Links with
India
Why Jersey is at the forefront of banking, wealth management and corporate services
Jersey structures for safeguarding real estate investment in the UK and beyond
The appeal of Jersey for succession planning, wealth preservation and philanthropy
Using Jersey companies to secure listings on stock exchanges around the world
Welcome to Links with India Jersey has been a leading international finance centre for more than 50 years. At the forefront of global banking, wealth management and corporate services, it has developed an offering that balances product innovation alongside high standards of regulation, world class legislation and in depth expertise from a range of experienced practitioners. The following articles explore the ingredients that have given Jersey this competitive edge and examine the benefits to intermediaries and their clients of working in partnership with practitioners in Jersey.
Geoff Cook Chief Executive, Jersey Finance
Links with India is published by Jersey Finance. The publication highlights how businesses in Jersey and India can work together in support of the strategic objectives of clients both in, and with links to, the region. It complements other publications in our ‘Links with’ series on China, the GCC and Russia. If you are interested in contributing to our ‘Links with’ series, please contact: Lucy Braithwaite T: +44 (0)1534 836009 E: lucy.braithwaite@jerseyfinance.je
www.linkedin.com/company/jersey-finance
@jerseyfinance
www.youtube.com/jerseyfinance
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Jersey’s attraction
04 06
Links away from the world of finance
Gateway to London and beyond
14
IPOs for Indian companies
Contents 08
Private wealth and succession planning
10 12
Philanthropy and philanthropic structures
Jersey for Indian family offices
ssion Planning Succe
Pr op er ty
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18 20
A view of Jersey from India
Jersey soil Indian roots
About Jersey Finance
t en em ag an
cial R Finan
Jersey’s
Attraction Jersey has provided financial services to Indian businesses, financial institutions, families and high net worth individuals, including non resident Indians, for many years. The jurisdiction is an attractive location to the Indian investment community thanks to the maturity and robustness of its regulatory and legal systems, its tax neutral platform, close proximity to the UK and European markets, and a concentration of financial planning and structuring expertise.
Political and economic stability Jersey has a unique constitutional relationship with the UK. It is independent with its own government responsible for legislation, economic policy and fiscal matters. One of the fundamental strengths of Jersey as an International Finance Centre is its enduring political and economic stability. It was awarded an AA+ credit rating from Standard & Poors and its financial stability was further recognised by the investment markets in 2014 when a Jersey Government debt bond issue was successfully launched in London and was more than two-and-a-half times oversubscribed. Its pricing represented one of the lowest new issue spreads ever achieved for a long dated, non-UK guaranteed sterling transaction and it was testament to the underlying strength of public finances and the strong fiscal and net asset position of Jersey as a jurisdiction.
Wide ranging expertise Equipped with an experienced workforce of bankers, investment managers and private wealth professionals, Jersey has become a specialist wealth management centre that attracts deposits and investments from around the world. With a banking sector comprising major global organisations, the infrastructure is bolstered further by access to all of the major professional services firms, including at least five first tier legal practices, and a vast range of independent trust companies and wealth managers.
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Jersey has also positioned itself as a leading European jurisdiction for funds with the ability to operate compliantly within the EU and to offer an alternative route for those not wanting to contend with the heavy burden of EU regulation. Meanwhile, another group of practitioners serve the needs of the corporate market and advise on Jersey’s range of investment vehicles that are designed to support inward investment projects in India and other major global economies and assist businesses looking to expand internationally and access capital on foreign exchanges. Nearly 25% of the workforce in Jersey is employed in the financial services sector1 and it is the largest number of any offshore centre. Jersey has the largest branch of the Society of Trust & Estate Practitioners (STEP) in the world and an extensive intermediary network virtually unrivalled amongst competitor jurisdictions.
Regulation and legislation Jersey’s world class reputation for the quality of its regulation and the endorsements it has received from key independent bodies such as the IMF, OECD and World Bank, make its offering even more compelling to international investors. Jersey’s authorities have vigorously fought tax evasion for many years and introduced legislation in the late 1990s making it a criminal offence. It has consistently followed international best practice with enhanced regulations designed to fight financial crime, whilst regulations are in place so that entities are fully accessible under the terms of 1 States of Jersey Labour Market Report June 2013
With an experienced workforce of bankers, investment managers and private wealth professionals, Jersey has become a specialist wealth management centre that attracts deposits and investments from around the world
NEW DELHI
MUMBAI
Tax Information Exchange Agreements (TIEAs). Jersey has to date completed over 40 tax agreements with countries worldwide, including one with India in 2011 and it has aligned with other major jurisdictions in committing to the new OECD model for automatic information exchange. Jersey was also one of the first jurisdictions to regulate its trust industry, a move which has provided investors with reassurance that structures are being administered by highly competent service providers. Jersey has a constantly evolving legislative platform designed to meet the needs of corporate and institutional investors and private clients. The world’s leading jurisdiction for trusts, Jersey added foundations to the statute five years ago to widen the range of options for investors considering investment strategies and to appeal especially to those in common law jurisdictions who are unfamiliar with the trust concept. The trust law, meanwhile, introduced 30 years ago and still the blueprint for laws in many other jurisdictions, continues to evolve, whilst innovations to the company law are currently being implemented to further expand Jersey’s appeal to those who structure investments.
