company’s articles of association, board meetings can be held over the telephone or by video conference or can be replaced by written resolutions signed by all directors.

Subject to the articles, voting at a directors meeting will be on the basis of one vote for each director present. If the company’s articles of association provide for it, the chairman may have a casting vote where the voting on any item of business is tied.

Subject to the company’s articles of association, a director may appoint a proxy or alternate to attend a board meeting in his place. Typically, a proxy would be appointed to represent a director at one meeting or at meetings held during a limited time period whereas an alternate would be appointed on a more long-term basis (e.g. if a director was sick). Depending on the terms of the appointment of the proxy or alternate, it may be necessary to notify the RoC of the appointment of an alternate director.

It is always important to check that any board meeting is quorate in accordance with the provisions of the company’s articles of association.

A director stands in a fiduciary position, under the general law.  He or she must avoid any conflict of interest when carrying out his duties as a director. However, as a practical matter conflicts of interest will arise, and generally the articles of association will usually permit a director who has a conflict of interest to nevertheless attend a board meeting, be counted in the quorum and to vote provided that he has fully disclosed his conflict of interest to the board. Minutes of each board meeting must be prepared, signed by the Chairman and kept on the minute book.  Similarly copies of any unanimous written resolutions must be kept on the minute book.

Indemnification of directors and insurance

It is usual for the articles of association to indemnify the directors out of the assets of the company in respect of any personal liability that they may incur in acting as a director of the company. Generally under the articles of association, a director will be indemnified for all losses other than those arising from his or her actual fraud or wilful default.

It is increasingly common these days for directors and officers liability insurance to be provided for directors. The cost of such coverage is generally not prohibitive.

Shareholders meetings

The Act does not prescribe the frequency with which shareholders meetings of an exempted company must be held. Shareholders meetings held between annual general meetings to deal with any special business are known as extraordinary general meetings. How much notice must be given of a shareholders meeting and the contents of the notice will be specified in the company’s articles of association.

Shareholders are 'members' of the company.

Voting at a shareholders meeting is usually on a show of hands (subject to the articles, one vote per share held) unless a poll is demanded, generally by the chairman, in which case, votes are determined by numbers of shares held.

Proxies can be appointed for shareholders meetings.

It is always important to check that any shareholders meeting is quorate in accordance with the provisions of the company’s articles of association.

Minutes of each shareholders meeting must be kept on the company's minute book (unanimous written resolutions of shareholders (where permitted by the articles of association) must also be kept on the minute book).

It is important to remember that most articles provide that a shareholders meeting is called by the directors and therefore the holding of board meeting would generally be the first step in calling any shareholders meeting.

Where the shares of an exempted company are divided into different classes, it may be necessary to hold separate class meetings in addition to a full shareholders meeting depending upon the nature of the business to be considered.

Subject to the company’s articles of association, shareholders meetings can be held over the telephone or by video conference or can be replaced by written resolutions signed by all shareholders.

Execution of documents

As mentioned above, generally, any document to be executed by the company must be first approved by the board at a board meeting or by written resolution signed by all directors. Deeds will generally be executed by a director (in accordance with the provisions of the Act) and the articles of association will need to also be followed if they contain relevant provisions. An exempted company does not have to use a seal for executing documents as a deed but may do so if it prefers.

Registered office

Exempted companies must have a registered office in the Cayman Islands to which communications and notices may be addressed, such services must be provided by a service provider who is licenced to do so.

Government fees and annual filing obligations

There are incorporation and annual fees which are due and payable to the Cayman Islands Government for the incorporation and ongoing maintenance of exempted companies.  As mentioned above, the fee amount is based on the authorised share capital.  Additionally, in January of each year, every exempted company has an obligation to file an annual return and pay annual exempt company fees to RoC.  The annual return filing and related fees to be sent to RoC is usually dealt with by the company's registered office.

Books of accounts and audit

Exempted companies are required to keep proper books of account with respect to all sums of money received, expenses, all sales and purchases and the assets and liabilities.  The Act does not require exempted companies to file or audit their books of account.  The memorandum and articles of association and the directors determine how and to what extent the accounts and books shall be open to inspection by the shareholders.

Beneficial ownership

Unless exempted by one or more of the available exemptions under the Cayman Islands Beneficial Ownership Transparency Act (As Revised) of the Cayman Islands ("BO Act"), an exempted company has an obligation to maintain a register of beneficial owners.  The provisions with respect to the BO Act are beyond the scope of this note, we can provide a separate note with respect to these matters, if required.

Economic substance

The International Tax Co-operation (Economic Substance) Act (As Revised) of the Cayman Islands ("ES Act") was introduced in the Cayman Islands and applies to certain classes of entities which include exempted companies. Under the ES Act any 'relevant entity' conducting a 'relevant activity' and receiving income must establish and maintain economic substance in the Cayman Islands, unless they are (i) tax resident outside the Cayman Islands, (ii) an investment fund or (iii) a not-for-profit company.  The provisions with respect to the ES Act are beyond the scope of this note, we can provide a separate note with respect to these matters, if required.

Winding up

There are extensive provisions in the Act which set out the steps involved in winding up an exempted company. Those provisions are beyond the scope of this note. Expert advice should always be sought whenever a winding up is contemplated.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

The Bill intends to address unfair employment practices and create a fairer, more flexible work environment. The second reading of the Bill took place on Monday, 21 October.

Whilst still in its infancy, the Bill will have no immediate effect on UK employment law and it has been suggested that the earliest these proposed reforms will come into effect is 2026.

It is, however, worthwhile for employers to consider the Bill in its current form to mitigate any commercial impact it may have once it is passed, and the reforms are introduced into law. 

The Bill can be found here and makes provision to:

• Give employees protection against unfair dismissal from day one, while allowing employers to operate probation periods;
• Establish parental and bereavement leave from day one;
• Give employees the right to transition from zero-hour contracts if they work regular hours over a defined period;
• End "fire and rehire" and "fire and replace" practices;
• Strengthen employee rights to request and secure flexible working arrangements;
• Deliver stronger dismissal protections for pregnant women and new mothers;
• Establish a new Fair Work Agency with new powers to enforce holiday pay; and
• Strengthen statutory sick pay rules.

Changes to UK employment legislation do not have any direct effect on either Guernsey or Jersey employment laws, but given the sweeping reforms under consideration in the UK and the trend to favour remote / flexible working, Channel Islands businesses with employees based in the UK must stay abreast of these reforms.

Consideration should also be given to checking policies and procedures to ensure compliance with the applicable law in the jurisdiction where their employees are physically based.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

The British Virgin Islands (the "BVI") recently published the BVI Business Companies (Amendment) Act, 2024 (the "Amendment Act"), which introduces changes to the Act and ensures that the BVI keeps pace with international best practices and standards established by standard-setting bodies such as the Global Forum on Transparency and Exchange of Information for Tax Purposes and the Financial Action Task Force. 

The Amendment Act was published in the Gazette on 26 September 2024 and, although not yet in force at the time of writing, will result in certain changes to the filing and compliance obligations on BVI companies. Consequently, shareholders, directors, administrators and stakeholders of BVI companies need to be mindful of the incoming changes.  

Summary of changes

• We will explore in more detail below the key changes, but as a summary:
• The register of members of a company will be required to be filed with the BVI Registrar of Companies (the "Registrar") but will not be made publicly available and will need to include information relating to nominee shareholders.
• The register of directors of a company will be required to be filed with the Registrar within a shortened time period, but must also show directors who are licensed professionals.
• A company applying to continue out of the BVI will be required to confirm that they are not subject to any regulatory action or pending litigation.
• A company applying to continue into the BVI will need to submit the list of members at the date of the application and file any information to bring it in line with the new requirements under the Amendment Act.
• Companies will be required to submit a 'return' on their affairs and an express duty on companies to cooperate with authorities and law enforcement agencies will be introduced.

Register of members

The Amendment Act clarifies the information that is required to be kept in a company's register of members and introduces a new requirement to include information in relation to any nominee shareholder.

This information will not be made publicly available, save in very limited circumstances (to domestic competent authorities and law enforcement agencies), unless the company chooses to file the register publicly (which is commonly seen where security is taken over the shares of the company).  The register of members is required to be filed with the Registrar within 30 days after the incorporation or continuation date of the company. The company will also be required to notify the Registrar of any changes to its members within 30 days.

It is important to note that certain companies are exempt from the filing requirement, including companies listed on recognised exchanges and BVI funds (being private, professional, public, private investment, incubator and approved funds).

The Amendment Act provides for a transitional period, and existing companies must comply with the requirement to file the register of members within six months of the effective date of the Amendment Act.

Beneficial ownership

The Amendment Act also clarifies that beneficial ownership includes consideration of both ownership and control.

This information will not be made publicly available (save to domestic competent authorities and law enforcement agencies), although Regulations may be issued which would permit persons with a legitimate interest (being a shareholding interest over 25%) to acquire the information and we will keep you updated on further developments as soon as we have them. The information should generally be filed with the Registrar within 30 days after the incorporation of the company or its continuation into the BVI. The company will also be required to notify the Registrar of any changes to its members within 30 days.

There are certain exemptions to this filing requirement for listed companies and BVI funds (being private, professional, public, private investment, incubator and approved funds).

However, in the case of BVI funds, the exemption will only apply where the company's beneficial ownership information is held, and can be provided to the Registrar within 24 hours of request, by:

• a person who holds a Category 6 investment business licence pursuant to the Securities and Investment Business Act, Revised 2020;
• the company's authorised representative; or
• another person licensed by the BVI Financial Services Commission (BVI FSC) that has a physical presence in the BVI.

Where the beneficial ownership information of a company is held by a person as detailed above, the company must file the name and address of that person with the Registrar within 30 days of incorporation (or continuation in the BVI, as the case may be).

The Amendment Act also places an obligation on the Registered Agent of a company to take reasonable measures to verify the beneficial ownership information before it is filed.

The Amendment Act provides for a transitional period, and existing companies must comply with the requirement to file beneficial ownership information within six months of the effective date of the Amendment Act.

Register of directors

The Amendment Act makes minor changes to the existing provisions as they relate to directors, including the following:

• the time period for the registered agent to appoint the first director of a company has been significantly reduced from six months to 15 days;
• the initial copy of the register of directors must now also be filed with the Registrar within a slightly shortened period of 15 days (previously 21 days);
• a member, director or any person aggrieved by the omission, may apply to the court for a rectification order where the information contained in the register of directors is incorrect or omits information;
• where a person licensed under the Banks and Trust Companies Act, Revised 2020, or the Company Management Act, Revised 2020, provides director services to a company or acts as a director of a company, this must now be made clear and information showing this filed with the Registrar at the same time that the register of directors is filed; and
• whilst not publicly available, access to the register of directors will be expanded to include:
  • the company;
  • the company's registered agent;
  • a competent authority; and
  • a law enforcement agency.

Continuations and discontinuations

The Amendment Act also brings in new requirements when continuing a company into or out of the BVI.

If a company is intending to discontinue out of the BVI, the following additional declarations will need to be included in the notice of intention to be filed with the Registrar:

• that the company does not have any pending request from a competent authority to produce documents or provide information which has not been satisfied;
• that a receiver has not been appointed over the company or in relation to any assets of the company; and
• that the company is not aware of any legal proceedings pending against the company, or any member, director, officer or agent of the company as it directly pertains to the affairs of the company.

The Registrar will also ensure that the company's information requirements under the Amendment Act are complied with, making the requisite checks for the filing of the new nominee director/shareholder information and beneficial ownership register.

If a company intends to continue into the BVI, the application will now also need to include a full list of the members as at the date of the application and details of its registered office in its country of incorporation.

The Amendment Act also puts additional information obligations on a foreign company continued into the BVI and such companies will now be required to file a notice with the Registrar within 30 days after a change in any of the following:

• its corporate name;
• the jurisdiction of its domiciliation;
• the instrument constituting or defining its constitution;
• its directors, or any information filed in respect of them;
• its members, or any information filed in respect of them;
• the address of its registered officed in its country of incorporation; or
• its registered agent.

Duty to cooperate

The Amendment Act puts a real focus on ensuring the BVI regulators have all the information and tools they need to discharge their functions and changes will be brought in so that companies will be required to cooperate (including disclosing information within the company's knowledge and producing documents in the company's possession or under its control) with the Registrar, a person conducting an inspection under the Amendment Act, a competent authority or a law enforcement agency in discharging their functions.

Other implications

Whilst the above changes will prompt the most interest, it is worth noting that these changes will have consequential effects to other parts of the Act, including:

• Dissolutions: provisions regarding the striking off of a company will be extended to circumstances where there is a failure to file any information specified under the new requirements.
• Restoration: when restoring a company, the new information requirements must be complied with and the registered agent will have 14 days from the restoration date to do so.

Market effect

The effect of the changes will be to codify the rules relating to beneficial ownership and shareholder and director filings, ensuring that the BVI remains at the forefront of responsible business practices and global transparency requirements.

The compliance process is streamlined, and essentially codifies certain anti-money laundering and know-your-customer requirements that are already in place within the BVI, whilst ensuring that information remains private and protected, guaranteeing that legitimate privacy and data protection requirements are supported.

We consider that the amendments will promote investor confidence in the jurisdiction, given that the rules in relation to the ownership and administration of companies are now clear, transparent and codified.

