Issue No.4
Finance Update For international investors and their advisors
Jersey continues to perform well among rivals Jersey gains further recognition as a leading finance centre and global player
Plus Continuing partnership between Jersey and the City of London Hong Kong Stock Exchange listings and IPO update
Jersey Finance
Finance Update: For international investors and their advisors
Contents
Contents Jersey continues to perform well among rivals...................................................1 Green opportunities for the finance industry......................................................2 Jersey company lists on Oslo Axess Market.........................................................3 Jersey Foundations in action....................................................................................5 Restructure to repackage...................................................................................... 7 Innovation and high standards can position Jersey as a leading custody centre..................................................................... 9 Jersey’s new partnership structures a benefit to funds.............................. 11 Continuing partnership between Jersey and the City of London.............. 13 Jersey - closed for businesses?.......................................................................... 14 New Secondment Exchange Programme.......................................................... 15 Hong Kong Stock Exchange listings and IPO update.................................... 17
Jersey Finance
Finance Update: For international investors and their advisors
Introduction
Jersey continues to perform well among rivals As well as showing itself to be a “leading international finance centre, Jersey has been recognised as a centre of excellence for financial services on the global stage
”
By Geoff Cook Chief Executive, Jersey Finance
Despite the increased levels of scrutiny that have been directed at international finance centres recently, 2010 has been a good year for Jersey’s finance industry. It has continued to perform well among its rivals, gaining recognition as a leading centre and as a global player. At the International Fund and Products Awards 2010, recognised as a key event in the field of international finance, Jersey’s finance industry was awarded ‘Best International Finance Centre’. Jersey was commended on the quality of its funds, as well as its reputation on the international scene and its robust legislative and regulatory framework. The Global Investor magazine, one of the flagship titles published by Euromoney Institutional Investor PLC, also awarded Jersey ‘Best Offshore Centre’, offering further acknowledgement that Jersey meets the highest standard of corporate governance. This award also reinforced the excellent work Jersey’s finance industry conducts at a local and international level. Also encouraging was Jersey’s continued high ranking in the 2010 International Finance Centre Rankings, published by The Banker magazine. Jersey was rated 3rd in the ‘specialised finance centres’ category, ahead of Guernsey (4th) and the Isle of Man (6th). The Cayman Islands retained their 1st place position and Bermuda was 2nd.
seeking to expand their overseas operations, saw Jersey increase its overall score from 39.38 in 2009 to 41.24 in 2010. As well as showing itself to be a leading international finance centre, Jersey has been recognised as a centre of excellence for financial services on the global stage through its position in the latest Global Financial Centres Index (GFCI). Placing 22nd in the competitive rankings overall, Jersey was ahead of Guernsey (26th), Isle of Man (32nd) and Cayman (34th). Recognised as “working to change perceptions” and “rise above the status of offshore specialist centres”, Jersey, along with Guernsey, were the only offshore centres close to achieving wider recognition as ‘global specialists’. Also worthy of note is the continued solid performance of Asian centres in the GFCI, such as Hong Kong and Shanghai. This further emphasises the importance of these jurisdictions to the global financial community and the need for Jersey to maintain its promotional efforts in these markets. These recent endorsements of Jersey’s finance industry help to reinforce the excellent work that is being conducted by Jersey locally, in the UK and at an international level. ■
The rankings, which are not simply based on the size of the financial services industry in each location, but on the level of international business and the value offered to institutions
“Jersey was recommended on the quality of its funds, as
well as its reputation on the international scene and its robust legislative and regulatory framework
”
If you would like to contribute to the next issue of Finance Update please email: lucy.braithwaite@jerseyfinance.je
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Jersey Finance
Finance Update: For international investors and their advisors
News
Green opportunities for the finance industry As home to a leading international “finance centre, as well as a truly stunning natural environment, Jersey is well-placed to understand and respond to the need to find new ways of doing business
”
By Francis Katamba Secondee Technical Manager, Jersey Finance
The threats of climate change, energy insecurity and scarce water resources are becoming more and more acute. The demand for natural resources in developing countries is set to rocket in the coming decades, whilst advanced industrial nations still continue to consume resources at an alarming rate. This trend has led some observers to argue that, during the 21st century, environmental threats will present the greatest challenge to the stability and prosperity of nations. Clearly, the importance of developing sustainable ways to do business has never been greater. The environmental imperative for change is clear. What is also becoming increasingly understood is the potential for economic growth that these environmental drivers can offer. In response to the need to develop a sustainable future, huge sums of money are being invested into clean technologies and other environmentally responsible investments. It is in this context that Jersey Finance has conducted research into the opportunities for ‘green’ business available to the jurisdiction. As home to a leading international finance centre, as well as a truly stunning natural environment, Jersey is well placed to understand and respond to the need to find new ways of doing business.