Gateway to western markets Jersey’s relationship with the City of London has been a powerful feature of its offering and helps to position Jersey as the gateway for investment in both London and European markets. For example, more than 106 Jersey companies are listed on exchanges worldwide, with a
combined market capitalisation of more than US$339 billion.2 The strength of its relationship with the City of London was highlighted in 2013 when an independent study undertaken on behalf of Jersey Finance by research firm Capital Economics showed that Jersey was a conduit for over US$753 billion of foreign investment into the UK, 5% of the total stock of foreign owned assets in the country.3 The relationship continues to prove valuable to financial institutions and other investors in India and other fast growing regions of the world looking to internationalise and seek capital abroad.
A growing presence in India Regular visits to India by representatives from Jersey’s Government, the financial regulator and the finance industry have been made in recent times to improve ties, showcase Jersey’s services and to highlight the quality of its regulatory regime. Jersey has increased its representation in the country and dedicated staff have been based in both Mumbai and New Delhi for some time. It is Jersey’s intention to continue to develop closer ties and, in this way, enhance its commercial relationship with Indian intermediaries, advisers and private clients. ■ 2 ‘Jersey Holding Companies as Listing Vehicles - Factsheet’ from Jersey Finance (June 2014) converted from GBP to USD in September 2014
3 ‘Jersey’s Value to Britain’ Report from Capital Economics (2013) converted from GBP to USD in September 2014
JERSEY FINANCE: LINKS WITH INDIA
3
Jersey and
LINKS AWAY from the
WORLD of
FINANCE
Wildlife conservation
India’s Acting High Commissioner Mr Rajesh Prasad and Jersey’s Senator Philip Ozouf sign a Tax Information Exchange Agreement between India and Jersey in 2011
International relations
Conservationist and author, the late Gerald Durrell, who founded the Durrell Wildlife Conservation Trust in Jersey, was born in Jamshedpur, India in 1925. His popular books include ‘My Family and Other Animals’ and ‘Birds, Beasts and Relatives’. Durrell’s Conservation Academy has trained many of India’s Zoo Directors, forestry officials and veterinarians in conservation techniques, whilst current conservation efforts by Durrell in India centre around the critically endangered pygmy hog in Assam.
Jersey’s officials have made regular formal visits to India in recent years and are proud to have strong relationships with their counterparts there. Trips have featured meetings with politicians, senior officials and business leaders, as well as visits to Indian companies with operations in Jersey. Individuals and groups from Jersey are also making regular trips to India for business and pleasure. So whilst established links are being strengthened, new ones are developing all the time.
Gerald Durrell and friends
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The relationship between Jersey and India is long established, thanks to excellent political, commercial and community links
Jersey cows are a common sight in India
The famous ‘Jersey Cow’ Jersey cattle can be seen across India and are an integral part of the dairy industry, as they are in many other countries. Renowned for the quality of the rich, creamy milk they produce, Jersey cows are relatively small, easy to manage and can withstand hot climates. India has the largest population of dairy cattle in the world and is the world’s largest milk producer. Pure breed Jersey cows have been imported, but most dairy cattle are cross breeds.
Indian businesses in Jersey Jersey is an internationally recognised, highly reputable jurisdiction and a well-respected business centre. It has a long standing reputation for attracting successful companies and individuals to its shores. A number of Indian individuals and organisations have established operations here including the Bharti Enterprise Group, Infrasoft Technologies and Minerva. They are profiled on page 20. ■ Chris George Photography
Sand sculpture at the Palladium shopping mall in Mumbai
Sand sculpture Jersey sand sculptor Simon Smith, World Masters People’s Champion, has worked all over the world and regularly travels to India. Most recently he created a sand sculpture at the Palladium Shopping Mall in Mumbai to raise funds for the Cancer Patients Aid Association. He also created a sculpture on Calangute beach in Goa, which involved 75 tonnes of sand and was 20 feet tall. It remained in place for 6 months.
St. Helier, Jersey JERSEY FINANCE: LINKS WITH INDIA
5
JERSEY:
GATEWAY TO LONDON & BEYOND
Jersey is ideally positioned as a gateway to investment into London and wider European markets. Its long standing commercial relationship with the City of London continues to be valuable to financial institutions and investors in India and other fast growing regions of the world. When the Late Lord Mayor of London, Roger Gifford, made a formal visit to Jersey during his term in office in 2013, he described Jersey’s financial services industry as ‘a fantastic adjunct’ to the UK economy. Later quoted in the London Financial Times, he explained: ‘They gather funds in a tax efficient way and send them onto London. That’s a great advantage to the UK.’
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HE UE OF
Strong partnership with the UK
Conduit
Jersey Finance recently commissioned an independent and detailed study to analyse Jersey’s relationship with the UK.1 The project was undertaken by Capital Economics, a leading macroeconomic research firm. The findings demonstrated the truly international nature of Jersey’s finance industry, with global capital flowing to the UK from some of the largest and fastest growing markets in the world:
Jersey is a key conduit for international wealth and its banking contribution is particularly impressive, perhaps unsurprising given the long term nature of Jersey’s relationship with the City of London. The relationship between banks in London and their long established operations in Jersey ensures that billions are ‘upstreamed’ into London and the capital markets.
£118
BILLION
Jersey channels £118 billion into the UK every year
75%
75% of the wealth attracted to Jersey originates from ultimate beneficial owners who are not domiciled in the UK
£1 IN EVERY £20
£1 In every £20 invested by foreign individuals and companies in assets located in Britain reaches the UK via Jersey
JERSEY
1.5%
TO THE UK
Jersey based banks’ contribution to parent operations in the UK represents 1.5% of the funding of the whole UK banking system
SEY
ports an estimated bs and adds £9 billion dom economy.
nnelled from Jersey nting 1.5% of the ole UK banking system.