Next steps

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

Jersey has long welcomed individuals and families looking to relocate to the island, often with their businesses. Traditionally, a key attraction may have been Jersey's favourable tax treatment, as it enjoys full fiscal autonomy. However, today, the low personal and business tax rates are just one of many factors drawing people to Jersey. The lifestyle, frequent travel links to the UK and mainland Europe, excellent schools and healthcare systems, together with a real sense of community, all contribute to Jersey's appeal.

If you are considering relocating to Jersey, we hope this briefing will be a helpful starting point for you. We've summarised the different options for moving here (whether that's under Jersey's high value residency scheme, relocating with your business, or both) and, recognising that the decision to up sticks is not one you'll make lightly, we've also provided an insight to what life is really like "on the rock".

High value residency programme

In 1970, Jersey first introduced a special tax regime for high value residents. Today, this process is governed by the Control of Housing and Work (Residential and Employment Status) (Jersey) Regulations 2013 (the "Regulations"). By Regulation 2(1)(e) of the Regulations, Jersey's Housing Minister has the power to grant entitled residential status to a person if the Housing and Work Advisory Group is satisfied that such grant is justified on social or economic grounds, or both, and is in the best interests of the community. Having entitled residential status gives full access to the housing market and offers the greatest flexibility in terms of employment.

The high value residency programme is not a citizenship by investment scheme and only a select number of high value residency consents are granted each year. Each case is considered on its own merits and on the basis of the economic and social benefits which the applicant would bring to the island.

Those approved under the high value residency programme are able to access a specific rate of tax of 20% on the first £1.25 million of worldwide income and then 1% on any worldwide income above this level, subject to certain restrictions.

To be eligible to apply for the high value residency programme, you must be able to demonstrate:

•          the ability to generate an annual minimum tax contribution of £250,000;
•         comfortable and sustainable annual worldwide income in excess of £1.25 million per annum (or the ability to draw such a level of income); and
•          personal wealth of more than £10 million in assets (excluding main residence and noting that an element of liquidity is expected).

In addition, other social and economic factors will also be taken into consideration when assessing high value residency applications. These factors will include your general lifestyle and family circumstances, positive and negative media coverage, past charitable pursuits, skills or cultural interests which have benefited a local community and could benefit Jersey, and your intentions for business activity in Jersey (including potential for future local employment, training, diversification, etc). 

If your application is successful, you may buy or lease a property in Jersey as your main place of residence on the island. Jersey's Population Office may require you to buy or lease a high value property (generally a house or apartment with a value in excess of £3.5 million or £1.75 million respectively). If you would prefer to lease initially, there is an expectation that you will purchase a high value property within a year or so.

Moving with your business

If you are interested in moving to Jersey with your business, we can assist with preparing the necessary business licence application, which is submitted to the Housing and Work Advisory Group. This application will provide details of the business (what it does/will do, any prior trading, reasons for relocating to Jersey) as well as details of your experience and qualifications. The application should also include three-year projections of staffing and anticipated revenue.

The Housing and Work Advisory Group will consider the local benefit of you bringing your business to Jersey.

We will also seek a licenced permission from Jersey's housing and work authorities to allow you to live, purchase property and work in Jersey. If your family is also moving to Jersey with you, we can also apply for licences for them to allow them to reside and work in Jersey should they wish.

Tax

Jersey is a low tax jurisdiction, offering some of the lowest tax rates in Europe, including:

• low personal tax rates for individuals (maximum of 20%);
• a special income tax rate for those from the high value residency programme (see above);
• no capital gains tax;
• no inheritance tax;
• 5% Goods and Service Tax, no VAT; and
• a general rate of 0% applied for corporate income tax, with certain exceptions:
• a rate of 10% applies to Jersey financial services companies;
• a rate of 20% applies to utility companies, companies involved in oil importation and quarrying, and income received from Jersey properties (such as property development and property rental); and
• for large retailers in Jersey (which have 60% of their trading turnover from retail sales to customers in Jersey and have retail turnover of £2 million and above): 0% where profits are less than £500,000; a sliding scale from 0% to 20% where profits are between £500,000 and £750,000; and 20% where profits are £750,000 or more.

Jersey's lifestyle

Jersey is regularly crowned the sunniest place in the British Isles and offers warm summers and mild winters.

There are plenty of activities on offer and, as you might expect, many of these involve being out on the water. You might fancy learning to surf, sail, paddleboard or joining our fleet of brave year-round sea swimmers. For something a bit different, you can also head out on a rib trip to the Ecrehous or the Minquiers and, with a bit of luck, you'll see some dolphins on the way.

Back on dry land, there are three excellent golf courses and lots of cycling clubs and trail running groups, as well as yoga and pilates studios. For football and rugby fanatics, we have the Jersey Bulls and the Jersey RFC.  The netball leagues are also popular. 

Jersey has some excellent local produce. You may have already heard about our Jersey royals, Jersey wonders, bean crock and dairy products from our famous Jersey cows. We also have outstanding seafood, including oysters (which are particularly special due to the island's huge tidal range and clean seawater), all of which is showcased in our plentiful restaurants.

If fine dining is your thing, there are plenty of excellent options (including several Michelin rated restaurants and currently one with a Michelin star) and, for those moments where you just want a bacon roll or a fish finger sandwich by the beach, Jersey really does come into its own.

The island also enjoys a thriving arts scene. There's the Ballet d'Jèrri, Jersey Opera House and Jersey Arts Centre, which all have regular performances. We also have music and comedy festivals and performances throughout the year and local artists showcase their work at various art galleries across the island.

There are also lots of interesting historic sites (including three castles!), museums and cultural attractions where you can immerse yourself in Jersey's rich history.

Practical considerations for you and your family

If you're considering moving to Jersey, you'll be pleased to know that:

• the island is reassuringly close to the UK, with regular flights to both London and regional airports and fast ferry links to both the UK and nearby France;
• Jersey is in the same time zone as the UK, which is perfect for business, meaning you can deal with Singapore and New York in the same working day;
• the island has an excellent education system, with a mix of public and private schools and its own college of further and higher education;
• healthcare on the island is of a high standard and GP appointments are never hard to get;
• the island is a very safe place to live, with a low crime rate;
• Jersey has an independent and stable government;
• there is a strong sense of community on the island; and
• the island has a well-maintained infrastructure.

Jersey's culture and community

Reflecting Jersey's historic ties to Normandy and proximity to France, the island's traditions and language have been significantly influenced by French culture.

Jersey enjoys a multicultural community. At the time of the last census in 2021, roughly 50% of the population were born in Jersey, 29% were born elsewhere in the British Isles and 15% were born in other European countries (including Portugal, Madeira, Ireland, Poland and Romania).

The island is also home to a range of religious communities.

Jersey's governance/judiciary

Jersey sits outside of the United Kingdom and the European Union.

As a Crown Dependency, the head of state of Jersey is the British monarch (King Charles III), whose traditional title in Jersey is the Duke of Normandy. The Lieutenant Governor is His Majesty's personal representative in Jersey. He serves as the de facto head of state in Jersey, performing various ceremonial functions and liaising between Jersey and the UK government. The Lieutenant Governor resides in Government House, which is also the official residence of His Majesty when visiting Jersey.

Jersey operates under a unique system of governance. The island's legislature, known as the States Assembly, is responsible for enacting laws and is composed of elected representatives, including senators, deputies and connétables from the island's 12 parishes. The Bailiff of Jersey presides over both the States Assembly and the Royal Court, which is the island's principal court, with jurisdiction over both civil and criminal matters. Individual trials may be heard by the Bailiff, the Deputy Bailiff or a commissioner, supported by volunteer Jurats. The Judicial Greffier performs the role of clerk of the Royal Court. 

How we can help you

If you are interested in the high value residency programme or moving to Jersey with your business, get in touch with us to discuss this further.

Our aim is to make the process as straightforward as possible for you. Working closely with your tax advisor, we can prepare the applications for you and liaise directly with Locate Jersey, which presents the applications to the Housing and Work Advisory Group. Having the right team in place, each bringing their own areas of expertise and experience, will make all the difference.

As a full-service law firm, we can assist you with all your legal needs for your relocation and beyond:

• our property team can assist you with the purchase of a property in Jersey;
• if you're bringing your business to Jersey too, we can advise you on all commercial and regulatory matters, including economic substance advice, the incorporation of Jersey entities and the application for necessary licences from the Jersey Financial Services Commission (JFSC) and housing and work authorities; and
• our international private client team can assist with your estate planning (including wills and lasting powers of attorney).

We are also very happy to introduce you to other key advisors on the island, from tax specialists to banking and investment managers, as required.

In the recent UK Employment Tribunal ("ET") decision of Mrs K Hibbert v The Chief Constable of Thames Valley Police 33109044/2020 (published on 23 September 2024), the Claimant ("KH") had experienced mental health difficulties – including anxiety and depression – for several years. During this time KH received treatment from the relevant occupational health unit and she continued to perform her services to the highest degree. However, following a transfer to a safeguarding role, and due to the unique and intense nature of her duties (working with young people with substance abuse issues and who had suffered other forms of exploitation), KH's mental health started to deteriorate. KH began to experience panic attacks and developed PTSD. An occupational health nurse advised KH that developing her personal interests and expanding her hobbies could benefit her mental health and wellbeing. KH was determined to make the necessary changes, and, with the support of her line manager, she applied for and was granted authorisation to set up a small events business. Once up and running, the events business had a therapeutic and positive impact on KH's mental health.

Unfortunately, things took a turn for the worst during 2019 when, amongst other things, KH's mental health deteriorated due to work stressors and she was signed-off sick as a result. The permission to run the events business was reviewed and ultimately withdrawn when it came to her superior's attention that she continued to run the events business while signed-off sick and, ultimately, KH was charged with gross misconduct in October 2019 for continuing with the events business after approval had been withdrawn. KH resigned from her position and referred a complaint to the ET. 

After carefully reviewing the facts, the ET held that KH had been discriminated against on the basis that she had been treated unfavourably (i.e. the withdrawal of the permission) because of something arising in consequence of her disability (i.e. KH's long-term sickness absence). The ET noted that the decision to withdraw the permission was made haphazardly, without considering how such a decision could impact KH's mental health and without affording KH an opportunity to make representations. There was also a failure to properly consider reasonable adjustments. KH was awarded a total of £1,168,561, including £633,881 in compensation for financial losses, £9,541 for personal injury, £24,932 for injury to feelings and £500,207 grossing up for taxation. Not an insignificant penalty.  

Although this is a UK ET decision, which does not automatically apply in Guernsey and Jersey, it is likely that local tribunals will take note of the ET's reasoning if called upon to assess a local employer's conduct in managing long-term sickness absence, especially if the absence relates to an employee's mental health condition which, depending on the circumstances, could constitute a 'disability' under local anti-discrimination legislation. 

This case is also a stark reminder to all employers that long-term sickness absence should be tailored to the circumstances of the specific employee and must be managed contemporaneously. If approached correctly, managing long-term sickness absence could result in a net-benefit for both the employee and the employer. Employers are encouraged to seek legal advice where complex long-term sickness absence/disability management matters arise.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

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Our Jersey private client and property teams are ranked in the very
highest tier by leading independent legal directories, emphasising our
standards of technical knowledge, expertise and client care.

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Section 64A of the Trusts Act ("s64A") grants the Grand Court of the Cayman Islands (the "Court") jurisdiction to set aside mistaken exercises of fiduciary powers.

It gives the Court statutory powers similar to what was the Court's equitable jurisdiction known as the rule in Hastings Bass.

Statutory framework

If the Court, in relation to the exercise of a fiduciary power, is satisfied that certain conditions have been met, it may:

• set aside the exercise of the power, either in whole or in part, and either unconditionally or on such terms and subject to such conditions as it may think fit; and
• make such order, consequent upon the setting aside of the exercise of the power, as it thinks fit.

The conditions that must be satisfied are that:

• in the exercise of the power, the person who holds the power either:
• did not take into account one or more considerations (whether of fact, law or a combination of both) that were relevant to the exercise; or
• took into account one or more considerations that were irrelevant to the exercise; and
• but for that person's failure to take into account such relevant considerations or their taking into account an irrelevant consideration, they:
  • would not have exercised the power;
  • would have exercise that power, but on a different occasion; or
  • would have exercised that power in a different manner.

If and to the extent that the exercise of the power is set aside by the Court, to that extent the exercise of the power shall be treated as never having occurred.

Importantly, it need not be alleged or proved that, in the exercise of the power, the powerholder (or any advisor to them) acted in breach of trust or duty.

Further, the Court's jurisdiction extends beyond the exercise of powers by trustees and includes the exercise of fiduciary powers held by others, such as protectors and enforcers.  For the purpose of s64A, a fiduciary power is a power that, when exercised, must be exercised for the benefit of, or taking into account the interests of, at least one person other than the powerholder.

An application may be made by:

• the person who holds the power;
• a trustee, beneficiary, or an enforcer (in the case of a STAR trust);
• the Attorney General (in cases of charitable purposes); or
• with the leave of the Court, any other person.

One caveat to the Court's jurisdiction is that it may not make an order which would prejudice a bona fide purchaser for value of any trust property without notice of the matters which would allow the Court to set aside the exercise of the relevant power.

