Tag: Jersey

Corporate Law, Cross Border & International Transactions

Migration Of Companies | Jersey | Parslows International

Migration of Companies | Brief Guidemigration of companies Jersey | Parslows International

The Companies (Jersey) Law 1991 (the “Companies Law”) includes provisions enabling:

A company incorporated in a foreign jurisdiction to move its place of incorporation to Jersey; or

A Jersey incorporated company to continue as a foreign incorporated company in that foreign jurisdiction.

The terms “continuance”, “migration” and “re-domiciliation” are used interchangeably but the Companies Law refers to the term “continuance”. However, for the purposes of this note we shall use the commonly used term “migration”.

Consent for either inward or outward migration is required from the Jersey Financial Services Commission (the “JFSC“), which provides regulatory oversight for financial services conducted in Jersey.

The key feature of a migration is that the migrating company can move its business (together with its place of incorporation) from one jurisdiction to another (assuming each place recognises the ability to migrate) and retain legal liability for all of its existing obligations without the need for complex and expensive business transfer assignments or novations of obligations. Furthermore, where migrations are recognised, there is no need to convey property into the name of the company that is seeking “continuance” because it continues to benefit from all ownership rights relating to its assets.

Companies may choose to migrate between jurisdictions for a variety of reasons e.g. to benefit from changing business opportunities, to achieve a more efficient cost base or to take advantage of more flexible regulation.

Migration of companies into Jersey

The application process for a foreign migration of companies  to migrate to Jersey is, so far as the Jersey side of the migration is concerned, a three-stage process and one that requires consent from the JFSC.

Pre-application

The first stage of the process principally involves the creation and approval of the “articles of continuance”.

The constitutional documents of the foreign company will generally not conform with the requirements of the Companies Law, therefore, company’s members must adopt amended constitutional documents that do so, these being the “articles of continuance”. These articles will take effect upon the company becoming incorporated as a Jersey company.

Other ancillary matters should be dealt with at this stage to avoid delay at a later stage, namely the administration arrangements for the company (it will need a registered office address in Jersey), the satisfaction of anti-money laundering issues and taxation advice, which should be taken to ensure that all relevant fiscal consequences are understood.

Application

The second stage of the process involves the application itself to the JFSC.

The relevant application form (form C100) can be downloaded from the Registry Section of the JFSC website. This form must be completed and submitted on behalf of the company to the JFSC with the requisite information and documentation including, inter alia:-

(i) the articles of continuance;

(ii) a statement of solvency signed by each director and each proposed director;

(iii) particulars of the directors and secretary;

(iv) confirmation from a lawyer qualified in the foreign jurisdiction on various issues regarding the foreign company;

(v) application fee payable to the JFSC (currently £500).

Post-Application

The JFSC will advise the Registrar of Jersey Companies (the “Registrar”) that the application has been granted. The Registrar will then issue the company with a Certificate of Continuance.

The potential of other regulatory requirements should also be considered, including the obtaining of a licence under the Regulation of Undertakings and Development (Jersey) Law 1973, if the company is intending to occupy floor space and employ staff in Jersey.

Migration of companies out of Jersey

As with a migration into Jersey, the process for a Jersey company to seek continuance overseas is also a staged process.

Shareholder approval

The company must first obtain shareholder approval of the migration. The members and each separate set of share classes must pass a special resolution (as defined in the Companies Law and the company’s articles of association) approving the migration.

Board of directors approval

The board of directors of the company must then hold a meeting at which it must approve:-

(i) the proposal to migrate;

(ii) the issuing of all notices to creditors (see below); and

(iii) the circulation of the special resolution.

Notice to creditors

A notice must be sent to all creditors as well as the publication of a Notice to Creditors in the Jersey Gazette informing them of the company’s intention to migrate and their right to object within 30 days. Only after 30 days following the sending of the last of the Notices to Creditors (assuming no objections are received from any creditors) can the application be made to the Registrar.

A second board meeting must then take place:

(i) Noting that a period of 30 days has passed following the passing of the special resolution and no members have objected to the migration;

(ii) Noting that a period of 30 days has passed since last notification to creditors and no creditor objection has been received (see above);

(iii) Noting that all local government consents have been obtained; and

(iv) Approving the final application to the Registrar for the migration from Jersey, including:

(a) a completed Form C101 (similar to the C100 Form);

(b) the Directors’ Declarations (see below).

Directors’ Declarations

Directors’ Declarations are required pursuant to the Companies Law confirming, inter alia, the solvency of the company and that no member objection has been received.

The Application

The company must then write to the JFSC enclosing all relevant application documentation including, inter alia:-

(i) Completed C101 Form with Minutes of the directors authorising the same;

(ii) A certified copy of the members’ special resolution;

(iii) Copy of Jersey Gazette extract showing the publication of the Notice to Creditors and the date of publication;

(iv) A certified copy of the audited financial statements of the company for the period ending 12 months within the date of the application (non-audited accounts may be accepted in certain circumstances);

(v) Originals of the Directors’ Declarations;

(vi) Affidavit of a lawyer authorised to practice in the foreign jurisdiction as to the ability of the company to seek continuance in that jurisdiction.