Jersey Finance's ‘Green Report’ looks at several case studies and highlights local ‘green’ business initiatives. Promoting these successes allows Jersey to gain credibility as a jurisdiction which is open to ‘green’ business and it is hoped that similar ventures will follow. By showcasing these examples, the ‘Green Report’ allows readers to appreciate the wider financial expertise which Jersey has to offer. The funds, foundations and other structures described in the ‘Green Report’ all have an environmental theme, but the underlying products can be used by a wide range of investors. Jersey Finance has also engaged with Jersey’s government to gain an understanding of the governmental policies aimed at ensuring that the jurisdiction adopts a sustainable business agenda. Encouragingly, there are a number of important initiatives which have recently been implemented or are due to come into effect in the near future and these are discussed in the ‘Green Report’. It is vital that Jersey is open to ‘green’ business. The rewards on offer are considerable both financially and, more fundamentally, in order to safeguard the jurisdiction’s sustainable future. The ‘Green Report’ is available on Jersey Finance's website at www.jerseyfinance.je/green. ■
“It is vital that Jersey is open to ‘green’ business. The rewards on offer are considerable both financially and, more fundamentally, in order to safeguard the jurisdiction’s sustainable future
”
www.jerseyfinance.je
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Jersey Finance
Finance Update: For international investors and their advisors
New Entrants
Jersey company lists on Oslo Axess Market Jersey has attracted some of the world's “leading financial organisations and accordingly its workforce has the requisite experience to meet the diverse needs of its international investor base By Jane Dolby Section Head, Moore Stephens
”
Jane Dolby, who heads the Listings team at Moore Stephens Jersey, reports that the firm is involved in the affairs of a Jersey company recently listed on the Oslo Axess market. Jane commented that the company, Scottish Salmon (formerly known as Lighthouse Caledonia), is Scotland’s leading independent salmon farming company and accounts for around 20% of the country’s production of salmon. Operating mainly in the Hebrides and the remote West Coast of Scotland, the Company is committed to building a sustainable business within Scotland’s rural communities.
self-government, judicial independence and the freedom to set its own taxes. This has been the foundation of its success as an offshore financial centre.
Scottish Salmon discussed floating in 2009 and considered the most suitable jurisdiction. Discussing why they opted for a Jersey company, Jane said: “A key factor in establishing a Jersey company is the tax neutrality that the jurisdiction offers. There is no stamp duty payable in Jersey on share transfers, no capital gains or capital transfer tax, and a standard 0% corporate tax rate on Jersey incorporated companies. Jersey’s successful combination of stability, reliability, investor regulation and flexibility, not forgetting its internationally recognised professional expertise, were attractive to Scottish Salmon.”
When considering raising capital from investors, companies need to be confident that the highest levels of investor protection can be assured; Jersey’s inclusion on the Organisation for Economic Co-operation and Development ‘White List’ of jurisdictions is testament to this. The Jersey Financial Services Commission, the jurisdiction’s regulator, defines good regulation by two broad measures of quality: efficiency and effectiveness. The success of any jurisdiction is based on its ability to allow regulator and business providers to work hand-in-hand. Jersey is a great example of this, with such an approach enabling Jersey companies to work with the Commission to achieve client’s objectives effectively and efficiently.