Judicial consideration of s64A

In Re Settlements made by Declaration of Trust dated 9 May 2013 (Unreported, 28 September 2023, FSD 228 of 2023 (IKJ)), the Court published its first decision on an application made under s64A.

In that case, the Court set aside the transfer of assets made to three trusts by declaring that such transfers were void.

Following a change of trustees from lay trustees to a trust company, the new trustee took tax advice (which the original trustees had not done) and was advised that the settlement of the trusts triggered substantial tax liabilities.  The Court accepted that it was obvious that, had appropriate tax advice been taken at the relevant time, the trusts would not have been established.

In giving its reasons for the decision to make the order sought, the Court:

• confirmed that s64A makes it possible for the Court to grant relief without considering the principles established by the UK Supreme Court in Pitt v Holt [2013] UKSC 26 (which case substantially narrowed the English courts' equitable jurisdiction by requiring that inadequate deliberation by a trustee must be sufficiently serious as to amount to a breach of fiduciary duty);
• confirmed that the Court's statutory jurisdiction is more liberally available than its equitable jurisdiction and that it is intended to facilitate a flexible approach to setting aside the flawed exercise of fiduciary powers;
• confirmed that the flawed exercise of a fiduciary power is void and not merely voidable (as has been suggested in England and Wales); and
• tentatively suggested, subject to further analysis, that s64A relief can only be obtained when the applicant has acted in good faith in relation to the impugned transaction and has not deliberately pursued a course of conduct designed to gain some undisclosed and impermissible onshore tax advantage or, indeed, designed to procure any other improper benefit.

More recently, the case of the S Trust came before the Court in September 2025. The S Trust was established in 2012 on the basis of tax advice that had overlooked certain information about the Settlor's residence that meant that he would likely be considered domiciled in the UK at the time he settled the trust.

The settlor being deemed domiciled in the UK would have prompted significant tax consequences so, when the error came to light, the Settlor applied to the Court to have the trust declared void ab initio – meaning that it would be treated as never having existed.

The Court held that the requirements for an Order were met; the Settlor had relied on professional advice, a key relevant consideration (an earlier period of residence in the UK) had been overlooked, and, had all parties been in possession of all of the facts, the trust would never have been created.

Conclusion

Section 64A and the subsequent decisions of the Court are a welcome enhancement to Cayman Islands trusts law, clarifying and simplifying the previous common law position in relation to trustee mistakes.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.

The Cayman Islands Segregated Portfolio Company ("SPC"), a justifiably popular vehicle since its introduction in 1998, continues to be a catalyst of judicial guidance, with cases now necessitating the input of the Islands' appellate courts.

In very simplistic terms, an SPC is a limited company which by statute has the ability to "contain" segregated portfolios in which the shareholders, assets and liabilities are separate and distinct from each other. The SPC can also hold general assets and liabilities which are not attributable to any of its segregated portfolios. It can be appreciated that insolvency issues could occur at SPC level or in one or more segregated portfolios. 

Whilst it is possible for liquidators and, per the relatively recent decision in Re Holt Fund SPC (Unreported, 26 January 2024, FSD 0309 of 2023 (IKJ)), restructuring officers to be appointed over insolvent SPCs, it is not possible to seek the appointment of liquidators over individual insolvent segregated portfolios.

Which leaves creditors with section 224 of the Companies Act (2023 Revision) (the "Act"), which provides that only receivers, who have similar powers to those a liquidator has, may be appointed over individual insolvent segregated portfolios.

Summary

In June 2024, the Court of Appeal of the Cayman Islands published its judgment in CMB International Securities Limited v Oakwise Value Fund SPC (Unreported, 13 June 2024, CICA (Civil) Appeal No. 0009 of 2023) (per Field JA, with whom Moses JA and Goldring (President) agreed) ("Oakwise"). It provides helpful guidance on several aspects of applications for the appointment of receivers over insolvent segregated portfolios, but particularly in the following regards:

-      It settles the position that the cash-flow test to establish the insolvency of companies governed by Part V of the Act (i.e. is the company in question able to satisfy its debts as they fall due?) does not apply to segregated portfolios.

-      It clarifies what is meant by "flexible" in the expression "flexible balance sheet test", which has been applied to determine solvency of segregated portfolios, and explains why flexibility is needed in the particular case of Cayman Islands segregated portfolios.

-      It emphasizes the fact that, even if insolvency were established on the "flexible balance sheet test", a petitioner seeking appointment of receivers is still far from the finish line, given that it must also:

‒      satisfy the court that the statutory purposes of the receivership (detailed further below) will be achieved; and

‒      persuade the court that there is no reason for it to exercise residual discretion and refuse to appoint receivers.

How "flexible"?

A petitioning creditor is tasked with demonstrating that the assets attributable to a segregated portfolio are, or are likely to be, insufficient to discharge the claims of creditors in respect of that segregated portfolio; the test must be satisfied on the balance of probabilities (i.e. more likely than not).

The Court of Appeal, referring to:

-      the type of assets which are commonly held on behalf of Cayman Islands segregated portfolios; and

-      the uneven playing field encountered by a creditor (a redeemed shareholder in Oakwise) when having to analyse the accuracy of values attributed by companies to assets on their balance sheets;

supported the views expressed by Parker J in Re Obelisk Global Fund SPC (Unreported, 12 August 2021, FSD 87 of 2021 (RPJ)) and by Kawaley J in Re Green Asia Restructure SPC (Unreported, 3 August 2022, FSD 112 and 113 of 2022 (IKJ)), that a simple balance sheet test, entailing "a simple assessment of the relative sides of a balance sheet", would not be sufficient.

Rather, the court should apply a test which:

                "involves determining on the available evidence, applying the civil standard of proof, whether the assets, taking into account the actual, contingent and prospective liabilities, are now or are likely to be insufficient in the reasonably near future [an expression which may prove to be a fertile ground for dispute] to pay the claims of creditors".

The Court of Appeal, in recognition of the potential disadvantage creditors might face when presented with asset values promulgated by companies intent on resisting petitions, added that when assessing these values, the court "should carefully examine what the evidence reveals as to how the value of the assets has been arrived at" and that:

"where the assets are financial instruments, the Court should be concerned to be shown the auditors' notes [in the audited financial statements] … and those sections of the SPC's Articles and Private Placement Memorandums dealing with how the instruments are valued in the financial statements and for NAV purposes".

Indeed, in Oakwise, it was upon the Court of Appeal's scrutiny of the unaudited financial statements that it found that there were "substantial grounds" for doubting the values therein.

Statutory purposes

The Court of Appeal also clarified that the requirement to demonstrate that the appointment of receivers would lead to the orderly closing down of the business of, or attributable to, the segregated portfolio (being one of the statutory purposes, the other being "the distribution of the segregated portfolio assets attributable to the segregated portfolio to those entitled to have recourse thereto") was a criterion distinct from, and preferable to, the test the Judge in the court below applied, which was whether "the closing down of the business under receivers would not … be in the best interests of the investors/creditors".

A matter of discretion

As noted above, even after jumping through the dual hoops of the flexible balance sheet test and satisfying the court that the statutory purposes would be achieved by the receivership, the petitioner must still ensure that the court exercises its discretion in favour of the appointment.

In Oakwise, the Court of Appeal explained that this would entail the judge having regard:

"to all relevant considerations including the superiority of the interests of creditors owed undisputed debts over the interests of participating shareholders which will invariably be subordinate to those of the creditors".

Conclusion

The Court of Appeal's decision will give comfort to SPCs looking to stave off the threat of having receivers appointed over their allegedly insolvent portfolios, because it affirms the application of the flexible balance sheet test, meaning that creditors with undisputed, unpaid debts are not entitled to an order for receivership of a segregated portfolio as of right, as they would be so entitled to an order for liquidation of any other type of company, but need to provide substantive information on assets and liabilities of the segregated portfolio and to show the statutory purposes would be achieved.

The flipside of the coin is that SPCs will have to keep in mind that the court is going to adopt an investigatory approach to the evidence of the SPC submitted in support of the contention that the segregated portfolio is, or is likely to be, balance sheet solvent. Those SPCs would do well to ensure that the values attributed to assets in particular are capable of withstanding such judicial scrutiny.

If you find yourself wrestling with the issue of whether a Cayman segregated portfolio is insolvent, please do not hesitate to ask us for help with that analysis.

Once a creditor has decided to enforce against real property they lose the right to enforce against moveable property, such as possessions or accounts, so careful consideration is necessary as to which route to take.

Importantly, in situations where there is more than one creditor, there can be no guarantee that any particular creditor will be successful at the end of the process. This is because, in the final stages of the Saisie, competing creditors have their claims ranked by the court in order of priority. Creditors are then called in reverse order of priority and asked to decide whether to take possession of the property or to surrender their claim. The first creditor who chooses to take the property must then pay off higher-ranking creditors in full within 15 days.

Therefore, unless a creditor can be confident that:

• their claim has the highest priority (commonly lending banks with a registered bond); or
• the property will fetch more on sale than the value of their claim

and they have the funds to pay any possibly higher ranking claims in full, in cash and within 15 days, Saisie proceedings are not entirely straightforward or without risk.

The procedural steps

A brief overview of the procedural steps is as follows:

• Before commencing Saisie proceedings, the creditor must obtain judgment on the debt.
• The creditor would then apply to the Royal Court for a preliminary vesting order ("PVO") against the property, which requires good service of the papers on the debtor.
• Once the PVO is granted the creditor must instruct HM Sergeant to notify the debtor in writing of the order.
• Once the PVO is granted the debtor retains ownership of the property but the creditor gains the right to make use of the property. The creditor also gains the right to evict the debtor, which is usually done as soon as the PVO is granted, but requires a separate application to court.
• The creditor must then apply to the court to appoint a Commissioner (usually a Jurat) to certify an account of all sums due to the creditor, including projected costs and interest up until the Saisie proceedings have completed.
• The next stage is a further court hearing where the creditor applies to a special monthly sitting of the court known as the "Plaids d'Heritage" for an interim vesting order ("IVO"). At this stage, the debtor's interest in the property comes to an end and title is vested in the creditor for the benefit of all claimants against the property. Any income in respect of the property is held for the party who eventually elects to take the property and the creditor should ensure the property is secure and insured.
• Once the IVO is granted, the creditor must instruct HM Sheriff and must notify the debtor in writing of the making of an IVO. 
• The creditor would then request that the court office opens a register of claims and would give notice in the local press (in the "Gazette Officielle" notices) on two occasions, once in each of two successive weeks that the register has opened. The notice invites any other creditors who wish to make a claim against the property to register their claim at the court office. The register remains open for 28 days from the date of the second notice.

The creditor must register their own claim against the property as there is no automatic registration. Once the 28 days has expired, the creditor must then summons each of the registered claimants to attend before a Commissioner appointed by the court to decide the order of priority between the competing claims.

Prior to the marshalling hearing, the creditor is required to produce a draft marshalling report which sets out the proposed order of priority between claims. The Commissioner will then confirm the contents of the report and set a date for a final vesting order ("FVO") hearing before the next Plaids d'Heritage court sitting. If the only claim registered is the creditor's then they may apply immediately for an FVO.

The final stage

The final stage in Saisie proceedings is an application to the court for an FVO.

Starting with the lowest priority claim, each registered claimant is asked whether they choose to take the property on the condition they pay in full all higher ranking creditors or to surrender their claim against the property and so each creditor must calculate the cost and benefit to them of either accepting the property or surrendering their claim. The creditor who chooses to take the property is granted the FVO and the property is vested in them 'for an estate of inheritance' which is the Guernsey equivalent of a freehold title. They also become liable to pay any higher ranking creditors the full amount of their claims in cash within 15 days.

Traditionally, the successful creditor is entitled to keep or sell the property as they wish and is under no obligation to return to the debtor any surplus in any proceeds of sale. However, current practice is for financial institutions such as banks to return any surplus to the debtor and the court often requires those creditors to give undertakings to this effect.

Costs

Each of the above stages involves advocates fees and other costs. For example, service fees by HM Sergeant are up to £140 per document served, publication fees in La Gazette Officielle are approximately £500 and court fees are approximately £150 for opening the register of claims and registering an interest. Court hearing fees are approximately £220 to 440 per hearing, depending upon the amount of debt.

There are two routes for seeking recognition and enforcement of a foreign judgment by the Guernsey courts: the statutory route and the common law route.

Because the Island is not a part of the EU it is neither a signatory to the Lugano nor Brussels Conventions, which cover enforcement of judgments in civil and commercial matters.

The statutory route

The Judgments (Reciprocal Enforcement) (Guernsey) Law, 1957 (as amended) (the "Reciprocal Enforcement Law") is used when looking to enforce judgments from the following reciprocating countries:

-      England and Wales – the Supreme Court and the Senior Courts of England and Wales, excluding the Crown Court;

-      The Isle of Man – the High Court of Justice of the Isle of Man;

-      Israel – the Supreme Court, the District Courts, Rabbinical Courts, Moslem Religious Courts, Christian Religious Courts and Druze Religious Courts;

-      Jersey – the Royal Court of Jersey and the Court of Appeal of Jersey;

-      The Kingdom of the Netherlands – the Hoge Raad der Nederlanden, the Gerechtshoven and the Arrondissementsrecht-banken;

-      The Netherlands Antilles – the Hoge Raad der Nederlanden, the Hof van Justitie der Nederlandse Antillen and the Gerecht in Eerste Aanleg;

-      Northern Ireland – the Court of Judicature of Northern Ireland;

-      Republic of Italy – the Corte d'Apello and the Tribunale;

-      Scotland – the Court of Session and the Sheriff Court; and

-      Surinam – the Hof van Justitie van Suriname, the Kantongerecht in het Eerste Kanton and the Kantongerecht in het Derde Kanton.