The JFSC will issue a conditional consent pending notification by the company to the Registrar of the date of issuance of the certificate of incorporation from the relevant registrar in the foreign jurisdiction along with the delivery of a copy of the same to the Registrar. Upon receipt by the Registrar of such certificate of incorporation the company shall cease to be incorporated under the Companies Law and the Registrar shall record that it has ceased to be so incorporated as of that date.

If you require any further information, advice or assistance please contact Mason Birbeck mason.birbeck@parslowsinternational.com

Company Migration | Jersey


Main Contact | Mason Birbeck

Head | Company Migration

 


 

Please note that the information provided on this website is for general information purposes only and is designed to provide you with an outline of the legal services we offer.  Whilst we endeavour to ensure our information is correct and useful, we make no representations or warranties regarding the accuracy or completeness of the information offered.  Information on our website does not constitute legal advice and Parslows International accepts no liability for any loss or damage arising out of, or in connection with, the information found in this website.  Please consult a lawyer in the event that you require professional assurance that our information, and your interpretation of the same, is correct. 
Corporate Law

Joint Venture Agreements | Core Aspects

Joint Venture Parslows InternationalJoint Venture Agreements | Core Aspects

Finding the right “Joint Venture” partner can open up new markets and distribution networks, and combining distinct skills and resources of separate but complimentary businesses should make achieving common objectives easier.  As compared to going it alone, a joint venture eases the level of resource commitment (financial or otherwise) of each joint venture party.

However, it is by no means free from potentially fundamental difficulties.  The set-up and operation of a separate joint venture vehicle often means additional cost in both monetary terms and human resource.  If contributions are not purely monetary there may be disagreement as to the value each party brings to the arrangement and, in turn, expectations as to control and financial return.

Most often, joint venture parties will be separate businesses with separate leadership, used to autonomy in decision making.  That can also create tensions as to the division of control in relation to their joint enterprise.  If those originating businesses operate in the same space then competing interests can also mean frictions arise.

A joint venture agreement will not resolve such commercial issues.  It can however bring into focus the parties’ respective expectations, and identify and address potential problems at an early stage, which may create more fundamental difficulties further down the line, when less easily resolved.

Having determined that operating through a separate jointly owned company is the right model, what should the respective holders ensure that the agreement governing the venture will cover?  Unsurprisingly, such an agreement will to an extent need to be tailored to the particular circumstances of the parties and their business, but there are common aspects one would expect to be included.

Identifying the exact nature and scope of the new undertaking’s activities is fundamental.  The term of the agreement should also be set out – is the venture to be finite to achieve a specific project within a given timeframe, or endure for the longer term?  Expectations as to turnover, and any geographical limitations (e.g. excluding territories in which one shareholder already operates) should also be incorporated.

The agreement should identify the contributions to the venture which the respective parties are obliged to provide and, if the joint venture is to be financed, how that financing will be serviced.  If the parties’ contributions by their nature create associated legal relationships, such as the licensing of intellectual property rights or the secondment of employees, the terms of those relationships should be clearly set out, possibly by way of separate stand-alone agreements.

The respective shareholders’ powers and in turn the levels of control can be a key area of friction.  If the equity in the business is not to be divided equally, shareholders with smaller interests will invariably seek minority protections, giving them a veto on critical decisions, such as the issue of further shares or acquisition and disposal of major assets.

If the essential nature of the respective shareholders’ ongoing commitments, financial returns or voting rights are not to be identical, then it may well be that having separate classes of shares will deal with that most effectively.

Balance of power is not an issue confined to shareholder level.  The directors will be the company’s governing mind, so each joint venture party will often want the ability to nominate a representative to the board, and to ensure the board meeting quorum and voting rights are structured so as to achieve the agreed balance of board level decision making powers.

Unrealistic profit expectation is another common cause of discord.  The understandable desire to expedite returns on investment may need to be tempered by the need to meet financing obligations or to reinvest into the business.  Joint venture partners must therefore understand their respective financial needs, and care should be taken before deciding to record in the shareholders agreement a commitment to fixed dividends.

The agreement should also address how and when shareholders will be able to exit the joint venture, and in what circumstances the venture should terminate, as well as the consequences of termination.  Those might include forced buy-sell mechanisms aimed at achieving a speedy determination of share value if deadlock arises on exit from the venture.  The parties will also want certain provisions of the agreement to survive termination, for example, confidentiality and non-compete / non-solicitation clauses.

The above is by no means an exhaustive summary of the provisions which a joint venture agreement might cover. Issues such as tax, dispute resolution mechanisms and employment matters may well have to be catered for.  However, this provides a flavour of the type of provisions that, if included, should produce an agreement creating a solid foundation for the sound operation of a joint venture.