Stability and reliability
Jersey banking law contains capital adequacy provisions tougher than those contained in the Basel requirements and, as such, is regarded a safe, secure home for the investment of clients and investor funds. Investor regulation
In four decades, Jersey has developed into one of the world's leading offshore finance jurisdictions, the basis of which is its political and economic stability and its constitutional rights of
“The success of any jurisdiction is based on its ability to
allow regulator and business providers to work hand-in-hand If you would like to contribute to the next issue of Finance Update please email: lucy.braithwaite@jerseyfinance.je
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Jersey Finance
Finance Update: For international investors and their advisors
New Entrants
“Scottish Salmon’s listing shows that Jersey is becoming
increasingly recognised as a leading international finance centre to be used for raising worldwide investor capital
”
Flexibility This flexibility of the Companies (Jersey) Law 1991 enables Jersey companies to adapt to changes in their market place. Scottish Salmon was originally formed as a private company, but once a decision had been agreed to move forward with the floatation, the company was easily able to alter its Memorandum and Articles of Association in order to become a public company. Internationally recognised professional expertise Jersey has attracted some of the world's leading financial organisations and accordingly its workforce has the requisite experience to meet the diverse needs of its international investor base. It is for this reason that Jersey was the first choice for Scottish Salmon and continues to be the first choice for other international clients.
Typically, Jersey companies are used for listing on the London market (both Main Market and AIM). However, Scottish Salmon’s listing shows that Jersey is becoming increasingly recognised as a leading international finance centre to be used for raising worldwide investor capital. Jane said: “We believe that this listing in Oslo is a first for Jersey and it has been a pleasure assisting this company. More exciting is the fact that they have applied to transfer to the Oslo Stock Exchange's main list, which we will very much look forward to.” ■
www.jerseyfinance.je
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Jersey Finance
Finance Update: For international investors and their advisors
Legal
Jersey Foundations in action
The Foundation structure “offers greater privacy to a Founder than is achievable presently with Trusts By Giles Corbin Partner, Mourant Ozannes
”
Since the Foundations (Jersey) Law 2009 came into force, we have seen a diverse range of practical applications to satisfy philanthropic, private and purpose objectives. Foundations have been most popular amongst individuals owning assets in Continental Europe, though Jersey is now seeing increased interest from clients in Hong Kong, Russia and the UK. Most Jersey Foundations are brand new incorporations, with one exception to date being a continuance of an existing Liechtenstein Stiftung. The continuance process worked well, so this should help pave the way for future migrations of Foundations to Jersey.
1. Jersey Philanthropic Foundations Sophisticated Ultra High Net Worth philanthropists are using Jersey Foundations and, in part, the attraction lies in the name itself. ‘Foundation’ is such a popular moniker for philanthropic structures that a number of charitable organisations bear that name, even though they are trusts (for example ‘The Bill and Melinda Gates Foundation’). The word ‘foundation’ suggests solidity and permanence, a body firmly anchored to the ground by virtue of publicly transparent registration. The Jersey Foundation has all these attributes making it suitable for those wishing to leave a legacy for long term philanthropic objectives.
Why a Jersey Foundation? Founders select the Jersey structure for a compelling combination of reasons: ■ The
Jersey Foundation has civil law recognition as a separate legal personality.
■ The
Foundations Law is drafted in a very permissive way which gives great flexibility to the way in which a Foundation is internally administered and externally as to how it provides benefit.
■ There
can be a high degree of Founder involvement where desired and appropriate for tax or legal reasons.
■ The Founder has a high degree of freedom to restrict or
positively prescribe the flow of information to beneficiaries. ■ The integral safeguards of the structure are the omnipresent
Guardian (supervisor of the Council Members) and the accountability of Members to the Foundation and regulatory oversight over the cornerstone Qualified Member by the Jersey Financial Services Commission (one of the Council Members must be a license holder with the Commission).
■ A
Jersey Foundation can have non-Jersey non-licence holding resident individuals or corporations acting as Council Members (to sit alongside the Qualified Member).
■ It
can have non-Jersey non-licence holding resident individuals or corporations, or committee of two or more thereof, acting as Guardian if desired.
■ Jersey
is a highly respected, well regulated and stable jurisdiction, with a quality kitemark of administration, legal and accountancy services.
■ Jersey
boasts a skill set groomed over the past 50 years in company and trust administration that transfers perfectly to the practical operational aspects of administering Jersey Foundations.
■ Jersey
Foundations are safeguarded by robust, internationally respected Royal Court judgments and by the Privy Council being the ultimate court of appeal.
