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demerger regime Parslows International

Jersey Company | new demerger Regime

Following a period of consultation which closed early in the year, it is anticipated that the Companies (Demerger) (Jersey) Regulations will come into force later in 2018.

These regulations will introduce a new procedure for Jersey companies, allowing them to spin off or split up into two or more Jersey companies, with the original company’s property, rights and obligations being apportioned between them.

Will the demerger regime be available to all Jersey Companies?

Demerger will not be available to all Jersey companies.  Certain companies within Jersey’s regulated financial services sector will be excluded, and factors such as Jersey taxation status will preclude others from making use of the demerger provisions.

What will the demerger process be?

The process requires a demerger instrument which sets out the fundamental characteristics of the demerged companies following demerger.  Approval at board and shareholder level will be required, as will a confirmation of solvency from the board (a court sanctioned process will be available for insolvent companies).

Generally, a demerger will not require sanction by the Jersey courts.  It will however involve an application to Jersey’s Registrar of Companies and notification to Jersey’s tax authorities.

The regulations include measures aimed at protecting shareholders, creditors and employees.  Notice must be given to creditors and employees, and both shareholders and creditors are empowered to formally object to the demerger by way of a court application.  Continuity of employment is maintained by employment contracts being transferred to one of the demerged companies, subject to an employee’s right to object to the transfer.


It is anticipated that the new demerger rules will strengthen Jersey’s corporate law offering.  The ability to segregate a company’s business lines, assets and liabilities or effect a pre-sale restructuring utilising the new demerger process, (as an alternative to existing mechanisms such as a court sanctioned scheme of arrangement, liquidation or asset sale), will provide welcome flexibility and cost-efficiency.

If you require any further information, advice or assistance please contact Mason Birbeck

Corporate / M&A


Main Contact | Mason Birbeck

Corporate | Jersey

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