If you require any further information, advice or assistance please contact our head of  Corporate/ M&A,  David Hill at david.hill@parslowsinternational.com

Corporate / M&A


Main Contact|  David Hill

Head | Cross Border & International Transactions, Corporate/M&A


Please note that the information provided on this website is for general information purposes only and is designed to provide you with an outline of the legal services we offer.  Whilst we endeavour to ensure our information is correct and useful, we make no representations or warranties regarding the accuracy or completeness of the information offered.  Information on our website does not constitute legal advice and Parslows accepts no liability for any loss or damage arising out of, or in connection with, the information found in this website.  Please consult a lawyer in the event that you require professional assurance that our information, and your interpretation of the same, is correct. 

Trust Foundations & Private Client

In what circumstances should a Trustee refuse to recognise the appointment of new Trustees?

appointment of new trustees Parslows International Appointment of new Trustees | In what circumstances should a Trustee refuse to recognise the appointment?

The question of refusal to recognise the appointment of new trustees  was explored in the case of WTHK Limited and Valentin NZ Limited -v- UBS Trustees (Jsy) Ltd [2016] JRC 099.  This case is unique in terms of its fact specific nature; however it still provides a useful insight into the view that Jersey courts might take if a Trustee refused to recognise the appointment of new trustees.

The Commissioner, sitting alone, was considering an application by the Representors for a declaration that: (i) They had been validly appointed as additional trustees of four trusts, in circumstances where the existing professional Trustee was refusing to recognise their appointment of new trustees and (ii) If the appointment was indeed valid, whether as a majority, the Representors were validly empowered to issue certain instructions to agents of the trustees in connection with assets of the trusts and also to terminate the trustees’ contractual arrangements with those agents if necessary.

Pursuant to the trust deeds, every decision, resolution or exercise of a power or discretion by the trustees will be validly made if it is made by a majority of the trustees. This also applied to the execution of a decision.

The factual background is relatively complex, however in so far as it is relevant to this commentary, a summary is as follows. Criminal investigations had taken place in Milan concerning the actions of the settlor and others, whereby it was suggested that the shares in a company called Ilva and other companies were sold at below market value to companies under the control, inter alia, of the settlor, with the proceeds of the re-sale of those shares being settled on the terms of the Trust in question.  The trust assets were therefore frozen. No charges had, at the time of this court case, been brought. If however, a prosecution and conviction follows in the future, it may result in the assets being confiscated. If on the other hand no prosecution follows or if there is an acquittal, the freezing order would have to be lifted.

Completely separately, in Taranto, charges were brought against the settlor and other senior executives of the company called Ilva, in respect of alleged environmental offences. Ilva owned one of the largest steelworks in Europe. The Italian authorities passed legislation in January 2015, which provides that the trust assets must be applied to purchase bonds Ilva used to remedy the alleged environmental deficiencies. Ilva is actually now bankrupt and therefore the bonds are likely to be worthless in reality.

The beneficiaries and the protectors of the trust wished to ensure that the trust assets were not remitted to Italy. They wanted instead to maintain the status quo, which was that the trust assets were in Switzerland subject to a freezing order, hence one of the reasons why the Representors had been appointed as the new Trustees, in circumstances where they would form a majority for decision making purposes.

The Commissioner appeared to be sympathetic to the position of the Representors and agreed with an observation previously made in connection with this case that the effect of the legislation, on the face of it at least, appeared to be a breach of the European Convention on Human Rights.

The existing Trustee was UBS Trustees (“UBS”). UBS had a suspicion that the assets of the Trusts may be the proceeds of crime, based on the factual background and criminal investigations and therefore the UBS Trustees were not willing to act on any instructions given by the Representors to transfer assets into the control of all three Trustees because that would have enabled them to have been dealt with thereafter by a majority and therefore without the consent of the JFCU. (The JFCU had by then specifically declined to consent to UBS Trustees doing any act which would facilitate the movement of transfer of control of the assets from the UBS Trustees and therefore in effect, the JFCU supported the position of UBS). The concern was that any consent on the part of UBS might amount to an offence under the Proceeds of Crime (Jersey) Law 1999.

UBS had also raised the issue that it had insufficient information as to the suitability of the Representors to act as Co-Trustees. Following receipt of further information in the affidavits in support (regarding appointment of new trustees) of the Representors however, UBS agreed that the Representors were suitable, at least in principal. The Commissioner made it clear that he agreed with this assessment. WTHK Limited is a company that provides trustee corporate and fiduciary services “across the globe”. The Commissioner also agreed that in the circumstances, it had been reasonable for UBS to make enquiries as to the suitability of the Representors regarding the appointment of new trustees.

The second aspect of the application in relation to appointment of trustees was this question: whether the fact of issuing the Revocation Instruction or terminating the fiduciary agreements would constitute an offence under the 1999 law (assuming always that the assets transpired to be the proceeds of criminal conduct). The offences concerned would have been under Article 29 and 30 of the Proceeds of Crime (Jersey) Law 1999.