£9
BILLION
180,000
JOBS
Jersey supports an estimated 180,000 British jobs and adds £9 billion to the UK economy
Jersey’s banking model is a diversified one. It does not rely on wholesale funding and is inherently stable, attracting capital from around the world. Its security and strength is complemented further by subscribing to the Basel standards and it holds an average core capital ratio across the banking sector of 14.8%, some 50% higher than the required international standard. Jersey and India have shared business connections for many decades. In the mid-1970s, the Bank of India established a presence in St Helier and, in more recent times, there has been an increasing use of Jersey investment vehicles to conduit international capital into India for infrastructure projects and to enable Indian businesses to expand internationally. A substantial body of India focused private fund and corporate structures are administered in Jersey, with Jersey investment structures used to support fund launches, listings and other transactions. Indian investors have also purchased property in the UK using Jersey holding company structures, whilst in India itself, a range of offshore funds have also been launched, backed by Jersey’s legal and administration services, to invest in infrastructure schemes including ports, airports and commercial property projects. Frequently these initiatives involve a close working relationship between practitioners in the City of London and Jersey.
UK and Indian trade The UK is already the third biggest investor in India, investing $3.2 billion during 2013-2014, and it has continued to announce major investment projects with India in recent times. Following the Indian elections, the UK Government, represented by its Chancellor and Foreign Secretary, visited Prime Minister Modi and his government to further strengthen Britain’s relationship. Previously, the UK Prime Minister has said that he wants Britain to become India’s partner of choice. Indeed in 2013, UK goods exports to India increased by 13%.2 As the UK and India explore the potential for greater cooperation, Jersey is well positioned to provide the structuring services required for both inward investment and expansion abroad. It is evident that despite the challenging times faced by all major financial centres, the partnership between the City of London and Jersey continues to flourish. Jersey is frequently part of the same transaction chain, client relationship and conduit process as the City itself. It is an important cog in the wheel that frees up mobile international capital for investment purposes, so vital to the operation of free markets and to the global financial system. ■
1 ‘Jersey’s Value to Britain’ Report is online at www.jerseyfinance.je/valuetobritain 2 www.gov.uk
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Wealth Management
Private Wealth & Succession Planning Gavin Wilkins, Director, Minerva Indian ultra high net worth families are globalising rapidly. Families are truly international, as are their assets and business interests. On the one hand, these attributes increase the need for effective succession planning and, on the other, create opportunities to centralise and structure wealth in order to meet ever more complex and sophisticated needs. Jersey is a time tested centre for succession planning and wealth management for both resident and non-resident Indians. Indian families are also increasingly aware of the differences between various International Finance Centres (IFCs) and their relative strengths. They are recognising Jersey as a particularly strong trust jurisdiction where their wealth can be held and managed. They are also increasingly mindful of the security and financial stability of IFCs and are comforted by the strength of Jersey’s balance sheet and its AA+ rating from Standard and Poor’s.
Meeting requirements It follows then that Jersey structures are increasingly required to accommodate Indian families, which are spread across the globe. This means that the Jersey structure needs to satisfy the requirements of both the non-resident Indian (NRI) family members and resident Indian family members.
that it can hold a very wide range of assets, including the shares of a family business. Since Indian family assets very often include significant privately held businesses, typically built up over several generations, then it is unsurprising that Jersey discretionary trusts are an ideal solution.
This differentiation gives rise to considerations such as the applicability of exchange controls and the local requirements and tax rules, which apply to specific family members. Jersey’s tax neutrality, combined with its comprehensive suite of trusts and structuring options, mean that it is ideally suited.
Jersey Discretionary Trusts
The international and progressive nature of modern Indian families can, in some cases, cause some degree of ‘generational dislocation’ between those who have built the family business and their internationally active offspring, who may be more remote from the business or less interested in playing an active role in its future. Considerations of this nature are not uncommon in the deliberations of an Indian family in selecting the optimum structure for their succession planning needs.
Discretionary trusts have for some time proved popular in succession planning for Indian families holding overseas assets. It is normal for a discretionary trust to include extensive investment powers and this means
Practically, the provisions of a Jersey discretionary trust typically afford considerable flexibility in terms of the trustee’s powers in relation to beneficiaries and are often sufficient to manage these concerns.
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Jersey is a time tested centre for succession planning and wealth management for both resident and non-resident Indians
Jersey Private Trust Companies In certain circumstances it may be desirable for a family member or advisor to have a greater input in the direction of the trust structure in future years. Jersey’s flexible trust regime can accommodate this through the creation of a Private Trust Company (PTC) to act as trustee to the trust and this is a mechanism that has, where appropriate, been employed by Indian families. In these scenarios, the PTC usually takes the form of a Jersey Limited Liability Company and often family members or trusted advisors are appointed to the board.
UK real estate Jersey has immense strength and an extensive track record where the underlying assets are located in the UK, in particular real estate. Bricks and mortar have always been a popular investment for Indian families. London continues to attract significant foreign investment in real estate. Jersey has unparalleled expertise in structuring investments into UK real estate and many of these investments are undertaken through Jersey trust structures.
Jersey structures for asset protection As an AA+ rated, politically stable jurisdiction, Jersey is an ideal centre for holding structures for asset protection purposes. Indian families have often used Jersey structures for this and to provide an element of security against the volatility of the Indian rupee. Internationally recognised and endorsed, Jersey is the highest ranked offshore international finance centre in the Global Financial Centres Index and is the only offshore jurisdiction listed in the world’s top ten jurisdictions for private wealth management.
