Jersey Forms of Company

Companies incorporated in Jersey are governed by the Companies Law 1991 which is based largely on the English 1948 Companies Act. Jersey companies are limited by shares; there are no forms comparable to those of English companies limited by guarantee or unlimited companies. A private company is any company that is not a public company.

Shelf companies are not available in Jersey; however the formation process is quick and inexpensive provided that a new company does not intend to carry on business on Jersey itself. There is an incorporation fee of GBP200 and an annual return fee of GBP150 and must have a registered office in Jersey. Accounts need not be audited, but have to be filed with the Jersey revenue authorities.

A company wanting to do business as such on the island will need to provide a great deal of information to the authorities in order to obtain the necessary consents and licenses; in fact the authorities actively discourage new business activity in most cases in order to conserve scarce resources.

A private company limited by shares can apply to the Comptroller of Income Tax to be exempt; the application costs GBP600 and is subject to the following conditions (this is a simplified statement):

Jersey residents must not have any direct interest in the shares of an exempt company, but may own shares in a company which does.
The exempt company's beneficial owners must be disclosed to the Financial Services Commission
The company must not have failed to pay income or corporation tax in a previous year
The company must not have been exempt in a previous period separated from the current period by one year or more, unless there has been a substantial change of ownership

Exempt status is applied for each year and lasts for one year; see Offshore Legal and Tax Regimes for details of the tax situation of exempt companies; the main advantage is that foreign income is untaxed.

A public company is one which has more than 30 members or which declares in its Memorandum of Association that it is public. Public companies are required to file audited accounts with the Registrar of Companies. Only a public company may issue a prospectus and offer its shares for subscription to the public.

The status of International Business Company can be held by an incorporated Jersey company or the branch of a foreign company. An IBC is resident in Jersey for tax purposes but the rates of tax are very low on non-Jersey income (see Tax Regimes). Jersey residents may not hold shares in an IBC. An annual advance tax payment of GBP1,200 must accompany an application for IBC status. As for private companies in general, beneficial ownership has to be disclosed, but is not kept on the public record.

NB In accordance with Jersey’s commitment to the ‘Rollback’ provisions of the EU Code of Conduct for Business Taxation, the International Business Company vehicle was abolished to new entrants with effect from 1st January, 2006. Benefits for existing beneficiaries of the International Business Company regime will be progressively extinguished by no later than the 31st December 2011.

Branch of Overseas Company

If a foreign company intends to trade within Jersey using its own name or to establish a branch or a permanent place of business on the island, it is subject to the same consents and license requirements that apply to resident companies; and it will be taxed as if it was a resident company. However, not being a Jersey company, it will not be required to register its corporate details or to file annual returns. A branch of a foreign company can apply to be an International Business Company.

General Partnerships
There is no legislation in Jersey governing ordinary partnerships; the law for General Partnerships is similar to English law as in the Partnership Act 1890. Partnership is between persons (which can include companies) and the liability of each partner is unlimited. There is no requirement to register details of a partnership. Resident partners are liable for tax on world-wide profits.

Foreign Partnerships

If the control and management of a partnership is carried on abroad, it is deemed to be resident outside Jersey, even if some of the partners are resident in Jersey. Tax will however be due on business profits earned through activities on the island and can be assessed on the resident partners.

Limited partnerships are governed by the Limited Partnerships Law 1994, supplemented by the Limited Liability Partnerships (Jersey) Law 1997 and the Limited Liability Partnerships (Insolvent Partnerships) (Regulations) 1998, putting Jersey LLP law on a very advanced basis for this useful form. Companies may be limited or general partners. Limited partnerships are often used in ownership structures for funds, real estate and leveraged financing packages. To form a limited partnership a declaration must first be lodged with the registrar, giving the names of the general partners, but not of the limited partners. The partnership agreement need not be filed. A registration fee of GBP500 is payable, but there is no annual registration fee. The tax treatment of limited partnerships is the same whether they are registered in Jersey or abroad. Each of the partners is separately assessed to tax on their partnership income and gains; resident partners on worldwide partnership income, and non-resident partners only on Jersey income.

In June 2006, the Jersey authorities published new proposals to amend the jurisdiction's Limited Partnership Law, in an effort to improve the competitiveness of the island's offshore financial services industry. One of the main aims of the proposals is to allow a Jersey limited partnership to have a legal 'personality', bringing the island into line with Guernsey, which amended its relevant legislation in 2001 allowing limited partnerships to elect to have legal identity. The government was due to place the amended legislation before the States in autumn 2006.

Although Jersey law has its roots in the Norman law (a 'Roman' or 'Civil' law code), the Trusts (Jersey) Law 1984 codified an entirely 'Anglo-Saxon' body of trust law, resolving many uncertainties and increasing protection for beneficiaries. Subsequent amendments included the recognition of 'purpose' trusts in 1996 (the normal form of Jersey trusts is 'discretionary'). This has led to an increase in corporate use of Jersey trusts.

The most significant amendment to the 1984 law came into force on October 27, 2006. This introduced settlor-reserved powers, which provide greater statutory certainty regarding the level of control and influence a settlor may exercise, in appropriate circumstances, over the ongoing administration of assets placed into trust. The powers that may be reserved by the settlor include the power to appoint and remove trustees, to amend or revoke the terms of the trust and to appoint or remove an investment manager or investment adviser. The amendments also permit a trustee to delegate any of his or her trusts or powers if permitted by the terms of the trust. Other amendments include conflict of law provisions which will mean that the validity of a trust governed by Jersey law will not be affected by any rights conferred on anyone under a foreign law, and a proposal that will remove the existing automatic ‘personal guarantor’ provisions for directors of corporate trustees, thereby making it more attractive to establish private trust companies in Jersey.

Jersey is a party to the Hague Convention on the Law Applicable to Trusts and Their Recognition. Jersey trust law explicitly excludes foreign inheritance laws and does not recognize foreign judgements. The creation of a trust is free from Government duty and there are no registration or audit requirements as such in Jersey, although the tax authorities of beneficiaries' jurisdictions (eg the UK) may require annual reports.

Jersey trusts may 'migrate' to other jurisdictions by changing trustees and the applicable law of a trust; likewise, foreign trusts may migrate to Jersey.

A Jersey trust is governed by the law of Jersey. In the case where the beneficiaries of a Jersey trust are non resident, income arising from sources outside Jersey is not liable to income tax in Jersey, nor are distributions to the beneficiaries. Interest on bank deposits made by the trustees of a nonresident trust is not taxed because of a government concession. The trustees of a non resident trust are not required to make returns or provide accounts of the trust to the Comptroller of income tax. Trust accounts must be kept but do not require auditing.

Unit Trusts

There are no special provision in Jersey law covering Unit Trusts, which are therefore treated in the same way as ordinary Jersey trusts, and have the same tax regime.