The Reciprocal Enforcement Law stipulates that the foreign judgment should also meet the following criteria:

-      the judgment must be final and conclusive between the parties;

-      the judgment must be for a sum of money, but not taxes, fine or penalty;

-      the judgment must not have been wholly satisfied at the time of the application;

-      the foreign court had jurisdiction to give judgment; and

-      the application to register the foreign judgment in Guernsey is made within six years of the date of the judgment from the original court.

In terms of jurisdiction, the Reciprocal Enforcement Law sets out criteria where the foreign court is deemed to have had jurisdiction depending upon the type of action in which the foreign court gave its judgment:

-      for actions in personam, that the judgment debtor was a plaintiff or counterclaimed in the original proceedings; or, if a defendant, was resident in the country of the original court; or either voluntarily appeared or agreed to submit to the jurisdiction of the original court; or, in the case of a company, had a place of business there; and

-      for actions in rem, that the property was situate in the country of the original court. 

The application for registration is made ex parte to the Royal Court of Guernsey and notice of registration must then be served upon the judgment debtor – if the debtor is in Guernsey then personal service should be effected by HM Sergeant.  If the judgment debtor is resident outside of the Bailiwick then it may be necessary to apply to the Court for substituted service.

It should be noted that, if the debtor is not British and not within 'any part of His Majesty's dominions', then the notice of registration must be served within the provisions of Rule 7(2) of the Judgments (Reciprocal Enforcement) (Amendment) (Guernsey) Rules, 1975, which involves a request for service abroad to the Bailiff, which is then transferred to His Excellency the Lieutenant-Governor of Guernsey and then on to His Majesty's Principal Secretary of State for Foreign and Commonwealth Affairs and, finally,  to the government of the country where service on the judgment debtor is to be effected.   

The judgment debtor may apply to the Royal Court to set the registration aside (noting that any application to set aside the registration must be within 14 days of service of the registered judgment on the judgment debtor) if any of the following conditions apply:

-      the judgment debtor did not receive sufficient notice of the proceedings in the original court;

-      the original court did not have jurisdiction to rule on the foreign judgment;

-      the foreign judgment was obtained by fraud; or

-      enforcement in Guernsey would be contrary to public policy.

Upon registration, the foreign judgment shall be treated as if it were a judgment from the Royal Court of Guernsey for the purposes of enforcement. 

Common law

If the Reciprocal Enforcement Law does not apply to the foreign judgment, the creditor can sue the debtor in the normal course for civil claims in Guernsey.  It may be necessary for the proceedings to include an application for service out of the jurisdiction if the debtor is not resident in the Bailiwick. 

The debtor may defend the proceedings on the same grounds prescribed in the Reciprocal Enforcement Law for setting aside registration. 

Enforcement

Once a foreign judgment is registered under the Reciprocal Enforcement Law or successfully sued upon, then the judgment can be enforced in the normal way in Guernsey by HM Sheriff, a court appointed official who has the authority to arrest and sell a debtor's assets upon request and payment of the applicable fee. 

Arrêts (literally 'arrest') and désastre proceedings can be pursued against a debtor's personal property.  HM Sheriff can be instructed to investigate assets and a Commissioner of the Court calls a creditors' meeting to determine the amount of assets and the order of priority between the competing creditors; the costs of the proceedings are typically first, then secured debts, preferred debts (such as wages and tax), then unsecured debts.

Saisie is a customary law method of enforcement against real property. Once a creditor has decided to enforce against real property, they lose the right to enforce against moveable property, such as possessions or accounts, so careful consideration is necessary as to which route to take.  Similar to désastre, a Commissioner of the Court is appointed to produce an account of all sums due to the creditor, including projected costs and interest up until proceedings have completed. The creditor would apply for an interim vesting order where the debtor's interest in the property comes to an end and title is vested in the creditor for the benefit of all claimants against the property.  The final stage is for the creditor to apply to the Court for a final vesting order where the property is vested in them 'for an estate of inheritance', which is the Guernsey equivalent of a freehold title. (For more information on Saisie, please see our briefing here.)

Enforcement against a company is generally (for debts over £750) initiated by way of statutory demand, which is served by HM Sergeant at the company's registered office.  If the demand remains unpaid for a period of 21 days, the company is deemed unable to pay its debts within the meaning of the Companies (Guernsey) Law, 2008 and so the creditor may apply to the Court to wind up the company and realise its assets.  

Corporate insolvency in Guernsey is governed by the following legislation:

• The Companies (Guernsey) Law, 2008 (the "Law");
• The Companies (Guernsey) Law, 2008 (Insolvency) (Amendment) Ordinance, 2020 (the "Ordinance"); and
• The Companies (Guernsey) (Insolvency Rules) Regulations, 2022 (the "Insolvency Rules").

The Royal Court of Guernsey (Ordinary Division) (the "Court") has jurisdiction to make orders in respect of the following insolvency measures:

• administration;
• winding up (voluntary and compulsory winding up);
• schemes of arrangement; and
• receivership.

These statutory measures are only applicable to companies and protected cell companies. Separate statutory provisions are applicable to the winding up of partnerships, limited partnerships, foundations and trusts. 

Insolvency practitioners in Guernsey are encouraged to use the Guernsey Insolvency Practice Statements (GIPS), which are guidance notes based on UK Statements of Insolvency Practice that set out best practice principles and compliance standards with which practitioners are encouraged to comply. These measures are voluntary and are not binding on practitioners. 

Administration

The purpose of administration is to maintain the company as a going concern or achieve a more advantageous realisation of the company's assets than would be effected on a winding up.

The administrator may do all things necessary or expedient for the management of the company's affairs, business and property (or cell, as the case may be), including the power to remove or appoint any director and call any meeting of members or creditors.

An application may be made by the company, directors, any member, creditor, liquidator, or incorporated or protected cell (if applicable).

Notice shall be delivered to the register at least two clear days before the application is heard by the Court.

Expedited or "pre-pack" administrations are available in Guernsey under the current legislative framework, the first case of which was successfully brought before the Court by this firm in 2014 (for more information, please see our briefing here).

Voluntary winding up

Voluntary winding up is an out of court process which commences upon the passing of the resolution for voluntary winding up.

Voluntary winding up is possible if: 

• the period fixed by the memorandum or articles for the duration of the company expires or any event occurs upon which the memorandum or articles provide that the company shall be dissolved – provided that, in each case, the company passes an ordinary resolution that it be wound up voluntarily; or
• the company passes a special resolution that it be wound up voluntarily.

A distinction between solvent and insolvent voluntary winding ups was introduced by the Ordinance in 2023, with the introduction of a 'Declaration of Solvency' to be signed by a director. Though not a compulsory measure, if the declaration of solvency is signed and filed with the Registrar within 30 days then the voluntary winding up can be streamlined. If not signed, then an independent liquidator must be appointed and hold a creditors' meeting where a report is presented to the company's creditors.

Compulsory winding up

Winding up is the legal process by which a company comes to the end of its life, and by which its assets are realised and its liabilities determined, and any funds distributed to those entitled to receive them.

An application for compulsory winding up can be made by the company, any creditor, member, director or interested party.

The Court may make an order for winding up if, amongst other matters:

• the company by special resolution resolves it;
• the company is unable to pay its debts; or
• the Court considers it just and equitable to do so.

A company is considered 'unable to pay its debts' within the meaning of the Law if the company fails to satisfy, within the period of 21 days, a written demand for payment served at its registered office via His Majesty's Sergeant, or if it fails to satisfy the solvency test.

A company is considered to satisfy the solvency test within the meaning of the Law if it is able to pay its debts as they become due, the value of its assets is greater than the value of its liabilities or, in the case of supervised companies, any other requirements as to solvency as imposed by statute.

Upon the making of an order for compulsory winding up, the Court may appoint a liquidator (an independent officer of the Court who is typically an insolvency expert) to be sworn into office to realise the beneficial winding up of the company.

The liquidator must send a copy of the compulsory winding up to the Registrar of Companies within seven days.

Schemes of arrangement

Much like the English law system, a scheme of arrangement in Guernsey is a court-sanctioned agreement between a company and its creditors or members.

An application may be brought by the company, any creditor, member, liquidator, administrator or receiver (if applicable).

The scheme must be voted on by 75% in value of the members or class of members (excluding any shares held as treasury shares) or creditors (as the case may be), present and voting either in person or by proxy, before being sanctioned by the Court.

The sanctioned scheme is to be filed with the Registrar of Guernsey Companies within seven days.

The scheme is binding on all creditors, members and the company (also liquidator, administrator or receiver if applicable).

Receivership

The Court may make a receivership order in respect of one or more cells of a protected cell company – a structure frequently used in the insurance sector. 

This route is to be used for protected cell companies only.

A receiver is appointed, who has the same powers as a liquidator.

A receivership is equivalent to a winding up of a cell where its assets are unlikely to meet its liabilities. Receivership is used where the cell itself is insolvent and not where a liquidator has been appointed to the protected cell company as a whole.

The "tout tel clause" means the buyer has the onus of checking the physical condition of the property. The principle of the clause is arguably a mirror of the English principle of caveat emptor (or "buyer beware").

The effect of the "tout tel clause" is that the purchaser takes the property in the condition in which it is found. The buyer will take the property together with all its defects which are present at the time at which the contract is passed (whether or not the buyer could have discovered them on an investigation or inspection of the property).

The "tout tel clause" seeks to remove the seller's liability to the buyer for any defects in the property.

The defects which may impact a property vary widely. They include:

• physical defects in the property (such as subsidence or structural issues);
• defects in title which may impact the saleability of the property or its market value (for example the property is subject to restrictions on its permitted use); and
• the property being in breach of the law (such as not having been constructed in accordance with building regulations).

There are two principal ways in which a buyer can protect themselves against the purchase of property with a defect:

• raising enquiries with the seller; and
• obtaining a full building survey.

Enquiries and investigations

In practice, a buyer will raise standard enquiries on the purchase of a property (together with specific enquiries on issues which arise in the title investigation).

The seller's responses to the enquiries raised are deemed to be "representations". If the seller's representations are false (whether or not the seller knew that they were false) then the seller makes a misrepresentation to the buyer.

The enquiries raised by a buyer are generally wide-ranging and will ordinarily cover issues such as insurance matters, flooding and disputes with neighbours. The buyer has a legitimate interest in understanding the history of the property and the principal issues that the seller has encountered during their ownership.

It is reasonable for the buyer to raise a broad spectrum of enquiries. However, because of the risk of misrepresentation (discussed below) the seller ought to be cautious in answering queries which are very broad or which relate to the general condition of the property. Additionally, where the seller does not know the answer to the enquiry, they should state that to be the case.

Misrepresentation

The courts in Jersey have decided that the presence of a "tout tel clause" did not prevent a buyer suing the seller where the seller had made a misrepresentation on which the buyer had relied.

Where a buyer relies on a seller's misrepresentation and suffers a loss as a result, then the buyer may be able to make a claim against the seller for damages to compensate them for that loss.

Building survey

It is always advisable for the buyer to instruct a building survey in advance of completion. The surveyor will undertake a detailed inspection of the property and then produce a report which:

• comments on the age, size and principal characteristics of the property;
• gives an opinion as to the value of the property; and
• details any issues which may affect the value of the property.

The survey should also be addressed to the buyer's lender (if any). If the surveyor does not identify a defect which they ought to have identified, then the buyer or their lender can sue the surveyor for any loss they suffer as a result of that defect.

New properties

The buyer of a newly constructed or renovated property will generally enter into a "pre-sale agreement". The pre-sale agreement obliges the buyer to purchase the property once it has been constructed.

In recognition that a buyer will not have the opportunity to carry out a building survey before they enter into the pre-sale agreement, the developer will oblige themselves to construct the property in accordance with:

• the plans and specifications agreed at the time of the pre-sale agreement;
• planning permissions, building controls and other statutory consents; and
• good building practice.

In the event that the developer breaches those obligations, then the buyer will be able to sue the developer for any loss they suffer.

Practicalities

A seller should think carefully about the representations they make to enquiries and should not be tempted to confirm anything of which they are not certain.

A buyer should mitigate the risk that they will discover a defect in the property after their purchase by:

• instructing lawyers to carry out a comprehensive suite of searches and a site inspection and investigate title; and
• obtaining a buildings survey of the property.

Bedell Cristin has a team of property experts who can help you with any queries.

The Perpetuities (Amendment) Act, 2024, passed by the Cayman Islands Parliament in July and in effect as of 22 August 2024 (the "Amendments"), disapplies the rule against perpetuities in relation to Cayman Islands ordinary trusts (Cayman Islands STAR trusts continue not to be subject to the rule).