Jersey’s commitment to Indian families Jersey is committed to India. Jersey Finance has a permanent presence in both Mumbai and Delhi and its members regularly visit India. It has, for some time, operated with the guidance of an India focused advisory board and coordinated India focused industry working groups to ensure that Jersey service providers are kept up to date with important and emerging issues which affect Indian families. ■
Jersey’s tax neutrality, combined with its comprehensive suite of trusts and structuring options, mean that it is ideally suited
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Wealth Management
PHILANTHROPY and Philanthropic Structures
Julian Hayden, Director, Hawksford
Jersey is an ideal jurisdiction for the formation and administration of philanthropic structures. It has the technical means and experience for excellence in this area and special opportunities enhanced by recent statutory developments.
The climate for philanthropy Though philanthropic donation is not confined to the rich, it is becoming an increasingly important issue for wealthy individuals and families. Many see the creation and maintenance of philanthropic structures as part of a wider process of engaging the next generation in the responsibilities of wealth management. Often they want structures that will endure for the future and possibly are self-financing. Good governance and management is required for these mechanisms within which funds can be built up for good causes and from which well-organised distribution channels can be provided. We are seeing growing interest in social entrepreneurship and in venture philanthropy including by younger individuals who wish to apply their business skills and the fruits of their success to helping others. Young entrepreneurs often want to make a social impact and this is clearly a growth area. Philanthropic activity is increasing within the funds sector in which sustainable investments seem to be developing as an asset class. Philanthropists are looking to the financial services sector in Jersey for greater engagement in the provision of relevant services.
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Jersey foundations are increasingly used by philanthropists as an alternative to trusts
Why Jersey? Jersey is a preeminent jurisdiction in the use of trusts and also offers foundations - two key structures used for philanthropy. Both can be highly flexible and tailor-made to meet the needs of the client concerned. These skills and services are now reinforced by the recent passing of a Charities Law as part of a coherent programme for developing Jersey as a philanthropic centre of excellence. Trusts and foundations will have an option to register as charities but they will not be obliged to do so, the choice depending on the specifics of the individual case. Exemption from Jersey Income Tax will be available and, irrespective of registration or not, there will be no Jersey Income Tax for structures having no beneficiaries in Jersey and with no income from land or buildings in the Island.
Indian Philanthropy Interest in philanthropy in India is growing thanks to economic growth, wealth creation and recent large gifts by wealthy individuals. The Hurun India Philanthropy List 2013 is a ranking of 31 Indians who donated more than Rs. 10 crore, or around $1.6 million, in cash or cash equivalent, between April 2012 and March 2013. IT tycoon Azim Hashim Premji, the chairman of Wipro Ltd, emerged as the most generous Indian, with a donation of Rs. 8,000 crore during that period. HCL chairman Shiv Nadar was the second highest contributor in the list, with a donation of Rs. 3,000 crore.
Jersey has breadth and depth of expertise in the provision of fiduciary services. It is also economically and politically stable, has a first class judicial system and a highly regarded regulatory regime, so that funds can be invested and managed safely, under expert governance. As well as its professional infrastructure and skills, Jersey has an immediate opportunity to assist in philanthropy and to develop as a leading jurisdiction, through the wealth already held and administered here. Vehicles can be structured for these purposes more flexibly than is usually possible elsewhere. Further, these structures can often be managed in parallel with those for personal or commercial purposes so, for many people with existing links to Jersey, convenience and accessibility are additional attractions.
Suitable structures Jersey’s trust legislation allows for both charitable and non-charitable purpose trusts and for trusts that can be set up for purposes that are partly personal and partly philanthropic. Non-charitable purpose trusts are often used for good causes. The flexibility of trusts allows for a range of structures that can be adapted to suit specific philanthropic objectives such that a charitable trust is an attractive option, but it is not the only solution. Jersey foundations are increasingly used by philanthropists as an alternative to trusts. Again they can be charitable or non-charitable or they can be primarily philanthropic but also capable of providing personal benefits. About one third of the foundations set up in Jersey since their launch in 2009 are used for philanthropic purposes. Their attractions include the clarity of registration whilst they offer a choice between confidentiality and publicity. They are capable of infinite duration. Further, through the system of having a council of members and a guardian to ensure the council pursues the foundation’s objectives, both flexibility and safeguards are provided, along with the ability for the economic founder to have a continuing role.
Philanthropy by Sector Environmental causes Agriculture
Rural development Healthcare Social development
Education
Jersey has several key strategic advantages as a jurisdiction and it has the means and purpose to become recognised as a leading global centre for philanthropic wealth planning. ■
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Wealth Management
JERSEY
Jersey For Indian Family Offices Ian Slack and Richard Joynt, Directors, Bedell Family Office
According to research from the Boston Consultancy Group, India was home to 284 ultra-high net worth households with US$100m or more in 2013, and to 175,000 millionaire households. As it is projected to become the seventh wealthiest nation by 2018, demand for family offices is set to rise and Jersey is the ideal location.
Role of the family office
Experienced professionals
Every family office is different and bespoke to the needs of the family it is serving. Some are focussed exclusively on managing the family’s investments or its concierge and travel needs. Others, including Bedell Family Office, provide professional support to the family, such as assisting with governance, financial reporting, project management and trustee and corporate services, and become the family’s trusted advisors over time.
Recruiting and retaining the best professionals is a primary issue for family offices and the nature of the family office may impact on the types of professionals required. Professionally trained staff working in the finance industry make up nearly 25% of the working population in Jersey1. Included in this are a large number of family office professionals and trust professionals, who have vast experience in setting up and running complex structures and in helping wealthy families manage their assets and lifestyle.