The Court received conflicting submissions as to whether the issuing of the Revocation instructions of terminating the fiduciary agreements would amount to an offence under Article 30 (1) and (3). The Prosecution argued that it would, but a particular difficulty for any prosecution in this type of case is that it is arguable that all the relevant acts by the Representors took place outside Jersey. If that were found to be so, there would be no jurisdiction to try any offence in Jersey. The lawyer for the Representors argued that no offence would be committed.

The Court did not make a finding because in the judgement of the Commissioner it would be wholly inappropriate for the court to make a determination. This was because the court was operating as a civil court in what would be a criminal case. It was also considering the issue of future conduct, although there was a suggestion that it in fact covered past conduct as well, because the Representors had already given their instructions. The danger with this Court granting a declaration that the Representors are validly empowered to issue the instructions, is that that may well carry with it the implication that this is lawful conduct when in fact it had not been decided upon by a criminal court. For that reason, the Commissioner agreed to issue a declaration which was more limited in effect.

The Commissioner declared the appointment of the Representors as valid. He also declared that under Jersey law and the terms of the Trusts, the Trustees are permitted to act by a majority decision, including in relation to the nominees and or agents. Lastly, he declared that the implementation of any decision, whether by all or a majority, is a matter subject to the terms of and law applicable to any relevant contract and any other applicable law.

As an aside, the Commissioner expressed a view that ordinary conduct (and genuine settlement) by the Trustees or others, of litigation to determine the rights and liabilities of the parties in relation to the proceeds of crime does not constitute an offence under Article 30 or any other money laundering provision and it is therefore open to the Representors and/or UBS to participate in litigation in Jersey.

The Commissioner also expressed a view that entering the names of the current Trustees on the memorandum, in accordance with Clause 15(7) could not amount to an offence under Article 30 either. He considered that the JFCU had therefore exceeded its power by informing UBS Trustees that it did not consent to them doing this.

For further information on appointment of new trustees or other trust issues please contact Mason Birbeck on 00 44 1534 630530 or email mason.birbeck@parslowsinternational.com

 

Trusts, Foundations & Private Wealth


Main Contact: Mason Birbeck

Head | Trusts & Private Wealth

 


Please note that the information provided on this website is for general information purposes only and is designed to provide you with an outline of the legal services we offer.  Whilst we endeavour to ensure our information is correct and useful, we make no representations or warranties regarding the accuracy or completeness of the information offered.  Information on our website does not constitute legal advice and Parslows International accepts no liability for any loss or damage arising out of, or in connection with, the information found in this website.  Please consult a lawyer in the event that you require professional assurance that our information, and your interpretation of the same, is correct. 
Trust Foundations & Private Client

Jersey Foundations – A brief introduction | Jersey Foundations | Parslows International

Jersey Foundations Parslows International

Jersey Foundations | a brief introduction

1. Incorporation

Jersey foundations (like a company but unlike a trust) come into existence following the completion of an incorporation process, and an entry made by the Jersey Companies Registrar in Jersey’s register of foundations.  This a matter of public record and conclusive evidence that a foundation has been incorporated and that the requirements of the Foundations (Jersey) Law 2009 in that regard have been complied with.

2. Essential characteristics

Jersey Foundations have their own separate legal personality and is therefore able to hold assets, contract with third parties and sue and be sued in its own name and capacity.  However, unlike a company it has no shareholders.  It is therefore an orphan vehicle.

Jersey Foundations can have an infinite duration.  It is not subject to the ultra vires doctrine and so has unlimited capacity and is therefore able to carry out all the functions a corporate body could, save that it cannot directly acquire, hold or dispose of immovable property in Jersey nor can it directly engage in commercial trading other than that which is incidental to the attainment of its objects.

3. Council

Jersey foundations have a council, which is similar to the board of directors of a company.  The council must have a qualified member (a person licensed by Jersey’s financial services regulator).  The function of the council is to administer the foundation’s assets and to carry out its objects.  The identity of the council members, other than the qualified member, is not a matter of public record.

4. Founder

The founder is the person who instructs the qualified person to apply for the incorporation of a foundation.  The Foundations (Jersey) Law 2009 provides that the endowment of a foundation by a person will not make that person a founder or confer founder’s rights upon that person, unless the regulations of the foundation in question provide otherwise.

The founder can be given such rights (if any) as are provided by the charter and regulations and, if permitted by the charter or regulations, those rights can be assigned to other persons.  Where the current holder of such rights (including the founder) dies or ceases to exist, the rights will vest in the guardian unless the charter or regulations provide otherwise.  There are no restrictions on the rights a founder can be given and if required these could be assigned to a committee that would act like a supervisory board.

5. Guardian

All Jersey foundations are required to have a guardian.  The guardian cannot be a member of the council unless also a founder or the qualified member of the council.  The guardian’s duty is to take such steps as are reasonable in all the circumstances to ensure that the council carries out its functions.  The guardian could comprise one or more persons or could be a corporate body.  The identity of the guardian is not a matter of public record.