Previously, the Cayman Islands rule against perpetuities was governed by the Perpetuities Act (1999 Revision) (the "Perpetuities Act"), which imposed a requirement for an ordinary trust to vest within a perpetuity period of one hundred and fifty years failing which it would be void, subject to a "wait and see" principle.

Additional Perpetuities Act amendments

The Amendments also provide that:

-      subject to the terms of a trust, if it is of unlimited duration and its governing law is changed to that of the Cayman Islands, it will continue to be of unlimited duration, even if it predates the Amendments; and

-      the Cayman Islands Grand Court may, upon application, make an order to extend a trust period or to disapply the rule against perpetuities for those trusts or powers currently subject to the rule (an "Application").

Application to the Grand Court

-      An Application may be made by:

‒      a trustee, settlor or enforcer;

‒      a person on whom powers are conferred; or

‒      a person with a beneficial interest.

-      An Application must be served on:

‒      all interested persons; and

‒      any other person the Grand Court considers relevant.

-      The Court must be satisfied that:

‒      the Application is not detrimental to the beneficiaries; and

‒      it is not in relation to disposition of land or an interest in land in the Cayman Island (unless held through a company partnership or other entity).

Closing comment

These changes were long awaited by leading private client and trust lawyers in the Cayman Islands and internationally and will, no doubt, further enhance the standing of the Cayman Islands as a jurisdiction of choice for international succession planning.

Creating a will in the Cayman Islands ensures that assets are distributed according to the testator’s wishes, providing clarity and reducing administrative burdens for loved ones during a difficult time.

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Understanding a US preference payment 

Under US law a preferential payment is a payment or transfer made by a debtor to a creditor for a pre-existing debt that is paid or transferred within a 90-day period preceding the filing for bankruptcy (for unconnected creditors) at a time when the debtor was insolvent and allowed the creditor to receive more than they were entitled to in bankruptcy proceedings. Where the creditor is connected, referred to as an insider (such as friends, family members or business associates), the relevant period preceding the filing is extended to one year. 

Where there has been a preferential payment a "clawback" action can be commenced to recover the preferential payment from the creditor who received it to return the payment back to the bankruptcy estate for distribution to all creditors. 

Cayman's position on judgment enforcement

In Cayman, common law principles apply for the enforcement of all foreign judgments (other than those from Australia) where the court will, as long as certain conditions are met, treat a foreign judgment as creating a debt due from the judgment debtor to the judgment creditor, and will then give a Cayman judgment on that debt. The process involves starting court proceedings for the sums due under the foreign judgment in Cayman and using the foreign judgment as evidence that there is no defence to that claim.

For any court order to be enforceable in the Cayman Islands as a foreign judgment, it would need to be:

- made by a court of competent jurisdiction;

- final and conclusive;

- not contrary to public policy in Cayman; and

- consistent with the principles of Cayman conflicts law.

Should Celsius seek to enforce any judgment from a US court (if obtained) in Cayman, there are a number of hurdles to overcome. 

Final and conclusive judgment of court of competent jurisdiction 

For a foreign judgment to be established as final and conclusive, the foreign court must give a judgment which is not provisional and, therefore, not subject to review in that court. The fact that such judgment is subject to appeal to a superior court does not prevent it from being considered final and conclusive.

If, by contrast, the judgment can be reopened and reconsidered in that same court, it cannot be said to be final and conclusive. Therefore, a judgment obtained in "default" of the defendant having appeared in the court where the judgment was obtained ("Default Judgment") (which often has the possibility of being set aside and overturned) is often not enforceable as final.

In addition, as the Default Judgment is usually obtained in "default" of the defendant having appeared in the court where the judgment was obtained, the court being asked to recognise the judgment may well conclude that the foreign court did not have jurisdiction over the debtor if the debtor was not present in that country and did not participate in the proceedings that led to the judgment. 

On that basis, Celsius might have a challenge enforcing a US court judgment for Clawback Claims against a Cayman incorporated company that did not take part in the US proceedings. 

Public policy/principles of Cayman conflict law - Cayman's position on preference payments 

Preference payments under Cayman law are voidable pursuant to Cayman's Companies Act (2023 Revision) (the "Companies Act"), which states that:

"Every conveyance or transfer of property, or charge thereon, and every payment obligation and judicial proceeding, made, incurred, taken or suffered by any company in favour of any creditor at a time when the company is unable to pay its debts […] with a view to giving such creditor a preference over the other creditors shall be voidable upon the application of the company’s liquidator if made, incurred, taken or suffered within six months immediately preceding the commencement of a liquidation." [emphasis added]

This is a notably different test to that of a US preference payment, such as those being made by Celsius, as it has no automatic "clawback" power from creditors who have been paid in the 90 days before the commencement of the bankruptcy/liquidation. As the claim arises from a US statutory power that has no Cayman equivalent, there is an argument that, as no action brought in a Cayman court for the "clawback" of a US preference payment could succeed under Cayman law, it should not be possible to ask a Cayman court to enforce a judgment based on such US "clawback" powers.

Ability to bring a claim 

To bring a claim, the creditor must show that they are the party with a right to receive the sums claimed. In corporate bankruptcy/liquidation cases, the claims are brought by individuals empowered by a court (usually) to represent the company to whom the sums claimed are owed and who have been given "standing" to bring claims on behalf of the company. However, a foreign court might not always recognise that standing. 

Under the Companies Act, the Cayman court may exercise its discretion to make orders ancillary to a foreign bankruptcy proceeding (under certain circumstances) upon the application of a "foreign representative" (i.e. a trustee, liquidator or other official appointed in respect of a debtor for the purposes of a foreign bankruptcy proceeding). The Celsius Clawback Claims are initiated by a litigation administrator, but a US bankruptcy law appointed litigation administrator would not appear to qualify for recognition as a foreign representative under the Companies Act (nor would a committee formed of a class of creditors, such as the Celsius Unsecured Creditor Committee). 

There are other ways to establish "standing" to enforce a foreign judgment in Cayman, such as obtaining a 'Letter of Request' for recognition. Nevertheless, this need to show "standing" is another hurdle which Celsius will need to overcome to enforce any US court judgment for Clawback Claims against a Cayman incorporated company.

Conclusion

The ability to successfully recover debts from foreign based debtors, as Celsius is attempting to do, will require a somewhat complex analysis of factors, including:

-      where the debtor and their assets are located and, therefore, whether the judgment needs to be exported;

-      what the basis of the claim is in the country in which it has been brought and whether that might be vulnerable to a public policy defence to enforcement in another country;

-      whether the court in an enforcement country will conclude that the home court had jurisdiction over the defendant when the judgment was obtained; and

-      the standing of the claimant to bring a claim for money belonging to the debtor in the place of enforcement.

Many international treaties on recognition and enforcement of judgments across borders have been implemented and are designed to get past many of these complexities. However, there are still many jurisdictions, such as Cayman, where the common law power to treat a foreign judgment as creating a debt due from the judgment debtor to the judgment creditor is the only basis upon which to seek to enforce most foreign judgments. Obtaining local law advice is crucial to debt recovery prospects in these circumstances. 

Having assisted many clients to both enforce and resist enforcement of foreign judgments in Cayman we can advise on "both sides of the fence" quickly and cost effectively.

Applications to restore a company are typically made where undistributed assets come to light, where a creditor wishes to make a claim, or where the legal issue that resulted in the company’s strike-off or dissolution has been resolved.

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We have experience of advising on all sides of these matters – supporting start-ups on their legal structuring and on successive funding rounds; advising funds on their investments into start-ups (as well as in connection with their own fund formation); and advising investors as independent counsel.

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The Cayman Islands stand out as a prime destination due to its high quality lifestyle, status as an international financial hub, advanced infrastructure, and supportive business environment.

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The primary legislation – the Companies (Jersey) Law 1991 – is based on the UK Companies Act 1985, and is familiar to English professionals, but offers more options, particularly on returning capital to investors.

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Our clients include major lenders and institutional investors such as pension funds, private equity and real estate funds, blue chip retailers and property developers.

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Our practitioners are regularly ranked in the top tiers of the leading independent legal directories.

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Our lead partner in Singapore has experience of working in London, BVI and Jersey and trained with a Magic Circle firm before moving offshore.

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We work with investors, typically alongside onshore counsel, based in the US, Canada, the Middle East, Asia and UK, to independently advise on matters of Cayman Islands law impacting fund documents including the jurisdiction’s evolving legal and regulatory framework.

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The customary law of Guernsey essentially imports the English common law relating to directors’ duties as it stood prior to the incorporation of the common law duties into the UK Companies Act 2006.

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PIFs have been a successful addition to the Guernsey funds toolbox – they are used by start-up managers, for family investments, for relatively closely held funds, and by institutional managers.

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La designación de un RO sólo puede ser solicitada por la propia empresa. Si el Tribuna designa un RO, la gerencia existente mantiene el control de las operaciones de la empresa.  ElRO (un profesional de insolvencia de Caimán) actúa como un especialista independiente para supervisar la implementación del plan de reestructuración, y desde el momento de su designación, una moratoria mundial sobre reclamaciones contra la empresa tendrá efecto automático.

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The Island’s long-standing popularity amongst Middle Eastern investors means that there is a wealth of experience amongst Jersey lawyers and other professionals on structuring options, and well-used solutions that have stood the test of time.

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The JPF was introduced to offer an investment vehicle within a proportionate regulatory environment, with a focus on flexibility, speed to market, and cost efficiency.

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JPUTs were immensely popular in the mid-2000s, and although there have been changes to the UK tax system since then, the JPUT model remains a fundamentally strong one for UK real estate investment.

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They balance the powers of trustees and safeguard the interests of beneficiaries.

A Protector is an individual or entity appointed within a trust structure to supervise and, in some cases, influence trustee decisions. Their role is outlined in the trust deed, providing specific powers and duties.

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The 2023 Law amends various statutes, but for the purposes of this briefing, we will focus on the amendments to the Employment (Jersey) Law 2003, to provide you with an executive overview of these positive additions to Jersey's existing parental leave regime.

What is Bereavement Leave?

Bereavement Leave is a day one statutory entitlement to two weeks of unpaid leave for eligible employees and self- employed persons in the event of the death of:

• a child, if they die under the age of 18; or
• a child who is stillborn after 24 weeks of pregnancy.

Who is entitled to Bereavement Leave?

The following employees or self-employed persons are entitled to Bereavement Leave:

• the mother of the child;
• the father of the child;
• an adopted parent of the child;
• a surrogate parent of the child; or
• a person married to, or in a civil partnership with, any of the persons mentioned above, provided the person had or expected to have responsibility for the upbringing of the child.

(together "eligible persons").

When and how should Bereavement Leave be taken?

Eligible persons are entitled to two weeks of unpaid Bereavement Leave from either the date of the death of a child or, in the event of stillbirth, the date of the child's birth.

Bereavement Leave can be taken without notice and up to and including 56 weeks after the death or birth (in the event of stillbirth) of a child (the "eligible period"). 

Eligible persons may choose to take all their Bereavement Leave as a whole or split it into no more than three blocks of leave within the eligible period. (e.g. an employee may take part of their Bereavement Leave immediately following the event and the remainder of their Bereavement Leave later within the eligible period).

If taken in no more than three blocks and an employee changes employers within the eligible period, the employee is still entitled to take the balance of any Bereavement Leave due to them whilst employed by the new employer.

An employee's entitlement to Bereavement Leave does not affect their entitlement to parental leave and/or any additional contractual entitlement to leave following the birth or adoption of a child.

Is Bereavement Leave paid?

Eligible persons are entitled, at least for the moment, to two weeks of unpaid Bereavement Leave. It is of course up to employers to offer paid Bereavement Leave and if any internal bereavement policies provide such, this should be honoured. Bereavement policies should clearly set out the amount of any contractual bereavement pay and the period for which it is payable.

The Government of Jersey is intending to implement a statutory bereavement pay system to compensate eligible persons for loss of income during any period of statutory Bereavement Leave. It is expected that further information about the rate of pay and application process will be provided in due course.

How does Bereavement Leave affect an employee's terms and conditions of employment?

The additions introduced by the 2023 Law largely mirror the rights and obligations that extend to employees on parental leave.

In summary, the specific additions applicable to Bereavement Leave are as follows:

• eligible employees should not be made to work during any period of Bereavement Leave;
• all terms and conditions of employment, except those relating to remuneration (including bonuses and commission attributable during any period of Bereavement Leave), which the employee would have received had they been working, remain the same during any period of Bereavement Leave (e.g. an employee's right to accrue holiday);
• eligible employees have the right not to suffer detriment after any period of Bereavement Leave;
• eligible employees have the right not to be dismissed for the fact that they have sought to take or have taken Bereavement Leave;
• eligible employees remain bound by their contractual obligations during any period of Bereavement Leave (e.g. duty of confidentiality);
• eligible employees have the right to return to the job they held immediately before any period of Bereavement Leave (e.g. an employee's seniority and right to benefits should not be affected by any period of Bereavement Leave); and

any contractual right to time off for Bereavement Leave cannot be exercised at the same time as any statutory entitlement to Bereavement Leave and it is up to an employee to choose the more favourable of the two.

What recourse does an aggrieved employee have?