Why choose Jersey? A number of factors are important to Indian families when deciding where to locate their family offices:
Tax If the family office will be managing asset holding structures, it is important to find a location that is tax efficient. Jersey benefits from tax neutrality, with 0% income tax on foreign owned companies (with exceptions for regulated and infrastructure businesses) and no capital gains taxes, wealth taxes or inheritance/death taxes.
1 States of Jersey Labour Market Report June 2013
2 Financial Services Industry - Quarterly Report (June 2014)
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Practical matters A reputable family office needs to be based in a jurisdiction with secure communication links and great infrastructure, including banking facilities and specialist professionals in accounting, tax, legal and other areas. Jersey has an exceptional financial infrastructure for its size, with all major accountancy firms represented. There are 5 first tier legal practices and 34 international banks (all listed within the top global 500), with over US$224 billion in banking deposits2. Jersey is in the same time zone as the UK so it is 5½ hours behind India Standard Time, meaning that there is a substantial part of the working day that crosses over. English is the main language in Jersey, with sterling as its currency.
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Pro pe rty
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ncial Reporting Fina Co rp o ra te
Concierge Serv oke ice p s s Be
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NEW DELHI
MUMBAI
Pro je c tM a
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ee Services Trust
Legal and political system
Regulation and legal structures
Jersey has its own democratically elected government and decides on its own tax laws - this independence from the UK and political stability has been preserved via charter and convention since 1204. Furthermore, Jersey operates its own well respected judicial system based on common law principles, so it will be familiar to Indian families.
Jersey is a well regulated jurisdiction and is rated as one of the best international financial centres globally by the International Monetary Fund (IMF). The regulation of investment and fund business, and trust and company administration business, is well established and understood, and provides a best practice framework which will no doubt give Indian families greater comfort with regards to the protection of their assets.
Jersey’s stability will be particularly relevant if ownership structures are going to be based in the family office jurisdiction. In certain cases this may drive the family office location to being outside India or wherever the wealth has been earned, to provide better privacy within the family’s home jurisdiction. Obviously tax laws and regulations continue to evolve, but Jersey is in a good position to preserve this stable political, legal and tax position, having demonstrated its ability to adapt to tax transparency and regulatory best practice in the past. This transparency is now a fact of life and may lead to less well regulated jurisdictions ceasing to exist as financial centres in the future. Jersey has, however, always insisted there is a level playing field to ensure that its competitiveness is not affected.
Jersey is often used by wealthy Indian families for asset protection, estate planning, family governance and by UK resident non-domiciled Indian families to manage their tax affairs
In addition, Jersey has a wide range of legal structures available to choose from for the family office: asset owning and charitable structures (including trusts); foundations; limited liability companies (including the protected cell companies); and limited partnerships. With over 50 years of private wealth management experience, Jersey is often used by wealthy Indian families for asset protection, estate planning, family governance and by UK resident non-domiciled Indian families to manage their tax affairs in the UK. Jersey offers tax neutrality, political and legal stability and an array of ownership structures. This is combined with excellent infrastructure (English language, UK time zone and ease of access to London) and a well trained workforce who are highly experienced in wealth management. It is therefore not surprising that there are a growing number of Indian families setting up family offices in Jersey. This has been helped by an increasing number of Indian families moving to London and using Jersey as a convenient jurisdiction for their asset ownership structures. ■ JERSEY FINANCE: LINKS WITH INDIA
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Capital Markets
IPOs
for Indian companies
Guy Coltman, Partner, Carey Olsen
Jersey is a leading financial centre which has much to offer India in the context of Initial Public Offerings (IPOs). Jersey’s key strengths in the IPO market are the legal and financial services it can offer to companies and the ready acceptance of Jersey securities by investors. Investors, particularly in Europe but increasingly further afield, are comfortable and familiar with Jersey-incorporated companies. In particular, Jersey offers a number of advantages over some competitor jurisdictions. Jersey’s long-standing, symbiotic relationship with the City of London has been well publicised and it is well regarded as a jurisdiction for listing on the London Stock Exchange. Indeed, Jersey is the number one jurisdiction for non-UK companies in the FTSE 100, the leading offshore jurisdiction for listing on its AIM market and has 95 companies trading on the LSE markets in total. Advisory links between the City of London and Jersey are strong, as evidenced by the many active nominated advisers in London who regularly select Jersey for transactions and the international law firms, accountancy practices and financial institutions which refer work into the jurisdiction on a daily basis. Jersey’s combination of reputation, skills and execution, and convenience from London, mean that this trend is likely to continue.
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Jersey capital markets in numbers
No.1 IN NON-UK COMPANIES IN THE FTSE 100
$339 BILLION
VALUE OF JERSEY-BASED LISTED COMPANIES
No.1 OFFSHORE JURISDICTION FOR AIM LISTINGS
95
COMPANIES TRADING ON LSE MARKETS
‘Jersey Holding Companies as Listing Vehicles’ Report from Jersey Finance (June 2014) converted from GBP to USD in September 2014
On the white list Jersey is a leading financial services provider with a reputation as one of the best jurisdictions of its type. This gives investors the comfort of an appropriate level of regulation, reliability and stability, and makes investment structures set up through Jersey more attractive than structures residing in some less well established offshore jurisdictions. Jersey was one of the first jurisdictions to be placed on the Organization for Economic Development’s ‘white list’ as having implemented internationally agreed tax standards. The International Monetary Fund, in its latest review, put Jersey in the leading rank of international finance centres. In March 2014, the Global Financial Centres Index rated Jersey as the top offshore jurisdiction for the tenth time in a row. Jersey’s position in global markets is supported by a network of experienced legal, accountancy, banking and other financial professionals, who are familiar to advisers in other financial centres. This enhances Jersey as a choice for transactions and makes the administration of Jersey structures easier and more cost effective. Finally, should any dispute arise, Jersey’s court system is well developed and has proved itself capable of handling the most complex and difficult cases.