If you would like to contribute to the next issue of Finance Update please email: lucy.braithwaite@jerseyfinance.je
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Jersey Finance
Finance Update: For international investors and their advisors
Legal
2. Very Private Jersey Family Foundations The Foundation structure offers greater privacy to a Founder than is achievable presently with Trusts. Beneficiaries of discretionary Jersey Foundations do not have any interest in the assets of the Foundation, nor any statutory right to see the accounts or non-public papers relating to the Foundation. The quid pro quo for the severance of direct accountability to the beneficiaries is the accountability of Council Members to the Foundation itself and the fact the Guardian is specifically charged with taking such steps as are reasonable in all the circumstances to ensure that the council of the Foundation carries out its functions. Founders who own assets located in civil law countries, including China, Russia, most of continental Europe, Asia and Latin America, naturally favour structures with the DNA of a Civil Law vehicle. This is where the corporate (distinct legal entity) quality of the Jersey Foundation really makes the difference. It is not only important for recognition but also makes for simpler structures because it negates the necessity
for a company to underlie a Trust, potentially saving separate company administration fees. 3. Jersey Orphan Foundations The Jersey Foundation is proving popular as an advantageous alternative to the Purpose Trust. Having no shares in issuance makes the Foundation the perfect natural orphan vehicle. As a corporate vehicle in its own right and therefore recognised in its own name, there are no private beneficiaries who might feel vulnerable in the event of legal action. There is often also a cost and complexity saving in using a Purpose Foundation as it provides a more comprehensive solution in one vehicle. Thanks to the flexibility of the Jersey Foundation, its use is only really limited by the imagination of the Founders and their professional advisers. In its first year the Jersey Foundation has enjoyed great success. The structure has already been put to a myriad of uses and this trend looks set to continue. ■
“The Jersey Foundation is proving popular as an advantageous alternative to the Purpose Trust ” www.jerseyfinance.je
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Jersey Finance
Finance Update: For international investors and their advisors
Legal
Restructure to repackage
Jersey, with its well-established “legislative and regulatory framework, looks set to continue as the jurisdiction of choice for many clients By James Gaudin Partner, Corporate and Commercial, Appleby Simon Tait Associate, Corporate and Commercial, Appleby
”
Restructure, restructure, restructure - the story for on and offshore capital market structures in the recent past. However, the last two months have seen a flurry of new activity. The deals may be less frequent and harder to structure, but at least, at last, they are completing. The story from global banks and intermediaries is that the post credit-crunch structured finance market is starting to re-emerge and Jersey, with its well-established legislative and regulatory framework, looks set to continue as the jurisdiction of choice for many clients. Jersey’s flexible and internationally recognised regime offers numerous options and advantages for clients looking to access the capital markets through a tax efficient structure. Jersey structures are tax transparent and will usually not be subject to income tax, VAT, withholdings tax, capital gains tax or the payment of duty on the issue or transfer of securities in Jersey. The Jersey Financial Services Commission are experienced regulators of both plain vanilla and more exotic capital markets structures, offering a fast, flexible and cost-effective solution to clients in a domicile that is internationally recognised for its high regulatory standards and innovation. Jersey’s attraction is further enhanced by its proximity to the Channel Islands Stock Exchange (CISX) which provides issuers with a competitively priced exchange capable of listing securities in the European time zone. The CISX is renowned
for its flexible and pragmatic approach and hosts a wide variety of capital market products, a feature that is particularly attractive to clients looking to list more exotic products in a fiscally acceptable domicile. Capital market structures established in Jersey commonly utilise one of Jersey’s corporate vehicles in the form of either conventional limited companies or protected or incorporated cell companies, the latter providing the advantage of statutory ring fencing. Limited partnerships and master trust structures are also used regularly and we are starting to see clients appreciate the advantages of using Jersey Foundations over the traditional charitable trust.
“We are starting to see clients appreciate the advantages of using Jersey Foundations over the traditional charitable trust ” If you would like to contribute to the next issue of Finance Update please email: lucy.braithwaite@jerseyfinance.je
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Jersey Finance
Finance Update: For international investors and their advisors
Legal
“Jersey vehicles are being utilised by clients from a variety of jurisdictions ranging from Israel...to the developing markets of China and India
�
Whilst the potential uses for these structures are unlimited, Jersey vehicles have been used in a wide variety of capital markets transactions including: Tier 1 Capital fund raising. Jersey vehicles are frequently used by global banks to raise new capital through the issue of securities by a Jersey incorporated subsidiary. With Basel III due to be implemented by 2012 this trend looks set to continue. Acquisition and other finance. Cash box structures have been a feature of the recent market turmoil as UK PLCs look to strengthen their balance sheets or raise acquisition finance through the issue of convertible bonds by Jersey incorporated subsidiaries. Debt and equity programme platforms. Many of the world's leading financial institutions have established programme platforms in Jersey issuing short, medium and long term debt instruments as well as preference shares and other equity interests. ICC and PCC structures are particularly well suited to this purpose, providing a fast, cost-effective method of establishing and expanding the platform and ensuring there is no cross contamination of assets between series or classes.