Eligible employees may refer any contraventions of the additions introduced by the 2023 Law to the Employment Tribunal and are required to do so within eight weeks of the relevant date (which will vary and be calculated by reference to the particular provision being breached).

Concluding remarks

Whilst there is no way to compensate for the loss of a child, this addition at least allows an employee the time off to grieve in private without the fear of ramifications in the workplace or losing job security, and will hopefully offer grieving parents some respite in unfortunate circumstances. Employers are encouraged to conduct themselves appropriately when managing matters associated with Bereavement Leave and to ensure that they respect the sensitivity and confidentiality of the matter.

The BVI Commercial Court has provided a useful summary of the principles that guide its decision-making when faced with a contested application to appoint liquidators based on non-compliance with a statutory demand, in China Minsheng Banking Corp., Ltd., Hong Kong Branch v Tai Feng Investments Limited (BVIHCM2023/0271)

China Minsheng Bank Corp., Ltd. (the "Bank") sought to appoint liquidators over Tai Feng Investments Limited ("Tai Feng") on the basis of a failure, by Tai Feng, to comply with a statutory demand seeking repayment of sums that had been advanced under a loan agreement, handling fees and interest amounting to some US $34,490,855.65. The original loan had been amended on three occasions and the Bank had taken some security from Tai Feng, which the Bank valued at US$756,085.00.

At the hearing of the application, Tai Feng raised three main arguments in its defence. These were:

• the statutory demand was not served on Tai Feng in accordance with the Insolvency Rules;
• the underlying debt was disputed on substantial grounds; and
• alternatively, Tai Feng enjoyed security over property, which Tai Feng claimed to have been worth in excess of the debt and, therefore, Tai Feng was solvent, or had already complied with the requirement in s.155(2)(d) of the Insolvency Act, 2003 (as amended) to secure the debt.

Service of the statutory demand

The parties accepted that the demand was served on Tai Feng's registered agent and the agent was authorised to accept such service.  Tai Feng's initial complaint was that, although the demand had been delivered to the registered agent on 10 October 2023, it did not come to the attention of the director of Tai Feng, Mr Sun, until early in December 2023. There seemed to be some equivocation on this point because Mr Sun had filed a second affidavit in which he said that "[H]e received and had knowledge of the statutory demand on 23 December 2023". This inconsistency in the evidence did not assist Tai Feng's defence.

Webster, J., held that "the delay in the registered agent forwarding the document to [Mr Sun] … does not in any way affect the validity of the service."

Failure to challenge the statutory demand

The BVI Commercial Court (the "Court") cited the well-known decision of the ECSC Court of Appeal in Trade and Commerce Bank v Island Properties SA and Jacob Ungar (BVIHCVAP 2009/12), which had been followed by the BVI Commercial Court in Everbright Sun Hung Kai Company Limited v Walton Enterprises Limited (BVIHC(COM) 2020/0022), in which it was held that "a company that does not challenge a statutory demand will not be precluded from challenging the issue of its insolvency at the hearing of the application to appoint liquidators – but it will have the burden of rebutting the statutory presumption of insolvency." The Court quoted the dicta of George-Greque J.A., (as she was then) in Trade and Commerce Bank. For the present purposes, it is worth emphasising the final sentence of paragraph 28, which was cited by the Court in the instant case:

"… Obviously, a company which has failed to challenge a statutory demand, in seeking to oppose the appointment of a liquidator will be saddled with the burden at that stage of establishing its solvency by way of countering its state of 'statutory insolvency'  under s.8(1)(a) brought about by such failure."

Debt disputed on substantial grounds

Tai Feng disputed the debt that was the subject of the demand because it said that there had been an oral agreement made between the Bank, Mr Sun and a Mr Cheng in or around June 2018 by which the Bank had agreed to release Tai Feng from further liability to repay the debts claimed and that Mr Cheng would, instead, take over responsibility for these.  This was denied by the Bank. However, Tai Feng had not produced any documentary evidence in support of this oral agreement but rather asserted that the Bank had not taken any steps following the alleged 2018 meeting. The Court found that the suggestion that there had been an oral agreement was inconsistent with the evidence and that the Bank had taken steps in relation to the sums owing since the date of the alleged meeting and before the service of the statutory demand. 

The Court rehearsed the well-known principles in Sparkasse Bregenz Bank AG v Associated Capital Corporation VG 2003 CA 3, namely that:

"The Court will order a winding-up for failure to pay a due and undisputed debt over the statutory limit, without other evidence of insolvency. If the debt is disputed, the reason given must be substantial and it is not enough for a thoroughly bad reason to be put forward honestly. But if the dispute is simply as to the amount of the debt and there is evidence of insolvency the Company could be wound up. To fall within this principle, the dispute must be genuine in both a subjective and objective sense. That means that the reason for not paying the debt must be honestly believed to exist and must be based on substantial or reasonable grounds. Substantial means having substance and not frivolous. Which disputes the Court should ignore. There must be so much doubt and question about the liability to pay the debt that the Court sees that there is a question to be decided. The onus is on the Company to bring forward a prima facie case which satisfies the Court that there is something which ought to be tried either before the Court itself or in an action by some other proceeding."

The Court went on to note the importance of contemporaneous documentary evidence, citing the dicta of Males, L.J in the English Court of Appeal in Simetra Global Assets Ltd and another v Ikon Finance Ltd [2019] EWCA Civ 1413, [2019] 4 WLR 112 and Lord Goff in the English House of Lords in Armagas Ltd v Mundogas SA, (The Ocean Frost) [1985] 3 WLR 640. Importantly, Webster, J., held that:

"It is very easy for a debtor, when faced with an application to appoint liquidators, to say that the debt on which the application is based is disputed on substantial grounds because there is an oral agreement disputing the debt. Each case must be decided on its own facts, but where such an allegation is made, especially when there is written evidence to the contrary, the debtor faces an uphill task to satisfy the Court that there is a genuine or substantial dispute regarding the repayment of the debt." 

The Court held that Tai Feng had failed to discharge this burden.

Tai Feng's solvency

Tai Feng suggested that it was not insolvent because it had two valuable assets; namely shares in two companies. The Court found that Tai Feng sought to ascribe a value to shares in the first of these companies based on an historical subscription and an extract from a financial report which suggested that, as at 2021, the group to which the company belonged had substantial value. Conversely, the Bank put forward evidence that suggested that in fact the value of the shares was nil. It was conceded that the number and value of the shares in the second company was significantly less than the debt in question. The Court also noted that Tai Feng had failed to adduce any evidence of its own liabilities, "which [made] the evidence of the value of the assets even less reliable in the context of proving [Tai Feng's] solvency."

In any event, the Court concluded that, "… assuming that Tai Feng was solvent on a balance sheet test, if it refuses to pay a debt that is not disputed on substantial grounds, it is still insolvent within in the meaning of s. 8(2)(c)(i) of the Act …"

As a consequence, the Court also found that Tai Feng had failed to discharge its burden of proving that it was solvent or that it had secured the debt in question.

Delay in enforcing the debt

Tai Feng submitted that the Bank had delayed in selling the shares described above, which had been secured against the loans in question and, in so doing, had failed to act in good faith and take reasonable steps to obtain the best price available. It was argued that had the Bank done so then it would have recovered more than the total amount due.   In response, the Bank pointed to the terms of the security documents that gave the Bank "the power to sell or otherwise dispose of the shares on such terms and in such manner as the Bank may think in its absolute discretion". In addition, the Bank benefited from a clause absolving it from any liability in relation to the sale of the same. In any event, the Bank contended that an earlier sale would not have achieved the result contended for by Tai Feng.

Request for an adjournment

Finally, Tai Feng sought an adjournment on the basis that Mr Sun had not become aware of the statutory demand until approximately two months after it was served. The Court was urged to exercise its discretion under s.167 in this regard. However, the Court was unpersuaded. It pointed to Mr Sun's inconsistent evidence and also the "scheme of the Insolvency Act which requires applications to appoint liquidators to be dealt with expeditiously."

Comment

In coming to its judgment, the Court provided a useful summary of the principles that guide its decision- making when faced with a contested application to appoint liquidators on the basis of non-compliance with a statutory demand. In particular, it is important to note that while a failure to apply to set aside a demand will not necessarily be fatal to a successful defence, there is thereafter a shift in the burden to the respondent to demonstrate that the debt is disputed, that the company is nevertheless solvent or that it has adequately secured the value of the debt in question. The judgment underlines the importance of producing contemporary documentary evidence in support of those assertions. It is also a reminder that a submission that the debt in question is disputed must be substantial and based on reasonable grounds. 

Historic and contemporary ties

Jersey stands as a testament to enduring relationships.  Jersey is a self-governing 'crown dependency' of the UK, a status that has been relatively unchanged for centuries. Jersey also has abiding historical ties with the Middle East, in part framed by the relationship between the Middle East and the UK and the City of London, with shared history and principles cultivating collaboration between the island and the Middle East.

Connections exist at many levels. There are strong political links, with members of the Jersey government making regular visits to the Gulf, and representatives from the region having been made welcome on official visits to the island – including delegations from Bahrain, Kuwait, Oman and Saudi Arabia. Formal arrangements include double taxation agreements signed with the UAE, Qatar and Bahrain and Jersey's first Bilateral Investment Treaty, which was signed with the UAE in 2021.  Jersey's financial regulator, the Jersey Financial Services Commission, has a series of Memoranda of Understanding with equivalents in the Middle East, including with Bahrain, Qatar and the UAE.

Jersey Finance also has a presence in the Dubai International Financial Centre (DIFC) and there is a wealth of well-established relationships between Jersey-based businesses and those in the Middle East. Many in the Middle East have long-standing connections with Jersey as a financial centre, which connections are founded on a number of core principles. 

Reputation and track record

The overall reputation and track record of Jersey is a key foundation for the trust placed in the island by clients of its financial services industry.  Operating as an international finance centre for over 60 years, Jersey has a sound legal framework, supported by an independent judicial system, providing a secure environment, stability, certainty and high standards. 

Jersey also has a strong regulatory framework, providing effective regulation of service providers in compliance with relevant international standards, whilst also allowing for flexibility and proportionality for client structures. This flexibility makes Jersey an ideal jurisdiction for a range of activities, including private wealth structuring and institutional or pooled investments. 

Expertise and excellence

There is a depth of financial services expertise in Jersey, with the island having one of the largest numbers of finance industry professionals of any international finance centre, giving a vast pool of skills.  The strength and breadth of the industry also provides for a wide range and choice of competitive products and services. Jersey also offers real substance and governance, providing quality and reassurance, underpinning its role as a hub for international capital and business.

Tax-neutral platform

A key feature of Jersey's offering as an international finance centre is Jersey's tax environment.  Jersey offers a clear and straightforward tax-neutral environment, with the island having a zero rate of income tax and no capital gains or transfer taxes. Investors may pay tax in their own countries or in those they invest in, but will avoid complex cross-border tax issues, or being taxed twice. The certainty and simplicity of the tax position in Jersey is a key attraction.

Sharia compliance and Islamic finance

Naturally, there is a demand for sharia-compliant solutions in the Middle East. Jersey's legal system readily accommodates sharia-compliant structures and investments, with Jersey being routinely used for sharia-compliant asset structuring, fund domiciliation, and capital markets activity, such as sukuk issuances, as well as sharia-compliant private wealth management and administration.

There is strong support for sharia financial solutions from the island's authorities. For example, Revenue Jersey (the island's tax authority) has issued strong confirmation that certain types of funding, specifically  Tawwarruq/Murabaha structures, are not subject to tax in Jersey.  The Jersey Financial Services Commission is also highly familiar with the regulation of Islamic finance products, and routinely issues regulatory consents in respect of such structures where they are required.

With an extensive record of accomplishment in establishing sharia-compliant structures, the Bedell Cristin team has developed significant expertise and experience in many areas of Islamic finance.

Expertise in real assets

Real assets – real estate and infrastructure – have long been a favoured asset class among Middle Eastern investors, with investing in UK commercial real estate being an investment staple for many.  Jersey is the 'go to' jurisdiction for investment in UK real estate, including through SPV holding companies, joint venture companies or partnerships, or the Jersey Property Unit Trust (JPUT), which is familiar to many advisors, investors and lenders. Based on the familiarity with, and confidence in, the jurisdiction, Jersey is also often used as the holding jurisdiction for real estate investments elsewhere, whether in Europe, Asia or the US. A large part of Bedell Cristin's commercial law practice encompasses the structuring and financing of real estate investments for Middle Eastern investors. Equally, the international private client team advises on many private or family structures holding real estate portfolios.

In addition, Jersey is often used for other alternative assets, including private equity and venture capital, with many high-profile investment advisors having domiciled their funds or other investment structures on the island, enhancing Jersey's reputation as a domicile for specialised assets. That said, Jersey structures are also used to invest in conventional assets, with a number of sharia-compliant investment funds investing in equities or other conventional assets having also been established in Jersey. Jersey's popular Private Fund structure is popular with investors and sponsors from the region who are looking for a quick product to market whilst still maintaining the regulatory standards that Jersey fund structures are known for globally.

Tailored solutions

As a jurisdiction, Jersey offers a variety of flexible structures to meet the specific investment needs of clients. Whether it's wealth preservation or management, asset holding, joint ventures, funds, real estate or private equity, Jersey can provide tailored solutions that align with client objectives. 