Tax neutrality Jersey provides a stable, tax-neutral environment in which to establish and maintain corporate structures. Jersey companies (apart from locally regulated financial services companies and utilities) are typically zero rated for income tax and are not subject to capital gains tax within the jurisdiction. Jersey has no capital transfer or similar taxes and does not levy any withholding tax on dividends. There is no stamp duty on Jersey share transfers and Jersey is outside of the UK Value Added Tax network.
Company law The Companies (Jersey) Law 1991 is a modern statute that is based on English company law but avoids many aspects of English law that some investors find restrictive. In particular, Jersey company law allows for payment of dividends irrespective of a company’s retained profits. Instead, payments to shareholders are dependent on a
company’s solvency. Financial assistance is permitted for both public and private companies and the share buy-back and redemption regime is straightforward. Jersey company law is, however, flexible so that investors can typically replicate, if needed, investor protection and other market standards through a company’s memorandum and articles of association. Jersey law has also been amended to permit the merger of a Jersey company with an Indian company, therefore reducing transaction times and costs. This provides Indian businesses with the opportunity to invest worldwide whilst ensuring that profits are recovered and repatriated back to India. Jersey has recently made amendments to its companies law which will reflect, among other things, certain innovations brought in by legislation in the UK, which make it even more attractive as a jurisdiction in which to incorporate a holding company for the purposes of seeking a listing. The amendments include specific provisions dealing with the redemption and buy-back of depositary receipts, removal of the prohibition on the issue of shares at a discount and restrictions on commissions, as well as other developments that may assist publicly traded companies. An example of this is the provision of a capital reduction mechanism for Jersey companies to be effected by way of shareholder special resolution and a directors’ solvency statement, rather than mandatorily requiring court approval (although that route remains available when the legislation is adopted).
Indian businesses using Jersey A number of Indian businesses have already used Jersey as a way of expanding their activities and raising capital. These include Yatra Capital Limited, an Indian property fund based in Jersey which listed on Euronext Amsterdam (that raised €100m at its launch in 2006), and Essar Energy, an Indian energy business, that recently used a Jersey company to issue US$550m bonds convertible into ordinary shares in its UK parent company.
The future It is expected that the trend of using Jersey companies to secure listings on stock exchanges around the world will continue. ■
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A view of Jersey from India Bijal Ajinkya, Partner, Khaitan & Co, India
Khaitan & Co is one of India’s oldest and most reputed full services law firms. My experience of Jersey in the areas of private client work, tax and investment funds has been exceptionally good. Our clients have used Jersey for a number of purposes and we have been very impressed with the jurisdiction’s legal framework and the levels of service we have received.
Chris George Photography
Khaitan & Co
The benefits of using Jersey
Khaitan & Co was founded in 1911 by the Late Debi Prasad Khaitan, a member of the Constituent Assembly that framed the Constitution of India in 1950. It attracted many stalwarts from the field of law who laid the foundations of integrity, dedication and professionalism.
Clients have used Jersey for real estate holding and financing vehicles for investments into the UK, for listing purposes, as feeder vehicles for funds, for IP holding and most often for asset protection and succession structures. Jersey’s main areas of appeal are its robust framework (both legal and through service providers) and its reputation.
Deeply rooted in this tradition, Khaitan & Co continued to grow and prosper, expanding from its first office in Kolkata (Calcutta) to New Delhi and to Bangalore, under the able stewardship of the Late Bhagawati Prasad Khaitan. On its 90th foundation day (November 11, 2001), Khaitan & Co opened its Mumbai (Bombay) office for the convenience of its rapidly growing clientele. Today, Khaitan & Co has more than 400 fee earners, including 70 partners, in its four offices. In addition to fee-earners, there are approximately 215 non legal associates. Khaitan & Co’s wide ranging clientele include business and financial enterprises, large Indian business houses and families, MNCs, banks, financial institutions, onshore and offshore fund houses, educational and charitable trusts, cultural institutions, high net worth individuals, estates and trusts. The firm is a full service law firm, having practices across the areas of corporate law, banking, tax, intellectual property, litigation and dispute resolution, real estate, infrastructure, capital markets and funds.
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As a partner in the firm’s Tax and Fund Formation practice, my experience of Jersey has been varied and exceptionally good, with service providers being proactive, prompt, and knowledgeable, the legal framework being well established and tested and, above all, the clients being content as a whole. The private client and investment funds areas in particular have robust legal structures available and Jersey has a great reputation in this space, providing considerable comfort to clients. Since its legal system is well-oiled and has sustained for a number of years, clients are particularly reassured establishing their businesses and affairs in Jersey. The high quality of administrators, who are the first points of contact for professionals operating outside the jurisdiction, make operating and creating structures in Jersey efficient and an excellent experience. Overall my view of Jersey is extremely positive and I rate Jersey as an offshore jurisdiction with great potential.