6. Beneficiaries/Objects

A foundation may, but need not, have beneficiaries and may be established solely for a particular purpose or particular purposes.  For example, a Jersey Foundation could be set up purely to hold the shares in a holding company.  The objects of the foundation can be charitable or non-charitable or both.  Moreover, the objects can be to benefit a person or class of persons or to carry out any specified purpose, or a combination.

Where there are beneficiaries of the foundation, they have no interest in the assets of the foundation and are not owed any fiduciary or analogous duty by the foundation or by the members of the council, the guardian or any other person appointed under the regulations.

However, if a beneficiary becomes entitled to receive a benefit from the foundation but does not receive the same, the beneficiary can apply to the Royal Court of Jersey for the foundation to be ordered to provide the benefit.

Unless required by the charter or regulations, a foundation is not obliged to provide any beneficiary with information relating to the administration, assets or the carrying out of the objects of the foundation.

7. Charter and Regulations

The constitutional documents of a foundation comprise its charter and regulations (every foundation must have regulations, unless all of its governing provisions are contained in its charter).  The Regulations are a private document and do not have to be filed with the Jersey Companies Registrar.

8. Powers of the Royal Court

The Foundations (Jersey) Law 2009 vests power in the Royal Court to amend the charter and regulations and to give directions regarding the foundation (e.g. as to interpretation of its charter and regulations, the functions of its council, and the manner in which the council is required to carry out the foundation’s objects).

Seeking further advice?

For further information on establishing a Jersey foundation contact our head of department,  Mason Birbeck on +44 (0)1534 630530 or email mason.birbeck@parslowsinternational.com


Main Contact | Mason Birbeck

Head | Trusts, Foundations & Private Wealth

Jersey Foundation Guide | Jersey Foundations | Parslows International


Please note that the information provided on this website is for general information purposes only and is designed to provide you with an outline of the legal services we offer.  Whilst we endeavour to ensure our information is correct and useful, we make no representations or warranties regarding the accuracy or completeness of the information offered.  Information on our website does not constitute legal advice and Parslows International accepts no liability for any loss or damage arising out of, or in connection with, the information found in this website.  Please consult a lawyer in the event that you require professional assurance that our information, and your interpretation of the same, is correct. 
Trust Foundations & Private Client

Pensions | Jersey | Are Qrops Staging a Comeback? | Parslows International

Pensions | Jersey | Are Qrops Staging a Comeback?

In 2014, the UK government announced reforms that were described by some as a pensions ‘revolution’. Those reforms introduced ‘flexible drawdown’, relaxing long-standing restrictions on how, and from what age, pension savers could access their pension pots – meaning that retirees would no longer be forced to buy an annuity to fund their pensions which, in depressed economic times, often produced relatively poor returns for a lifetime’s saving.

The first phase of ‘flexible drawdown’ saw a reduction in size of the pension pot a retiree with a defined contribution pension needed before being entitled to draw a lump sum proportion. A year on, the 2015 UK budget saw the abolition of restrictions on what proportion could be taken as a lump sum, and, as an alternative to the annuity option, the choice of a freely accessible drawdown contract.

While not so fundamental, Jersey has seen similar reforms to its domestic pensions regime. Jersey’s pensions legislation is principally built into its primary tax legislation, the Income Tax (Jersey) Law 1961. In September 2014, an amendment to that law was passed paving the way for implementation of, among other pension-based reforms, the following changes:

  • The existing 30 per cent limit on tax-free lump sum withdrawals was retained – pensioners, however, have been given greater flexibility in the number of tranches by which that 30 per cent lump sum entitlement may be drawn.
  • The requirement that a person of retirement age retires before drawing a pension no longer applies.
  • And pension savers are now allowed to enter into a drawdown contract – attractive to those not wishing to secure their pension by way of an annuity – even if they have already received a tax-free lump sum from their pre-existing occupational pension scheme.

Crossing borders

As well as introducing domestic reforms, the amendment to Jersey’s tax legislation opened opportunities for Jersey’s international pensions offering, particularly in relation to Qualifying Recognised Overseas Pension Schemes (QROPS).

The UK’s QROPS regime enables accrued benefits in a UK pension to be transferred to a non-UK based scheme – where a UK employee is moving overseas, for example – without losing the tax breaks which HMRC affords to UK-registered pension plans. For a QROPS scheme to be ‘recognised’ it has to meet certain criteria laid down by HMRC.

Other international finance jurisdictions, Guernsey included, stole a march on Jersey with regard to accessing the ‘third-country QROPS’ market. In response, Jersey QROPS legislation was lodged for approval by the States in 2012. However, events intervened, as, around the same time, and in response to what it perceived as abuse of the QROPS regime, HMRC de-listed a swathe of self-certified QROPS schemes established in various jurisdictions, including Guernsey.

The third-country QROPS market survived nonetheless, and these latest amendments to Jersey’s pensions law may provide a shot in the arm for Jersey’s own QROPS offering.