The future

Looking to the future, the long-standing links between Jersey and the Middle East look set to continue. The Middle East remains a priority region for Jersey and for Bedell Cristin, with political, regulatory and industry attention focussed on the development of the already significant relationship. The strength of that relationship, combined with the fundamentals of Jersey's proposition – including stability, excellence and flexibility – should mean that Jersey continues to be a jurisdictional partner of choice for clients in the Middle East.

If you would like any further information or advice please contact your usual Bedell Cristin contact or one of the contacts listed.

Unlike most other amendments (which came into force almost immediately), the 2016 Pensions Amendment Act took a more phased approach by slowly coming into force over the years through various commencement orders. This briefing focuses on the most recent commencement order, the National Pensions (Amendment) Act, 2016 (Commencement) Order, 2022 (the "2022 Commencement Order"), which relates to the reforms which have become effective throughout 2023.

The selected provisions of the 2016 Pensions Amendment Act, which correspond to the 2022 Commencement Order, generally concentrate on fortifying the pension regime through reforms that improve procedures and encourage more compliance. More specifically, they increase the responsibilities of pension plan administrators (the "Pension Administrators") and aim to hold non-compliant employers more accountable through enhanced punitive measures. By virtue of this, the pension plan members (the "Pension Members"), and the general public, gain further information and transparency with regard to pension plans and pension funds.

Increasing the responsibilities of Pension Administrators

The 2016 Pensions Amendment Act refined the pension regime by increasing the fiduciary duties of Pension Administrators to ensure that pension procedures were more standardised in order to provide more effective service, better knowledge and transparency to Pension Members.

Annual General Meetings ("AGMs") and Pension Benefit Statements ("Statements")

The 2016 Pensions Amendment Act introduced a provision which, effective 1 January 2023, requires all Pension Administrators to:

-        hold AGMs;

-        provide a record of the AGM to the Director of the DLP within three months of the AGM; and

-        provide a record of the AGM to the Pension Members (along with their Statements). 

Simultaneously, the 2016 Pensions Amendment Act changed the frequency and method by which Statements are provided to Pension Members. Effective 1 January 2023, Pension Administrators are required to provide Pension Members with a Statement, issued either electronically or in hard copy, on a semi-annual basis (as opposed to the former annual basis).

By legally refining and imposing these responsibilities on all Pension Administrators, the DLP ensures that all Pension Members, irrespective of their Pension Administrators, have an opportunity to discuss, and gain further knowledge with respect to, their pension plan.

Information provided to membership applicants 

In line with its target to ensure that Pension Administrators are being informative and transparent, the 2016 Pensions Amendment Act made slight modifications to the requirements to disclose information to pension membership applicants.

Pension Administrators must provide in writing to persons applying for membership prescribed information concerning the pension plan, including an explanation of the applicable provisions of the pension plan and an explanation of their rights and obligations under it. Effective 1 March 2023, Pension Administrators are now required to also provide details of the returns and expense ratios of the pension fund.  All of this information has to now be provided immediately upon a person's application for membership, ensuring more timely and efficient communication from Pension Administrators. Furthermore, employers now have a 21-day deadline within which to provide Pension Administrators with any relevant information that is required to perform their duties in providing such information.

Inspection of the Pension Administrator's documents

While the Principal Act already gave individuals access to pension records applicable to their pension plan and pension fund, it lacked a timeframe in which the information was to be provided. Therefore, the 2016 Pensions Amendment Act included reforms to ensure that Pension Administrators perform their duties in a timely manner.

Effective 1 March 2023, Pension Administrators have 30 days from the date of the written request to make the relevant prescribed information and documents available to the applicant.  Additionally, requests for inspection can now be made once every six months rather than only once per calendar year.

As a result of these reforms, it is important for Pension Administrators to ensure that their records are maintained, up to date and in an organised manner, otherwise, they run the risk of non-compliance within fairly short deadlines.

Training of Pension Administrators

The DLP expects Pension Administrators to ensure that sufficient training is being provided to their staff to allow them to meet their increased responsibilities.

Therefore, effective 1 October 2023 Pension Administrators must:

-        provide evidence to the Director of the DLP of the method being utilised to address on-going administrator training when registering pension plans; and

-        in performing their ongoing fiduciary duties, provide evidence of annual administrator training to the Director of the DLP within three months of the end of the financial year.

Holding non-compliant employers accountable

The 2016 Pensions Amendment Act also targeted the increasing issue of non-compliant employers. Over the years there has been an increased trend of employers making pension contributions incorrectly (if at all), so the DLP has put in place reforms that aim to hold these employers more accountable through harsher punitive measures.

Requirement to publish

Pursuant to the 2016 Pensions Amendment Act, effective 1 March 2023, the Director of the DLP requires all registered pension plans to be published in the Gazette, or some other media that they may determine, including details of the respective Pension Administrator and other key service providers for the pension plan. Publishing an official list of pensions ensures that Pension Members can verify that their respective pension plan has been properly registered with the DLP as its regulator. 

More importantly, effective 1 March 2023, employers who fail to properly provide and contribute to pension plans for their employees will be subject to heavier penalties. On summary conviction, courts can now impose fines starting at $20,000, imprisonment starting at a term of two years, or a combination of both.

Delinquent payments and imposition of heavier penalties

Pursuing their aim of deterring employers from breaching their duties, the DLP significantly reformed the Principal Act with regard to recovering arrears of contributions from employers who have failed to comply with their duties. 

Effective 1 July 2023, a more structured process was initiated, which included the following: 

-        a "contribution date deadline" was introduced by which employers are given a timeframe in which to pay monthly contributions into their employees' pension fund;

-        where a contribution is not made within this timeframe, it will be considered a "delinquent contribution", and Pension Administrators will have authority to take immediate action to collect the delinquent contribution (including interest accrued) before the "reportable date";

-        where employers fail to pay the delinquent contribution by the reportable date, Pension Administrators shall report this in writing to the Director of the DLP by a specified "delinquent notification date"; and

-        Pension Administrators will be required to inform affected employees of a non-compliant employer within 60 days of notifying the Director of the DLP and will have the option of publishing the names of these non-compliant employers.

In addition to the above, the reforms included enabling the Director of the DLP to investigate and initiate action against non-compliant employers to recover the payment of the delinquent contributions through one or more of the following means:

-        demanding that the non-compliant employer make payment within 14 days;

-        demanding that the non-compliant employer appear before the Director of the DLP to address the delinquent contribution and disclose various documentation;

-        ordering the payment of a fee of up to 10% of the amount owed or $50 per day until the total amount is settled;

-        commencing legal proceedings to recover the delinquent contribution (including fines and fees); and

-        publishing details of breaches of the Pension Act, including the name of the employer, the offence committed, and the applicable penalty.

Furthermore, reforms also enable employees (who reasonably believe that their employer has failed to remit their contribution) to report their employer in writing to the Director of the DLP to investigate and take the above actions where required.

Additionally, it has been clarified that, aside from any other fees, fines, or penalties, an employer is obligated to pay interest, calculated daily at the current prime rate in the Cayman Island plus 5%, on all money due to be paid by an employer to a pension fund.

Conclusion

The full effect of the 2016 Pensions Amendment Act may have been a long time coming; however, it has really made the pensions law in the Cayman Islands fit for purpose as an essential benefit required to be provided by employers to employees.

Admittedly, it is a complex piece of legislation and therefore employees, employers, and Pension Administrators could be forgiven for feeling a little bemused. We at Bedell Cristin have guided clients through the complexity and welcome the chance to guide others.

Overview of the JPF

The JPF was introduced to offer a flexible vehicle within a proportionate regulatory environment.  The JPF is designed specifically for private funds and other co-investment structures with a focus on flexibility, speed to market, and cost efficiency.  A JPF must meet certain regulatory requirements set out by the Jersey Financial Services Commission ("JFSC"), but the regulatory framework provides flexibility so as to accommodate different types of funds, structures and investment strategies.

JPFs can have a maximum of 50 investors, who must be either professional or otherwise eligible investors. The JPF can be open-ended or closed-ended and can be established as a company, a unit trust, or a limited partnership.  JPFs can be used to invest in any type of asset class, including private equity, real estate, infrastructure and hedge.

One of the main benefits of the JPF is the streamlined regulatory process. Establishment involves the submission of a single application to the JFSC, with consent usually granted within 48 hours. Once the JPF is authorised, there is no ongoing requirement to seek regulatory approval for changes to the structure or investment strategy, provided that the JPF remains compliant with the published JPF guide.

Benefits of the JPF

There are many benefits of using a JPF.

Reputation and credibility

Jersey is a highly respected and long-established international finance centre, which provides reassurance and credibility for structures established in the island.  This can be particularly important for private fund managers who are seeking to attract institutional investors or other international investors.  Jersey's reliable legal system also provides investors with a high degree of legal certainty and predictability.

Strong but proportionate regulation

Jersey maintains a well-established regulatory framework, which is compliant with international standards.  Designed for professional or other eligible investors, JPFs are themselves subject to relatively light touch regulation.  At the same time, each JPF must have a designated service provider (administrator) in Jersey, which must comply with ongoing best practice requirements, meaning that investors can have confidence in the integrity of the JPF structure and its management and administration.           

Tax neutrality

Jersey has tax-neutral status, meaning that there are no taxes on a JPF's income or gains. This can allow the pooling of capital without the addition of a further layer of taxation, can provide tax efficiencies for investors and can make Jersey an attractive location for fund and other investment structures.

Access to expertise and substance

There is a well-established financial services industry in Jersey, with a range of service providers offering expertise in fund and corporate administration, legal and regulatory compliance, and accounting. This means that investment managers and investors can access a depth of knowledge and experience to support the establishment and management of the JPF structure, in a cost-effective manner.  Jersey has a depth of infrastructure and resources which enables the provision of appropriate substance for structures managed in the island.

Efficient set-up process

Another benefit of the JPF regime is speed to market.  A new JPF can be launched within a matter of days, compared to the weeks or even months it can take to establish a fund in other jurisdictions.  This can reduce the time and cost involved in establishing a structure and can allow managers to focus on their core activity of investment selection and management.  This can also be particularly advantageous in situations where time is of the essence, such as when a manager wants to take advantage of a specific investment opportunity, or if bespoke structures are required.

Access to global markets and Europe

Jersey is strategically located between the UK and Europe, providing easy access to global markets.

A benefit of the JPF regime is its ability to provide access to European investors via the National Private Placement Regime ("NPPR").  NPPR allows investment managers to market their funds to investors in the European Union ("EU") without having to comply with the onerous requirements of the Alternative Investment Fund Managers Directive ("AIFMD").

Compliance with the AIFMD can be time-consuming and expensive, and many managers have found it difficult to navigate the complex regulatory landscape.  In contrast, under NPPR, managers can market and sell their funds to professional investors in EU member states by complying with a simplified set of regulatory requirements, enabling access to a large pool of potential investors without having to invest significant time and resources in complying with the AIFMD.

The Success of JPFs

Since its launch in 2017, the JPF has become a widely recognised and respected investment structure, reflecting the range of benefits available to investment managers and investors.

The success of the JPF regime can be seen in its rapid growth. Since launch, nearly 650 JPFs have been established, an increasingly significant element of Jersey's funds industry alongside the US$559 billion regulated fund segment.  The JPF regime has attracted a range of investment managers and investors, from small start-ups to established global firms, across a range of asset classes.

Since their introduction, JPFs have been widely praised for their simplicity and flexibility and providing an attractive and secure platform for the establishment and management of private funds and other investment vehicles.  Jersey is recognised as a leading centre for the establishment and management of funds and investment vehicles, and the JPF has contributed to Jersey's strong record of providing effective vehicles for international investment managers and investors.

Conclusion

The JPF offers an efficient and cost-effective solution for investment managers and investors looking to establish a fund or other investment structure in a reputable and well-regulated jurisdiction.  JPFs are flexible, with the ability to structure matters so as to accommodate the preferences of managers, investors and the investment strategy of the fund.  The benefits of using a JPF include the strong but proportionate regulatory framework, the reputation and credibility of Jersey as a financial centre, tax neutrality, access to expertise, and a fast and cost-effective set-up process.

Overall, the JPF regime has been a major success, encouraging a wide range of investment managers and investors to establish structures in Jersey.

Annual returns, annual fees and economic substance

Cayman Island entities are required to file an annual return and pay annual registration fees to the Cayman Registrar of Companies (the "Registrar") in January. Prior to this, all Cayman Islands entities (including foreign registered companies) are required to also file an annual economic substance notification ("ESN"). The entity's registered office will typically carry out the filing of the ESN and annual return and make the annual payment for the Cayman Islands entity.

The Registrar will consider a Cayman Islands entity to not be in good standing if the ESN, annual return and annual registration fees have not been filed and paid by 31 January. Late payment penalties will accrue if these are not filed and paid by 31 March.

CIMA registration

Cayman Islands entities that are registered with the Cayman Islands Monetary Authority ("CIMA"), including mutual funds and private funds, are required to pay 2024 annual licensing / registration fees to CIMA by 15 January. After this date, late payment penalties accrue.