As part of their investment strategy, Indian property developers are increasingly looking for opportunities overseas, and the UK, especially London, has proven to be their preferred location
About Bijal
Practices International Tax
Bijal joined Khaitan & Co in 2013 as a Partner to expand and build the Tax, Private Client and Investment Funds practice. Bijal is highly regarded for her dedication, in-depth understanding and knowledge of taxation, estate planning and structuring of funds and for her solution oriented approach. She features on the Citiwealth Leaders List 2012 and 2013 in relation to private client matters. Legal 500, 2010/2011/2012/2013 (Asia Pacific) has mentioned her as being a leader in the field of taxation in India. Bijal has also been recognised as being a leading tax lawyer in India by Chambers & Partners (Asia – Pacific) 2010, 2011 and 2012 Client Guides. Indian Lawyer 250 Law Business Research recognises Bijal as a highly regarded name. She has also been featured in Who’s Who Legal ‘Corporate Tax Guide 2013’ as a leading practitioner in the field of corporate tax in India. Bijal serves as an officer-elect on the Individual Tax & Private Client Committee of the International Bar Association. She is a member of the Steering Committee of the International Wealth Advisors Forum, which is a global think-tank for the exchange of emerging trends in estate and succession planning.
Tax Litigation Asset Protection and Private Client Fund Formation
Education LL.M., (International Law), University of Mumbai (2002) LL.B., Government Law College, University of Mumbai (2000)
Professional Affiliations Bar Council of Maharashtra and Goa Membership Officer – Private Client, IBA
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Bharti Enterprise Group: Airtel-Vodafone Jersey Airtel Limited is part of the Bharti Enterprise Group, which includes the flagship telecoms brand Bharti Airtel. Bharti Airtel ranks amongst the top four mobile service providers globally in terms of subscribers. When Bharti Enterprises decided to enter the European market, they began small but with big aspirations. Partnering with another global telecommunications giant, Vodafone, for reasons of brand and roaming tie ups, the Airtel-Vodafone brand was created. The intention was to use the Channel Islands as a test bed to learn the differences between markets in Asia and Africa and those in Europe, with the aim of eventually moving into the mainland European market when the right opportunity arises. Jersey Airtel Limited was granted a licence to operate 2G and 3G services in the Channel Islands in April 2006. They launched their network in June 2007, offering islanders mobile telephone products and services, with the aim of bringing innovation and competition to the marketplace. Today they have more than 40,000 retail and corporate customers, and 50+ staff who provide technical, sales, customer services and marketing support across the Channel Islands. Jersey was chosen because the Channel Islands have an excellent infrastructure, are well regulated, and are on the doorstep to mainland Europe. The knowledge of the European market that the organisation has gained from the Channel Islands has been significant as the Indian market is predominantly pay-as-you-go, whereas the European market favours the contract route.
Jersey Soil Indian Roots Jersey is an internationally recognised, highly reputable jurisdiction and a well-respected business centre. It has a long standing reputation for attracting successful companies and individuals to its shores including those of Indian origin. 18 JERSEY FINANCE: LINKS WITH INDIA
Airtel-Vodafone is expecting to deliver 4G soon, when the technology and experience that Airtel and Vodafone have developed in other markets will come to the fore in Jersey.
WHY JERSEY? JERSEY IS GROWING AND DIVERSIFYING
STRONG, STABLE ECONOMY Jersey’s high growth economy provides a first-class commercial environment and supports continuous investment
Infrasoft Technologies
Minerva
Founded in 1995, InfrasoftTech is a specialist software solutions provider headquartered in Mumbai, with operations spread across North America, UK, Africa, Middle East and South East Asia.
Minerva, an independent provider of corporate, private client and fund administration services, was established in Jersey in 1979.
At the time of incorporating Infrasoft Technologies Jersey Limited in 2007, the organisation was keen to bring to Jersey their expertise in the financial services domain. Jersey is a location perfectly matched to InfrasoftTech’s ethos and business focus to be niche and to concentrate on the finance industry. The organisation’s core software services and solutions offerings include: • Application development, modernisation and maintenance • Data migration and integration • Data warehousing and business intelligence • End-to-end and automated testing • Mobility InfrasoftTech is committed to developing and delivering best practices through modern methodologies and senior management commitment. It is constantly evolving its products and services to bring to the Jersey business community new-generation solutions in the space of social media, mobility, payments, analytics and cloud integration, thereby building a competitive edge for all parties. InfrasoftTech’s growth strategy is based on a socially responsible and economically sustainable business model and the conviction that encouraging and supporting local talent is paramount to the future success of Jersey businesses. In recognition of its need to add value to society and its keenness to engage and give back to the community, InfrasoftTech’s ‘Jersey Talent Acquistion Program’ is in its seventh year of running.
The firm’s principal shareholders were born in, or originate from, India and Minerva has been active in assisting families of Indian origin all over the world. India’s remarkable growth story continues to generate work for Minerva. Minerva was founded by Vipin Shah and Umesh Sahai who, along with their wider families, remain actively involved in the continued growth and success of the business. Vipin was born in Kenya following his father’s emigration from Gujarat in the early 1900’s. He was educated in Nairobi, Mumbai and London, where he was called to the English Bar. Umesh was born in New Delhi and educated at the Doon School and St Stephen’s College, Delhi University before coming to England in 1964 to pursue a career in accountancy. He qualified as a Chartered Accountant in 1969. Minerva remains family owned as the next generation of the Shah and Sahai families are actively involved in the business. The organisation has a headcount of around 180 globally, with a presence in most of the major well-regulated financial centres in the world, some of which, such as Singapore and Mauritius, are key channels of investment flows into and out of India. They are therefore well equipped to cater to the needs of the modern Indian corporate or family with cross-border interests. The business remains committed to serve people of Indian origin and Minerva’s India Team maintains a regular visiting programme to see clients and professional firms in their home environment.