The UK rules do not require a QROPS to be established in an individual’s new country of residence – so a QROP established in, say, Guernsey, could be used by a person moving from the UK to the other side of the world. Historically, however, Jersey QROPS were only permitted for Jersey residents. The recent changes to pensions law now allow Jersey residents to transfer their pensions to ‘equivalent’ schemes in other jurisdictions. A corollary to that is the ability for local service providers to now offer Jersey QROPS to non-Jersey residents, removing a significant impediment to promotion of Jersey as a QROPS-friendly jurisdiction.

The recent introduction of flexible drawdown in the UK from April 2015 also has implications for QROPS offerings in Jersey and elsewhere. Whether that will be positive is unclear. It remains somewhat uncertain whether or not HMRC’s principle that overseas scheme rules should mirror those in the UK will mean that QROPS will have to afford flexible drawdown with a similar age cap on accessing pension funds. For a number of jurisdictions offering QROPS, this would mean raising the current age limit provided for by their own legislation.

Certain jurisdictions, such as Malta, have already made legislative moves to align their pension regimes with those changes to the UK rules, and it may be that Jersey will have to follow suit.

Contact: Mason Birbeck

Please note that the information provided on this website is for general information purposes only and is designed to provide you with an outline of the legal services we offer.  Whilst we endeavour to ensure our information is correct and useful, we make no representations or warranties regarding the accuracy or completeness of the information offered.  Information on our website does not constitute legal advice and Parslows accepts no liability for any loss or damage arising out of, or in connection with, the information found in this website.  Please consult a lawyer in the event that you require professional assurance that our information, and your interpretation of the same, is correct. 

Commercial Property

Commercial Leases in Jersey – A brief guide

Commercial Leases in Jersey Parslows InternationalCommercial Leases in Jersey – a brief guide

While the terminology may seem quite familiar for real estate practitioners in other jurisdictions the legal effects in relation to Commercial leases in Jersey can be very different and assumption should not be made.

Term of lease

Commercial leases in Jersey for a term in excess of nine years must be passed before the Royal Court of Jersey on a Friday afternoon.

A commercial lease with a term of nine years or less may be dealt with without of the formality of attending the Royal Court.  These can be completed on any day by the parties executing the lease document itself.

Security of tenure

Jersey has no equivalent to the Landlord and Tenant Act 1954 relating to a prima facie right to remain in commercial premises after the expiry of a lease. A landlord holding Jersey property should however note that, under Jersey law, if a tenant remains in occupation after expiry of the term and rent continues to be accepted rent, a new tenancy may be deemed to arise on identical terms, save as to guarantors.

Assignment

Unless the lease expressly provides otherwise, a tenant may not assign a lease without the consent of the Landlord. Jersey has no equivalent protection such as the English Section 19 of the Landlord and Tenant Act 1927, which implies that a landlord must act reasonably.

Breach or termination

Jersey has no concept of forfeiture of leases.  There is no equivalent of the Law of Property Act 1925 section 146 procedures. The Landlord is likely to have the right to cancel the lease on specified grounds if the Tenant is in breach, subject to obtaining an appropriate court order. There is no provision for “relief” from cancellation. If both parties wish to terminate the lease, they can enter into a contract of cancellation on agreed terms.

Tax

Goods and Services Tax (‘GST’) may be payable on Commercial Leases.  This is currently 5% on rental. There are exceptions to this. International Service Entities such as Banks, trust companies and other financial institutions who have been granted such an exemption will not incur GST.

Non-resident landlords are taxed at a rate of 20% on rental income derived from Jersey property.

Stamp duty on leases is payable if the term of the lease exceeds nine years.

There is no capital gains tax in Jersey.

If you require any further information, advice or assistance please contact our head of Commercial Property Carl Parslow at carl.parslow@parslowsinternational.com

 

Commercial Property

Main Contact | Carl Parslow

Head | Commercial Property 


Please note that the information provided on this website is for general information purposes only and is designed to provide you with an outline of the legal services we offer.  Whilst we endeavour to ensure our information is correct and useful, we make no representations or warranties regarding the accuracy or completeness of the information offered.  Information on our website does not constitute legal advice and Parslows International accepts no liability for any loss or damage arising out of, or in connection with, the information found in this website.  Please consult a lawyer in the event that you require professional assurance that our information, and your interpretation of the same, is correct. 
Corporate Law

Framework for Successful Joint Venture Company

Successful Joint Venture CompanyFramework for Successful Joint Venture Company

Successful Joint Venture Company – There are various statistics bandied about as to the success rate for joint ventures.  A fairly conservative consensus puts that at around 40%.  So why do many businesses still choose to embark on joint ventures?

Having the right ‘JV’ partner can open up new markets and distribution networks, and logic dictates that combining distinct skills and resources of separate but complimentary businesses should make achieving common objectives easier.  As compared to going it alone, a joint venture eases the level of resource commitment (financial or otherwise) of each joint venture party.

What then are the factors that contribute to that statistical failure rate?  Establishing and running a separate joint venture vehicle often means additional cost in both monetary terms and human resources.  If contributions are not purely monetary there may be disagreement as to the value each party brings to the arrangement and, in turn, expectations as to control and financial return. This can impact on a successful joint venture company.

