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Changes to Jersey Companies Law
Introduction
Following the January 2008 amendments to the Companies (Jersey) Law 1991 ("Companies Law"), further changes to the Companies Law come into force today (Friday, 27th June 2008).
The changes are brought in by the Companies (Amendment No. 9) (Jersey) Law 2008 (as amended). The main changes are as follows:
Meetings
All general meetings (annual or extraordinary) will be able to be called at 14 days’ notice, irrespective of whether the meeting is to consider special resolutions. Previously, a 21 day notice period was required where special resolutions were to be voted upon. It should be noted that a company's Articles of Associations are likely to specify a 21 day period and so the Articles of Association will need to be changed before companies can take advantage of this change in the Companies Law.
As was previously only the case with private companies, public companies can now dispense with holding annual general meetings by agreement with all of their shareholders.
Public company names
The names of public companies will now be able to end with the words "public limited company" or the abbreviations "PLC" or "plc". Formerly, it was only possible for a public company to end with the words or abbreviations "limited", "ltd", "avec responsabilité limitée" or "a.r.l.".
Distributions
Jersey companies are now permitted to make distributions to shareholders without reference to the distributable reserves of the company, provided that the directors provide a statement of solvency. This statement of solvency will not have to be filed with the Companies Registry. Distributions will be able to be made from any capital account of the company, save for the capital redemption reserve (if any) or, in the case of par value companies, from the nominal share capital account.
Notably, the directors are no longer required to make a "full enquiry into the affairs and prospects of the company" in providing the statement of solvency. This change is to be welcomed, mirroring the wording of the other solvency statements contained in the Companies Law with it having long been acknowledged that this "full enquiry" requirement was unduly onerous and/or ambiguous.
In accordance with a general trend in corporate law worldwide, these changes will greatly simplify the ability of a company to make payments to its shareholders while maintaining protection for creditors. Changes relating to the distribution of a company's assets to its shareholders on a winding up have also been introduced.
Share buyback/redemptions
Shares can now be redeemed or bought back from any source, including from any capital account. Formerly, any shares to be redeemed or bought back had to be funded from a distributable reserve account or from the proceeds of a fresh issue of shares. Directors authorising the redemption or buyback will be required to make a statement of solvency, similar to the statement to be made upon a distribution.
Accounts
Jersey companies must, at present, prepare accounts in accordance with generally accepted accounting principles (GAPP) which "give a true and fair view" of the financial position of the company. However, any company required to appoint an auditor will soon be able to prepare accounts which, as an alternative, are said to be "presented fairly in all material aspects". (Please note that these changes to the company accounting rules do NOT come into force today. These provisions are to debated in the States in July 2008 and, subject to States' approval, should become law in August 2008.)
Conclusion
As with the changes to the Companies Law that were introduced in January 2008, these latest amendments provide increased simplicity and flexibility for Jersey companies. It is to be hoped that this process continues as Jersey's competitors both onshore and offshore increasingly look for ways in which to attain a competitive edge in corporate matters.
If you would like any further information on these latest changes please feel free to call Paul Wilson (01534 601752) or Andrew Pinel (01534 601754) of Crill Canavan’s commercial team or, alternatively, reply to this email.
Crill Canavan, 40 Don Street, St. Helier, Jersey, JE1 4XD, Channel Islands