Securitisations. A wide range of receivables have been securitised using Jersey structures from mortgages and other loans, to oil, gas and aircraft. Master trust structures have been particularly popular for the securitisation industry in Jersey. Repackagings. A number of large repackaging vehicles have already been established in Jersey and, with baskets of illiquid and/or underperforming assets generated by the recent downturn, repackaging through a Jersey structure can provide clients with alternative sources of liquidity. In addition to structuring deals originating out of the more mature US and European markets, Jersey vehicles are being utilised by clients from a variety of jurisdictions ranging from Israel, where Jersey vehicles are being used to raise finance for real estate acquisitions, to the developing markets of China and India. The work that Jersey Finance is doing in these jurisdictions will be crucial to maintaining Jersey's traditionally strong position in this area. â–
www.jerseyfinance.je
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Jersey Finance
Finance Update: For international investors and their advisors
Funds
Innovation and high standards can position Jersey as a leading custody centre Around 75% of the “total value of funds currently under administration in Jersey are now ‘specialist funds’
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By Adam Buxton Relationship Manager, Deutsche Bank International Limited
Jersey has worked hard to establish itself as a leading European jurisdiction for ‘specialist funds’ work over the past decade and is recognised as a centre for the domiciliation, management and administration of such funds. Stemming from this success, Jersey has also seen significant growth in the custody services it can offer. New funds The trend over recent years has seen a move away from traditional fund structures into more innovative structures such as Protected Cell Companies (PCCs) and Incorporated Cell Companies (ICCs). These offer fund companies and investors a range of benefits including cost efficiency and ‘time to market’. At the same time, investment strategies have focussed on more esoteric asset classes such as renewable energies like carbon credits or wind farms, art and car collections and even wines. Around 75% of the total value of funds currently under administration in Jersey are now ‘specialist funds’.
The launch of Jersey’s Expert Fund regime in 2004 had a hugely positive impact in terms of enhancing flexibility and improving the speed of bringing funds to market and a revolutionary new fund structure has recently been launched that could help further stimulate the market. Using Jersey’s Incorporated Cell Company legislation, this template, called the ‘Standard Form Expert Fund’ (SFEF) and devised by Herald Fund Services and law firm Crill Canavan, allows individual investment funds to be established as separate incorporated cells. It is also possible to appoint standard legal, advisory, administrative, banking, auditing and custody functionaries for each cell – all provided by specialists, many of which are based in Jersey. The SFEF is already attracting significant interest owing to the ease and reduced costs involved in launching investment funds. In order to ensure flexibility in fund structuring, Crill Canavan is currently developing the SFEF concept further to provide both a company platform and a partnership platform, each of which will use an ICC as a key component.
“The SFEF is already attracting significant interest owing to the ease and reduced costs involved in launching investment funds
”
If you would like to contribute to the next issue of Finance Update please email: lucy.braithwaite@jerseyfinance.je
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Jersey Finance
Finance Update: For international investors and their advisors
Funds
Corporate governance Jersey fund practitioners realise, however, that with greater innovation, flexibility and sophistication comes a growing need to focus on responsibility and corporate governance. As well as cutting down on costs, the SFEF structure also presents an opportunity for improved oversight, with cooperation and strategic partnerships between the functionaries of each fund structure. Deutsche Bank is pleased to have been appointed as a Custodian to the SFEF. Naturally, the diversification of these ‘new funds’ makes the role of a Custodian much more varied and brings into focus its responsibilities. In a post-Madoff world, investors are quite rightly calling for enhanced supervision to ensure that their assets are appropriately controlled and managed. Against a backdrop of increasing global financial services regulation, particularly within the funds industry, Jersey has been quick to commit to implementing the highest standards of compliance and governance.
