Over the past year, there has been an increasing trend towards migration of companies, both in and out of Jersey. Movement is more active than ever and Pinel Advocates is well-placed to assist, both with the Jersey law elements and the foreign legal advice, through our network of trusted advisors. We work particularly regularly with lawyers in the BVI, Guernsey and the Isle of Man.
What is Migration?
Migration is the process by which a company changes its place of incorporation from one legal jurisdiction to another.
The Companies (Jersey) Law 1991, as amended, (the “Law”) details the process for a company migration in order to become either incorporated in Jersey if the company was previously based in a different jurisdiction or, if formerly a Jersey company, cease to be incorporated in Jersey and become incorporated in a new jurisdiction if the laws of the proposed jurisdiction allow.
Migration, referred to in the Law as ‘continuance’, is a possibility for any solvent incorporated company, provided that the laws of the jurisdiction of their incorporation allows such companies to migrate. Companies are not eligible to migrate to Jersey if they are in the process of a winding-up or liquidation, are insolvent, have had an administrator (or equivalent) appointed in respect of any property, have entered into an ongoing arrangement with a creditor that is unapproved by the Jersey Financial Services Commission (‘JFSC’), or have a pending application before the court regarding any of the above.
In certain cases, migration is a cost effective way in which businesses can move from one jurisdiction to another. This is because legal liability for all former contractual obligations will be transferred to the new jurisdiction without the need for complex or costly arrangements. Companies often migrate to Jersey to take advantage of efficient, cost effective regulation, optimal business conditions and favorable costs.
Inward Migration, continuance in Jersey:
Prior to making an application it is necessary to gain consent from the Registrar of Companies, or local equivalent, in the jurisdiction in which the company is currently located. As it is unlikely that the company’s existing constitutional documents will fully comply with the Law, it will also be necessary for the company to adopt amended constitutional documents, referred to in the Law as ‘articles of continuance’, that will take effect upon the company’s successful migration to Jersey.
In order for a company to migrate to Jersey it is necessary to submit the prescribed C100 application form, accompanied by the following documents:
(i) a copy of the constitutional documents of the body corporate that have been certified by an Advocate of the Royal Court of Jersey or a regulated administrator of the body corporate;
(ii) the articles of continuance that detail the amendments to be made;
(iii) an opinion from a lawyer qualified in the current jurisdiction of incorporation on various issues regarding the foreign company;
(iv) a statement of solvency signed by each person who will be director upon the company’s continuance;
(v) details of the directors and details of the secretary;
(vi) the proposed company name; and
(vii) an application fee that is currently set at £500.
The JFSC may also request other documents or information in relation to the application to migrate. Other arrangements that a company migrating to Jersey ought to consider include the procurement of customer due diligence (CDD) and anti-money laundering documentation in respect of each ultimate beneficial owner of the company, the procurement of tax advice from the relevant jurisdictions as well as confirmation that there are no existing agreements that would unfavorably impact upon migration, and the procurement of a license under the Regulation of Undertakings and Development (Jersey) Law 1973 if there is an intention to occupy floor space and employ staff in Jersey.
Inward Migration, after the application:
If the application is approved, the JFSC will issue a certificate of continuance. The Commission must then be provided with confirmation that the company has ceased to be a body corporate in the former jurisdiction. This confirmation usually takes the form of a certificate, letter or email from the Registrar of Companies in the initial jurisdiction. The result of an application to the JFSC will usually be provided after a period of five to ten days.
Should an application be refused, a company has the right to apply for a written statement detailing the reasons for the decision, which the JFSC must provide within fourteen days. A company may also appeal to the Royal Court within one month of the application being refused and on the grounds that refusal was unreasonable.
Outward Migration, leaving Jersey:
It is also possible for a Jersey incorporated company to migrate to a new jurisdiction, although the process for outward migration is somewhat more complex than the process for inward migration.
Prior to making an application it is necessary for the company’s members to pass a special resolution approving the migration. The notice of the meeting at which the resolution will be passed must provide a summary of the proposed application and must inform members that they may object to the migration by application to the Jersey courts within 21 days. It is also necessary that a board meeting be held. The meeting is intended to approve the proposal to migrate, the issuing of all notices and the circulation of the shareholders’ special resolution, approve a solvency statement signed by each director, and approve the final application to be made to the Registrar of Companies in Jersey. Regarding the issuing of notices, unless there are no creditors or all the creditors have already agreed in writing that they have no objections, a notice of migration must be published in the “Public Notices” section of the Jersey Evening Post and sent to each creditor informing them of the company’s intention to migrate and their right to submit an objection within a 21 day period.
To apply for migration it is necessary to submit the prescribed C101 application, accompanied by the following documents:
(i) a certified copy of the members’ special resolution approving the migration;
(ii) a solvency statement signed by all current and future directors of the company;
(iii) a statement of confirmation of no restrictions in respect of the continuance and that no member has applied to the Royal Court of Jersey on grounds of unfair prejudice or any application has been determined;
(iv) confirmation from a law firm based in the foreign jurisdiction that all property and rights of the company will continue in the foreign jurisdiction, the foreign jurisdiction permits the migration, the company will remain subject to all civil and criminal liabilities, contracts, debts and other obligations and all legal proceedings and other actions pending may be continued;
(v) a statement of the current business of the company signed by all current directors;
(vi) a statement of confirmation that all the creditors of the company have agreed in writing that they have no objection to the migration (if applicable);
(vii) a statement of confirmation that the company has no creditors (if applicable);
(viii) the notice to be included in the Jersey Evening Post (if applicable);
(ix) the notice to be given to the Department of Income Tax and the Department of Social Security in Jersey of the company’s intention to migrate;
(x) confirmation from the Department of Income Tax and the Department of Social Security in Jersey that they have no objections to the migration;
(xi) a copy of the latest financial statements of the company. A co-ordinated approach to the migration to the foreign jurisdiction is required and therefore the company will need to liaise with its foreign advisers to ensure that all relevant formalities are dealt with in the foreign jurisdiction;
(xii) evidence that notice to creditors has been given and no creditor has applied to the Royal Court for a restraining order or such application has been determined;
(xiii) the annual return for the company for the current year, submitted with the relevant fee; and
(xiv) an application fee that is currently set at £500.
The JFSC may also request other documents or information in relation to the application for migration.
Outward Migration, after the application:
In the event that the application to migrate is refused, the company may appeal to the Royal Court within one month of being informed that the JFSC refused the application. Consent will often be issued conditionally, pending the fulfilment of certain conditions, such as notification by the company to the Registrar of Companies of the date the certificate of incorporation was issued in the new jurisdiction accompanied with a certified true copy of said certificate. When the JFSC is satisfied that the company has been registered as a corporate body in another jurisdiction, a certificate confirming the company’s deregistration as a Jersey incorporated company will be issued.