Inherently, a joint venture has as its origin separate businesses with separate leadership, used to autonomy in decision making.  That can also create tensions as to the division of control in relation to their joint enterprise.  If those originating businesses operate in the same space then competing interests can also come into play.

A joint venture agreement will not be a panacea for commercial issues such as those.  It can however set the framework identifying to each of the parties the others’ expectations, and bring into focus potential problems at the establishment stage, which they may otherwise come up against further down the line, when less easily resolved.

So, if, as a prospective joint venture partner, you have concluded due diligence on your proposed confederate(s) and determined that a separate company is the right model for a successful Joint Venture Company, what exactly should the agreement governing the venture cover?  While such a shareholders agreement will to an extent be bespoke to the particular circumstances, there are common aspects one would expect to be included.

Purpose and objectives

For obvious reasons, identifying the exact nature and scope of the new undertaking’s activities is fundamental.  The term of the agreement should be set out – is the venture to be finite to achieve a specific project within a given timeframe, or endure for the longer term?  Expectations as to turnover, and any geographical limitations (e.g. excluding territories in which a shareholder already operates) should also be incorporated.

Contributions and financing

The agreement should state the parties’ initial contributions, and any future commitments they are bound to provide.  Those might include, for example, cash, assets, facilities or intellectual property.  If, by their nature, the contributions create associated legal relationships, (e.g. the licensing of intellectual property rights or the secondment of employees), the terms of those relationships should also be stated, possibly by way of separate stand-alone agreement.

If secured third party financing is to be obtained then one should anticipate recording the requirement for charges over company’s assets and, potentially, secured guarantees from the shareholders, which, to one degree or another, would undermine the effectiveness of using a limited liability company to ring-fence the risk of the venture.

Control

Identified as one of the key areas of friction, it is critical that the agreement identifies the respective shareholders’ powers.  If the equity in the business is not to be divided equally, shareholders with smaller interests will often insist on minority protections, giving them a veto on critical decisions, such as the issue of further shares or acquisition / disposal of major assets.

If the essential nature of the respective shareholders’ ongoing commitments, financial returns or voting rights are not to be identical, then it may well be that having separate classes of shares will deal with that most effectively.

Balance of power is not an issue confined to shareholder level.  The directors will be the company’s governing mind, so the joint venture parties will invariably want the ability to appoint a representative to the board, and to ensure the board meeting quorum and voting rights are structured so as to achieve the agreed balance of board level decision making powers.

Financial return

Unrealistic profit expectation is another common cause of discord.  The desire for a speedy return on investment may need to be tempered by the need to meet third party financing obligations or to reinvest into the business.  Accordingly, care should be taken before deciding to record in the shareholders agreement a commitment to fixed dividends.

Exit

The agreement should also address how a shareholder will be able to exit the joint venture, and in what circumstances the venture should terminate, as well as the consequences of termination.  Those might include forced buy-sell mechanisms aimed at achieving a speedy determination of share value if deadlock arises on exit from the venture.  The parties will also want certain provisions of the agreement to survive termination, for example confidentiality and non-compete / non-solicitation clauses.

The above is by no means an exhaustive summary of the provisions which a joint venture shareholders agreement might cover.  Among others, issues such as tax, dispute resolution mechanisms and employment matters may well have to be catered for.  However, this provides a flavour of the type of provisions that, if included, should produce an agreement providing a solid foundation for the sound operation of a joint venture.

If you require any further information, advice or assistance in relation to Successful Joint Venture Company or any other advice on corporate law please contact Mason Birbeck at mason.birbeck@parslowsinternational.com

Corporate / M&A


Main Contact|  David Hill

Head |  Corporate/M&A


Please note that the information provided on this website is for general information purposes only and is designed to provide you with an outline of the legal services we offer.  Whilst we endeavour to ensure our information is correct and useful, we make no representations or warranties regarding the accuracy or completeness of the information offered.  Information on our website does not constitute legal advice and Parslows Jersey accepts no liability for any loss or damage arising out of, or in connection with, the information found in this website.  Please consult a lawyer in the event that you require professional assurance that our information, and your interpretation of the same, is correct. 

Trust Foundations & Private Client

Trusts Amendment No 6 Jersey Law 2013

trusts amendment no 6Trusts amendment no 6 Jersey Law 2013

The Trusts amendment no 6 Jersey Law 2013 came into force on 25 October 2013 to amend Article 47 of The Trusts (Jersey) Law 1984 so that it now provides a statutory basis for the Royal Court of Jersey to provide discretionary relief to beneficiaries who find themselves materially prejudiced by a trustee’s decision.  The ability to grant relief in these circumstances is commonly known as the Hastings-Bass principle, which has previously been exercised by the Royal Court, with the parameters of the relief having been developed through case law.

Fault on the part of the fiduciary does not have to be shown. The amendment has retrospective effect.