Following last year's amendments to CIMA's regulatory procedures on termination, the License Under Termination 'LUT' status is no longer available. An entity in the process of terminating its license may no longer benefit from a reduction or waiver of CIMA's annual licensing or registration fee and is subject to the full CIMA fee for the subsequent year unless the entity's de-registration is complete and no further fees are due.

Registered and licensed directors

Under the Directors Registration and Licensing Act (as revised) of the Cayman Islands ("DRLA"), directors registered or licensed with CIMA must complete their annual declaration and pay their annual licensing / registration fee to CIMA by 15 January. 

If a director no longer requires CIMA registration, they must file a de-registration application under the DRLA prior to 31 December; otherwise, they may incur the full annual 2024 fee.

SIBA registered persons

All entities registered with CIMA under the Securities Investment Business Act (as revised) of the Cayman Islands ("SIBA") must file an annual declaration and pay their annual fee to CIMA by 15 January. 

Terminating entities

If an entity is to be terminated by way of voluntary liquidation, it may commence an expedited (at slightly greater expense than the ordinary course) process prior 1 December allowing sufficient time to meet the voluntary liquidations deadline of 31 January to minimise or avoid entirely payment of 2024 annual fees and costs. This termination process is recommended for entities that have engaged in trade, operations, or commercial transactions throughout their life cycle. Once completed the entity cannot be legally reinstated by an interested party, except in very limited circumstances.

For CIMA-registered entities, the CIMA de-registration process must be completed prior to an entity being dissolved and therefore deregistration ought to be started as soon as practicable in order to meet the deadlines and avoid (however likely or unlikely at this stage) annual fees.  As mentioned above, an entity still in the process of terminating its license or registration as at 1 January will still be subject to the full CIMA fee for the subsequent year. If de-registration is unlikely to be completed by the deadline, the entity will need to make necessary reserves for its fees and costs.

Termination by way of strike off only becomes permanent after a 10-year period and may be more suitable for dormant or never traded entities. For the registered office to submit a strike off application, the entity must not be operating or have any outstanding regulatory matters. The next available strike off date is 24 March, however as next year's annual fees will apply, entities will need to make necessary reserves for such fees.

Such an acquisition may be attractive to boards and shareholders alike for a number of reasons, for example:

-     to return capital to shareholders;

-     to consolidate share ownership;

-     to make adjustments to the financial statements; or

-     in the case of a listed investment company, to reduce any discount in its share price to its underlying net asset value.

In any case, there are a number of requirements under the Companies (Guernsey) Law, 2008 (as amended) (the "Law") that the company will need to comply with in making the acquisition. Most notably, the directors must resolve and certify that the company will be able to satisfy the statutory solvency test, on a cashflow and net asset basis, immediately after the acquisition.

Fundamental requirements and restrictions

In order for a Guernsey company to acquire its own shares, the company must be authorised to do so by its memorandum and articles of incorporation. The acquisition by the company of its own shares must be effected on such terms and in such manner as may be provided for by that company's memorandum or articles, or the terms of the issue of those shares.

A company may not acquire its own shares if, as a result of the acquisition or redemption, the company would have no members.

Guernsey companies are free to return capital and earnings to shareholders without recourse to the courts and without creditor approval.

Types of acquisitions

First, a company may acquire its own shares pursuant to a written contract with one or more shareholders in an "off market" acquisition. Such a contract must be authorised by the shareholders by an ordinary resolution before it is entered into.

Second, if the company is listed on a stock exchange, a company may acquire its own shares by means of a "market acquisition", otherwise known as an "on market acquisition", which is defined by the Law as "an acquisition of shares made on a recognised investment exchange, provided that the acquisition is subject to a marketing arrangement". Market acquisitions must be authorised by means of an ordinary resolution of the shareholders of the company, as well as be authorised by the memorandum and articles of the company. Where a market acquisition is authorised, such authorisation may be general or limited to the acquisition of shares of any particular class or description and may be either conditional or unconditional. The authorisation must, however, specify the maximum number of shares authorised to be acquired, determine both the maximum and minimum prices which may be paid for the shares and specify a date on which it is to expire.

It is worth noting that the rights of a company in either case are not assignable. However, a company may release its rights in an off market acquisition if the terms of the release agreement are approved by ordinary resolution in advance.

Finally, if the company has issued redeemable shares, those shares may be redeemed by the company in accordance with the terms of issue.

Acquisitions treated as distributions

Payments made by the company in connection with the acquisition by a company of its own shares are treated as distributions. Where a company makes a payment in consideration of:

-     acquiring any right in respect of an off market acquisition;

-     the variation of a contract in an off market acquisition; or

-     the release of any of the company's obligations under a contract for an off market acquisition or under a contract for an on market acquisition,

such payment will also be treated as a distribution. The Law similarly confirms that the redemption of shares by a company and the acquisition of shares by a company are distributions subject to the Law.

Solvency test

In light of the treatment of all types of such acquisitions as distributions, the company will be required to satisfy the solvency test under the Law. To do so, the directors of the company must be satisfied on reasonable grounds that the company will, immediately after the payment, satisfy the statutory solvency test as well as any other requirement in its memorandum and articles. As part of the authorisation required by the directors, they must approve a certificate stating that, in their reasonable opinion, the company will, immediately after the distribution, satisfy the solvency test and provide the grounds for that opinion. The certificate must be signed on the company's behalf by at least one director.

A company satisfies the solvency test if it is able to pay its debts as they become due and the value of its assets is greater than the value of its liabilities. In the case of a company supervised by the Guernsey Financial Services Commission, the company must also satisfy any other requirements as to solvency imposed on it by applicable regulation. Additionally, the test is cumulative, meaning that a company is insolvent if it fails any part of the test. In determining whether the value of the company's assets is greater than the value of its liabilities, the directors must consider the most recent accounts of the company, as well as all other circumstances that the directors know or ought to know affect, or may affect, the value of the company's assets and the value of the company's liabilities. The directors may also rely on valuations of assets or estimates of liabilities that are reasonable in the circumstances.

According to the Law, "debts" includes fixed preferential returns on shares ranking ahead of those in respect of which a distribution is made (except where that fixed preferential return is expressed in the company's memorandum or articles as being subject to the power of the directors to make distributions) but does not include debts arising by reason of the authorisation. "Liabilities", on the other hand, includes the amount that would be required, if the company were to be dissolved after the distribution, to repay all fixed preferential amounts payable by the company to members, at that time or on earlier redemption (except where such fixed preferential amounts are expressed in the company's memorandum and articles as being subject to the power of directors to make distributions), but, subject to the definition of "debts", does not include dividends payable in the future.

Consequential matters

If the directors cease to be satisfied on reasonable grounds that the company will, immediately after the acquisition is made, satisfy the solvency test, any acquisition made by the company is deemed not to have been authorised.

Where a distribution is made at a time when the company did not, immediately after the distribution, satisfy the solvency test, it may be recovered by the company from the member, except to the extent that:

-     the member received the distribution in good faith and without knowledge of the company's failure to satisfy the solvency test;

-     the member has altered his position in reliance on the validity of the distribution; and

-     it would be unfair to require payment in full or at all.

Where a company has acquired its own shares, those shares will be immediately cancelled and the amount of the company's share capital reduced accordingly, unless as permitted by the company's constitution, the directors resolve to retain them as treasury shares.

For the purposes of Guernsey law, an acquisition of own shares will generally constitute a distribution for purposes of income tax unless, and to the extent that, it is a repayment of capital to the member or the amount of value of any new consideration given by the member for that distribution. A non-Guernsey tax-resident shareholder will not generally be subject to any Guernsey tax on receipt of a distribution arising from an acquisition by a Guernsey company of its own shares (save when they are held through a permanent establishment in Guernsey). 

The British Virgin Islands ("BVI") joined a global effort to establish an international standard for tax residence of entities doing business in a jurisdiction to avoid the Harmful Tax Practice of Base Erosion and Profit Shifting. The BVI (like many other offshore jurisdictions) put in place a law requiring certain entities which are tax resident in the BVI to demonstrate that they have sufficient 'economic substance' in the BVI to show they are a true tax resident if they carry out certain specified activities.

The law is The Economic Substance (Companies and Limited Partnerships) Act, 2018 (the "ES Law"). The Economic Substance Code (guidance) accompanies the ES Law.

The ES Law applied from 1 January 2019 to all newly formed entities that are in scope of the ES Law and from 30 June 2019 to entities formed prior to 1 January 2019 that are in scope.

Which entities are subject to the ES Law?

Any company (incorporated in the BVI or a foreign company registered under Part XI of the BVI Business Companies Act, 2004) or limited partnership (formed in the BVI or a foreign limited partnership registered under Part VI of the Limited Partnership Act, 2017) which is tax resident in the BVI and carries on any of the following "Relevant Activities" as a business (i.e. for profit and with regularity):

• banking business;
• insurance business;
• fund management business;
• finance and leasing business (which, among other activities, includes the provision of credit facilities);
• headquarters business;
• shipping business;
• holding company business (i.e. only pure equity holdings not holdings of another kind of asset e.g. real estate or bonds);
• intellectual property holding business; or
• distribution and service centre business (which, among other activities, includes the provision of services to foreign affiliates).

Definitions of each Relevant Activity are provided in the ES Law.

What do such entities need to show?

Entities subject to the ES Law must (subject to certain exceptions described below), in respect of their Relevant Activities:

• be directed and managed in the BVI;
• conduct Core Income Generating Activities in the BVI; and
• have adequate employees, expenditure and physical assets in the BVI.

When is a company 'directed and managed' in the BVI?

A company will be directed and managed in the BVI in an appropriate manner if:

• the board's members have adequate knowledge and expertise;
• it meets in the BVI with adequate frequency, having regard to the amount of decision making required (it is not expected that all or a majority of board meetings will be held in the BVI);
• a quorum is physically present at each board meeting in the BVI;
• strategic decisions of the company are made in those meetings with minutes recorded; and
• minutes and other records of the company are kept at the registered office in the BVI.

What are 'Core Income Generating Activities'?

Examples of Core Income Generating Activities ("CIGA") are provided in the ES Law for each of the Relevant Activities. The CIGA are considered to be the key essential and valuable activities that generate the income of the company and these activities must be carried out in the BVI.

However, non CIGA activity such as back office functions, expert professional advice or specialist services can be obtained elsewhere. A company can outsource its CIGA so long as it continues to monitor and control the outsourced activities.

Note also that not all CIGA have to be carried out in the BVI. On a case by case basis with reference to each individual entity it may be possible to satisfy the requirements of the ES Law conducting only some CIGA in the BVI.

How can I tell if an entity has adequate employees, expenditure and physical assets?
This needs to be assessed on a case by case basis depending on the activities of the entity and how its CIGA arises. Directors should consider these factors, make a determination in good faith and ensure there are records to demonstrate the basis and operation of that determination.

Note also that the ES Law does not require a company to incur more expenditure or engage more employees than it actually needs.

Are there any exceptions?

Entities which are tax resident outside of the BVI do not have to have, or report on, Economic Substance but do have to annually report and prove their tax residence.

Entities which carry on the following activities are subject to a slightly different regime:

• holding business: entities conduct holding business if they only own equitable interests or shares in other entities. If this is the case there is no requirement they be directed and managed in the BVI nor is there any requirement to carry out CIGA in the BVI. Adequate employees and premises are still required in the BVI but where the holding is passive in nature this may be satisfied by compliance with pre-existing statutory obligations (such as appointing a registered agent and having a registered address in the BVI);
• intellectual property holding business: entities which hold, exploit or derive income from intellectual property in a manner defined as "high risk" are automatically deemed non-compliant with the substance requirements unless they provide additional evidence of compliance.

How is compliance with the ES Law monitored?

Compliance with the ES Law is monitored and enforced by the BVI International Tax Authority. Entities subject to the ES Law are required, in respect of each financial period, to confirm to their registered agent whether or not they carry out any Relevant Activities and, if so, provide details of such activities. This information must be provided to the registered agent within 6 months of the end of the relevant financial period. Failure to comply with the ES Law will result in fines ranging from US$5,000 up to US$400,000 (applicable for IP companies after multiple infractions). The details of non-compliant companies will also be disclosed to the relevant foreign tax authorities.

Where can I find out more?

Please refer to Bedell Cristin's detailed economic substance briefings and 'top tips', available on our website, and contact any of our specialists if you would like more information or advice.

Choosing Jersey

With foundations available in a number of jurisdictions, it is important that families choose a location, and a form of foundation, which suit their requirements.

Factors in Jersey's favour are as follows:

• Experience, expertise and quality of service: Jersey's finance industry has developed over more than 50 years, and offers an extensive range of highly-respected services, together with a network of more than 13,000 professional advisers.
• Stability: The island offers political, economic and geographic stability at levels not often seen in other jurisdictions.
• Robust and highly-regarded regulatory regime: Jersey adheres to and is often an early adopter of global standards set by the United Kingdom, the European Union, the United States of America, and the Organization for Economic Co-operation and Development (OECD).
• Rule of law: Jersey has a well-respected judicial system, with adherence to the rule of law and ready access to the courts.
• Central time zone: With a central time zone, Jersey is accessible for families across the globe.
• Proximity to the UK: Jersey has several daily flight connections and a flying time to London of under an hour so that, for those with business interests or family connections in London or elsewhere in the UK, choosing the island makes logistical and practical sense.