The SFEF is one example of how Jersey’s fund professionals, in conjunction with the JFSC, are able to offer innovative solutions within a robust regulatory framework. Not only can this approach help propel Jersey to the fore as a leading international funds centre, it can also offer a real opportunity for future growth in its funds industry. Investors and fund practitioners appreciate that Jersey takes its robust regulation and corporate governance responsibilities very seriously and this, in tandem with a growing reputation as a centre for specialist ‘new funds’ work, will lead to a steady flow of high value, high quality business over the coming months and years. ■
“Against a backdrop of increasing global financial services regulation, particularly in the funds industry, Jersey has been quick to commit to implementing the highest standards of compliance and governance
”
www.jerseyfinance.je
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Jersey Finance
Finance Update: For international investors and their advisors
Funds
Jersey’s new partnership structures a benefit to funds Since it is expressly not to be “regarded as a body corporate, an SLP is not subject to the rules and obligations applicable to companies
”
By Kate Anderson Associate, Voisin
The States of Jersey recently adopted laws providing for the establishment of Incorporated Limited Partnerships (ILPs) and Separate Limited Partnerships (SLPs), two more attractive vehicles for the already wide array of structures available in Jersey.
applicable when considering the relationships between companies, directors and shareholders. For example, a general partner must ‘act honestly and in good faith with a view to the best interest of the ILP’ which mirrors a director’s statutory duty under the Companies (Jersey) Law 1991.
Separate Limited Partnerships The SLP Law has been heavily based upon the Limited Partnerships (Jersey) Law 1994. An SLP is effectively a limited partnership with the ability to contract in its own name and sue and be sued in its own name, although the named general partner may still contract on behalf of the SLP and therefore also be sued. Since it is expressly not to be regarded as a body corporate, an SLP is not subject to the rules and obligations applicable to companies. Where a ‘person’ is required, for example a carried interest partner in a standard Jersey Limited Partnership, but tax transparency needs to be maintained, the SLP is an ideal vehicle to use. The legislation provides that SLPs will be tax transparent for both income and capital in Jersey and, at the moment, UK commentators are envisaging that the UK position will be the same for UK-based limited partners. Incorporated Limited Partnerships Whilst the SLP could be described as a useful addition to the limited partnership family, the ILP provides an interesting and innovative vehicle for collective investment. The ILP Law is also based upon the 1994 legislation and is intended to complement this. An ILP, however, will be incorporated and with incorporated status will come certain important considerations and obligations for both the general partner and the limited partners. These are analogous to those
An ILP will, like a company, have perpetual succession and any winding up will be governed by Regulations, unlike the provisions made for winding up all other types of limited partnership. The ILP itself will also have criminal liability. An interesting distinction, however, is that unlike a conventional limited partnership, where the general partner assumes primary and sole responsibility for the debts of the partnership (with certain exceptions e.g. where limited partners become involved in the management of the limited partnership and incur a liability), with an ILP the primary liability rests with the partnership. The general partner only assumes liabilities to the extent that the same have not been satisfied out of the assets of the ILP. It must be noted that although under Jersey law the ILP is tax transparent for both income and capital, UK commentators are suggesting that in the UK it will only be tax transparent for income and not capital. Therefore for any structure which requires capital gains transparency, the ILP will not be the vehicle of choice. The further obligations on the general partner of an ILP, and the ability to implement regulations with regard to winding up, will make the ILP a more appealing vehicle for collective investment. Investors will benefit from these enhanced requirements which, given their limited involvement
“The ILP provides an interesting and innovative vehicle for collective investment ” If you would like to contribute to the next issue of Finance Update please email: lucy.braithwaite@jerseyfinance.je
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Jersey Finance
Finance Update: For international investors and their advisors
Funds
“The two new types of limited partnership are expected to be very well
received by the funds industry, providing fund promoters with an extra degree of flexibility in structuring their investment vehicles in Jersey
�
in the running of the ILP, will provide vital safeguards for passive investors. In addition, it has been suggested by some commentators that, for limited partnerships which will invest in jurisdictions not familiar with the concept of a limited partnership, the fact that an ILP is a body corporate will add an extra layer of protection for the limited partners in maintaining their limited liability; the argument being that a standard limited partnership is a contractual arrangement and thus the limited liability is contractual and open to attack, whereas the ILP is a body corporate and therefore the protection is legislative. Whether a standard limited partnership would ever be attacked in this way is debatable but the ILP may prove attractive for those investors who are used to a corporate structure and the comfort afforded by the traditional limitation of liability that comes with a traditional corporate structure.