PRO-BUSINESS
WELL POSITIONED
LOW TAXATION
Jersey is a well regulated and independent jurisdiction with an accessible, pro-business government
Less than 14 miles from France and under an hour from London, Jersey has frequent flights to all major European business centres
Jersey’s direct tax rates are among the lowest in Europe, for both individuals and companies
EXCELLENT, MODERN SERVICES Jersey is equipped with an impressive health service, outstanding schools and excellent sports and leisure facilities
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ON EY
Jersey The International Finance Centre
CREDIT RATING AA+
O TREATY SIGNED IOSC
S DE LALIST
W H
U LA
E IT
AW AR AN TI D -M
NATIONA R E L T AC N M I F R R E I A T TING I TOP & CO G2 S NDERING 0
A W ARDS INTERNATIONAL FINANCE CENTRE OF THE YEAR STEP Awards 2009/2010
OUTSTANDING INTERNATIONAL WEALTH FINANCIAL CENTRE
Private Banker International Awards 2012
BEST OFFSHORE CENTRE Global Investor/ISF Awards 2012
BEST INTERNATIONAL FINANCE CENTRE
International Fund and Product Awards 2012
BEST OFFSHORE CENTRE Global Investor/ISF Awards 2013 © Jersey Finance 2014 20 JERSEY FINANCE: LINKS WITH INDIA
IFC OF THE YEAR
2012
Wealth Briefing Awards 2013
2013
2014
HIGHLY COMMENDED IFC
International Fund & Product Awards 2013
BEST IN CLASS FOR FUND SERVICES
Fund Services Awards 2013 and 2014
IFC OF THE YEAR
Citywealth International Financial Centre Awards 2013 and 2014
BEST INTERNATIONAL FINANCE CENTRE
Wealthbriefing - European Awards 2014
BEST INTERNATIONAL FINANCE CENTRE
Professional Adviser - International Fund & Product Awards 2014
About Jersey Finance This publication is brought to you by Jersey Finance, a body established in 2001 to promote and lead the development of Jersey as an International Finance Centre (IFC). The organisation’s primary objective is to communicate the many factors that make Jersey a leading IFC, including the experience and expertise of its practitioners; its political, economic and fiscal stability; and its high level of regulation and security. It also actively represents the finance industry’s needs and concerns with regard to legislation, regulation and other key areas of innovation that can enhance Jersey’s product offering. Jersey Finance has representative offices in Mumbai, New Delhi, Abu Dhabi and Hong Kong. They deliver a promotional programme of networking events, host business and government delegations from Jersey, organise Community of Interest groups for in-country practitioners who do business with Jersey and offer introductory services for Jersey businesses new to the regions.
Our representatives in India Kapil Dua and Pankaj Jain, our Business Development Managers in India, are responsible for raising Jersey’s profile in India and for providing technical support to promote bilateral trade, cross border mergers, investment and financing opportunities between India and Jersey.
Kapil Dua Kapil Dua, based in New Delhi, is a qualified Chartered Accountant with over nine years’ experience in strategy and market entry execution. Kapil spent five years as a corporate advisor and research analyst for foreign investors entering the Indian real estate, healthcare and hotel industry markets. Kapil has experience in establishing businesses in Hong Kong, Singapore, Germany and the UK and much of his attention has been focused on markets where there is a flourishing opportunity between these territories and India. As Head of Business Services for the UK India Business Council, Kapil advised UK organisations regarding compliance with Indian financial and legal regulatory frameworks.
Pankaj Jain Based in Mumbai, Pankaj Jain holds an MBA degree and a specialised Certificate in International Business and has more than eight years of industry experience in international trade and business incubation services. He is well connected within the Indian business community and has a good knowledge of the Indian system. Pankaj’s career includes significant international experience in promoting bilateral trade between India and countries including Germany, Canada, Australia, China, Myanmar, the UK and USA. As Deputy Director and Head of International Division for Confederation of Indian Industry (CII-WR), Pankaj has facilitated strategic ties-ups and collaborations in India for many foreign companies. He also has a considerable amount of experience in advancing the interests of the Indian business community internationally.
Head Office
Delhi Office
Mumbai Office
4th Floor, Sir Walter Raleigh House, 48-50 Esplanade, Jersey JE2 3QB Channel Islands
Jersey Finance Limited, (Sannam S4) 3rd Floor, Devika Tower 6, Nehru Place, New Delhi - 110019
Jersey Finance Limited, (Sannam S4) 9se, 9th floor, Ruby Tower, 29 Senapati Bapat Marg, (Tulsi Pipe Road), Dadar (W) Mumbai, India - 400028
T: +44 (0)1534 836000 E: jersey@jerseyfinance.je
www.jerseyfinance.je
T: +91 (0) 11 4212 4100 E: india@jerseyfinance.je
www.linkedin.com/company/jersey-finance
T: +91 (0) 22 6742 3211 E: india@jerseyfinance.je
@jerseyfinance
www.youtube.com/jerseyfinance
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Jersey Finance Members
The States of Jersey (Jersey’s Government)
Website: www.jerseyfinance.je/member-directory
Website: www.gov.je
Jersey Financial Services Commission Website: www.jerseyfsc.org
Jersey Association of Trust Companies Website: www.jatco.org
Law Society of Jersey Website: www.jerseylawsociety.je
Jersey Bankers’ Association Website: www.jerseybankersassociation.com
Useful Network of Contacts
Jersey Funds Association Website: www.jerseyfunds.org
Jersey Chamber of Commerce Website: www.jerseychamber.com
Jersey Society of Chartered and Certified Accountants Website: www.jscca.org
Locate Jersey Website: www.locatejersey.com
Jersey International Insurance Association Website: www.jerseyiia.org
www.jerseyfinance.je
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www.jerseyfinance.je