Consideration of the Limited Liability Companies (Jersey) Law
On 21 May 2018, the Limited Liability Companies (Jersey) Law 201- (LLC Law) was formally presented to Jersey’s government for its consideration and approval.
LLC Law will continue Jersey’s trend of introducing innovative financial services vehicles
If adopted, the LLC Law will continue Jersey’s trend of introducing innovative financial services vehicles. It follows on from legislation introduced in 2009 creating the Jersey foundation, a company / trust hybrid, aimed at providing clients based in civil law jurisdictions (Europe, South America and the Far East) with an alternative, more familiar, wealth planning vehicle to the Jersey trust. Other recent innovations in Jersey’s financial services-focused legislation include amendments to the Trusts (Jersey) Law 1984 and the adoption of the Limited Liability Partnership (Jersey) Law 2017.
Once in force, the LLC Law will bring into being the Jersey limited liability company (Jersey LLC). Another hybrid entity, the Jersey LLC has been described as sharing some features of a company and others akin to a statutory partnership. As such, it will have separate legal personality but without being classified as a body corporate.
Its proponents’ focus is across the Atlantic. It is anticipated that introducing an entity which is identifiable with the ubiquitous vehicle of choice for a wide range of activities in the United States will further encourage the current growth in Jersey’s U.S. source business.
A Jersey LLC will be governed by an “LLC agreement” operating within the overarching legal framework set out in the LLC Law. The LLC agreement will be legally binding on the LLC itself, each of its members and its managers. Appointment of a manager to manage the LLC would be optional, with the extent of the manager’s powers determined by the LLC agreement.
A Jersey LLC would have one or more members, and absent appointment of a manager, would be managed by its members, who would each have an “LLC Interest” – an interest in the LLC’s profits / losses, rights to distributions and whatever other rights / obligations are provided for in the LLC agreement.
Designed to be a transparent entity for tax purposes, and emulating the flexibility of its U.S. counterpart (the Jersey LLC will be capable of creating designated series), it is anticipated that the addition of this vehicle to Jersey’s existing financial services offering will have appeal not just in the U.S., but globally.
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