Jersey Companies
Companies Law amendment spurs worldwide interest in Jersey companies
On June 27, 2008, pursuant to the Companies (Amendment No. 9) (Jersey) Law 2008, a number of welcomed changes to the Companies (Jersey) Law 1991 came into force. The amendment has greatly simplified matters within the law with the intention of further encouraging the use of Jersey companies worldwide. Important changes include increased flexibility for a company to make distributions to its shareholders while maintaining protection for its creditors. It also introduces the ability of Jersey public companies to dispense with a requirement to hold AGMs and shortens the notice period for special resolutions at company meetings to 14 days. These changes should be enthusiastically received by company officers and administrators.
Changes to the capital maintenance requirements
Distributions
Previously, Jersey companies could generally only make distributions out of accumulated profits. As a result of the changes to the Law, Jersey companies are now permitted to make distributions to shareholders without reference to distributable reserves. Instead, distributions can be made out of the company’s assets provided that the directors approve the distribution and sign a solvency statement to the effect that the company will be able to continue its business and meet its liabilities as they fall due for the next 12 months. Specifically, a distribution can be made out of any capital account of the company (except the capital redemption reserve (if any) or the nominal share capital account in the case of par value companies).
Share buyback and redemptions
Limited shares of both par value and no par value companies may be redeemed or bought back from any capital source, provided that the shares are fully paid up. A redemption or buyback of shares out of the distributable reserve account will no longer require an equivalent transfer to capital redemption reserves in respect of par value companies. This change will allow more flexibility within the capital maintenance of Jersey companies in that the nominal value of shares redeemed or brought back will no longer need to be paid for out of distributable reserves or out of the proceeds of a fresh issue.
Meetings of a company to consider special resolutions
The period of notice for an extraordinary general meeting of the company at which a special resolution is proposed has been reduced from 21 days to 14 days.
Public companies
Dispensing with AGMs
Previously, only members of the private companies could dispense by written agreement with the requirement for an annual general meeting to be held. The amendment extends this right to all Jersey companies.
Use of the term public limited company and abbreviations
Jersey public companies will be able to use the term public limited company, plc or PLC at the end of their names, which will clarify some current presentational issues, particularly with regard to listed Jersey companies.
For further information on Jersey companies and their uses, please contact Bill Gibbon or Stephen Brennan of Voisin, or Robert Christensen or Simon Perchard of Volaw.