The amended Article 47 (Trusts amendment no 6 Jersey Law 2013) sets out 4 situations concerning Jersey Law Trusts, the first two of which concern transfers into trust and the second two concerning the exercise of powers in regard to an existing trust:

Article 47E – Power to set aside a transfer or disposition of property to a trust due to mistake.

Where a transfer or other disposition of property to a trust has been made by a settlor or another person exercising a power, and the settlor or other person made a mistake in relation to the transfer/disposition and would not have made it but for that mistake, and the mistake is so serious to render it is just for the court to make a declaration then the court may declare the transfer or disposition is voidable and has such effect as the court may determine or is of no effect from the time of its exercise.

Article 47F – Power to set aside a transfer or disposition of property to a trust exercised by fiduciary power.

Where a transfer or other disposition of property to a trust has been made by a settlor or through a person exercising a power to transfer or to make other disposition of property to a trust on behalf of the settlor, and that person owes a fiduciary duty in relation to the exercise of that power, but failed to take into account any relevant considerations or took into account irrelevant considerations, and would not have exercised the power, or would not have exercised the power in the way it was exercised but for the failure, then the Court may order that the exercise of the power is voidable and has such effect as the Court may determine or is of no effect from the time of its exercise.

Article 47G – Power to set aside the exercise of powers in relation to a trust or trust property due to mistake.

Where a power has been exercised by a person other than in the capacity of a trustee in relation to a trust or trust property, but the person made a mistake in relation to such exercise of power, and would not have exercised the power, or not in the way in which it was exercised, but for that mistake, and the mistake is of so serious a character to render it just for the court to make a declaration, then the Court may order that the exercise of the power is voidable and has such effect as the Court may determine or is of no effect from the time of its exercise.

Article 47H – Power to set aside the exercise of fiduciary powers in relation to a trust or trust property.

Where a power has been exercised by a person other than in the capacity of a trustee in relation to a trust or trust property and the person owes a fiduciary duty to a beneficiary in relation to the exercise of the power, and failed to take into account any relevant considerations or took into account irrelevant considerations, and would not have exercised the power, or not in the way in which it was exercised, but for such failure, then the Court may order the exercise of power is voidable and that it has such effect as the Court may determine or is of no effect from the time of its exercise.

The above is intended to provide a general overview of the amendment, and specific advice should always be sought in relation to The Trusts (Jersey) Law 1984 and The Trusts (Amendment No.6) (Jersey) Law 2013.

For further information contact Mason Birbeck on 00 44 1534 630530 or email mason.birbeck@parslowsinternational.com

Trusts, Foundations & Private Wealth


Main Contact: Mason Birbeck

Head | Trusts & Private Wealth


Please note that the information provided on this website is for general information purposes only and is designed to provide you with an outline of the legal services we offer.  Whilst we endeavour to ensure our information is correct and useful, we make no representations or warranties regarding the accuracy or completeness of the information offered.  Information on our website does not constitute legal advice and Parslows International accepts no liability for any loss or damage arising out of, or in connection with, the information found in this website.  Please consult a lawyer in the event that you require professional assurance that our information, and your interpretation of the same, is correct. 
Commercial Property

Jersey Commercial Property – Goods and Service Tax (GST)

commercial lease rental GSTCommercial lease rental GST – Overview

The Goods and Services (Jersey) Law 2007 specifies that commercial lease rental payable under leases of commercial premises attracts commercial lease rental GST charge.  This is presently 5%.

Landlords are liable for GST on taxable turnover of over £300.00 per annum (at present) in relation to commercial lease rental.   In such cases the Landlord will be obliged to pay GST on the rent received.

The only exception is where the Tenant is an International Services Entity (ISE). In such cases GST remains zero-rated on the rent. A non-ISE taxable Landlord should ask for a copy of the Tenant’s ISE certificate to ensure that it is not required to pay GST to and is not an (ISE))

Whose liability?

In all commercial leases the Landlord should include a clause which allows the Landlord to recover any commercial lease rental GST payable on the rent (and other payments) from the Tenant. If such a provision is not included, then the Landlord has no right to recover the GST from the Tenant.

Even if the Tenant is an ISE, the landlord would be advised to include a recoverability provision as on assignment a new tenant may not be an ISE.  A non-ISE tenant (if GST registered itself) should be able to offset any GST it pays on the rent against the GST it is charging for its goods or services.

If you require any further information, advice or assistance please contact our head of Commercial Property Carl Parslow at carl.parslow@parslowsinternational.com

Commercial Property

Main Contact | Carl Parslow

Head | Commercial Property 


Please note that the information provided on this website is for general information purposes only and is designed to provide you with an outline of the legal services we offer.  Whilst we endeavour to ensure our information is correct and useful, we make no representations or warranties regarding the accuracy or completeness of the information offered.  Information on our website does not constitute legal advice and Parslows International accepts no liability for any loss or damage arising out of, or in connection with, the information found in this website.  Please consult a lawyer in the event that you require professional assurance that our information, and your interpretation of the same, is correct.