More flexibility The two new types of limited partnership are expected to be very well received by the funds industry, providing fund promoters with an extra degree of flexibility in structuring their investment vehicles in Jersey and affording investors and service providers alike additional comfort and security in dealing with limited partnerships. Through their introduction, Jersey is seeking to maintain its competitive edge in the international corporate and fund arena by continuing to develop the wide range of structures available to meet the needs and demands of the international consumer. â–
www.jerseyfinance.je
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Jersey Finance
Finance Update: For international investors and their advisors
UK
Continuing partnership between Jersey and the City of London and the City both understand “theJersey critical importance of establishing a strong dialogue and making the case for our financial services industry By Nick Anstee Late Lord Mayor of the City of London
”
When people talk about the UK financial services industry they inevitably associate it with the Square Mile. However, as an island nation we know better than most how important connectivity with other centres – like Jersey – is when it comes to sustaining our position as a world-leading global business hub. Aside from being subject to the same Sovereign, the UK and Jersey also share many synergies when it comes to the world of finance. Even during the banking crisis, Jersey was the largest provider of net deposits, supplying in the region of $218.3 billion to UK banks in the second quarter of 2009 alone. And of the 60 Chinese companies listed on the London Stock Exchange's Alternative Investment Market, a quarter were incorporated in Jersey – thereby delivering significant professional fees for the UK. So Jersey's strength as an offshore centre therefore contributes to the City's success. This is not one way traffic and having a vibrant London on your doorstep clearly also helps to attract some of the leading firms based in Jersey. The recent Review of British Offshore Financial Centres highlighted Jersey's strong performance across all areas, which is directly linked to the value that we generate for one another. Jersey's authorities recognised this by setting up a representative office in early 2009 as proof of Jersey’s commitment to London
and to provide a platform to facilitate regular interaction between key players on both sides of the Channel. And as the top offshore financial centre – according to the latest Global Financial Centres Index – Jersey, like London, acts as a gateway to a range of markets. The City of London and Jersey Finance have offices in Asia and an agreement for listing companies in Hong Kong. We are also working together in Brussels to meet the regulatory challenges facing us over the coming years. From our differing standpoints, Jersey and the City both understand the critical importance of establishing a strong dialogue and making the case for our financial services industry. We worked well together to secure a satisfactory compromise on the Alternative Investment Fund Managers Directive, particularly on the third-country passport issue, and must continue to put forward a united voice when responding to proposals from government and regulators – hard, fast and early. That is why I hope both jurisdictions will continue to work closely with TheCityUK, which is playing a vital role in coordinating the promotion of financial services internationally, while broadening understanding of their importance to the audience at home. This mutually beneficial relationship is vital to the economic prosperity of both the UK and Jersey. Through partnership, financial services can play a vital role in bridging the water that separates us. ■
“The recent Review of British Offshore Financial Centres
highlighted Jersey's strong performance across all areas, which is directly linked to the value that we generate for one another
”
If you would like to contribute to the next issue of Finance Update please email: lucy.braithwaite@jerseyfinance.je
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Jersey Finance
Finance Update: For international investors and their advisors
UK
Jersey – closed for businesses?
Aided by our commitment to “appropriate regulation and substance of activity, Jersey has invested in building the best possible relationship with EU decision makers
”
By Martin De Forest-Brown Director, International Finance, States of Jersey
An odd title perhaps, but whilst promoting Jersey in London, this is the comment I hear most often. Let me be clear. Thanks to the excellent promotion by Jersey Finance and the industry itself, there are an awful lot of specialist finance industry advisers with whom we do business on a regular basis that understand Jersey’s reputation as a quality jurisdiction with high standards of regulation. However, for the rest of the population, and even some of the above, they mostly seem to have the impression that Jersey is closed when it comes to actually relocating there. The government of Jersey has therefore decided to establish a London office to ensure the presence of a government voice in order to explain, amongst other things, exactly what our policy is on this point – namely that for the right sort of high value, low footprint businesses our doors are wide open as part of Jersey’s plans for growth. So on the 1st October 2010, after four years of understanding and representing Jersey and its finance industry across the globe, I relocated to focus greater attention on London. Quite simply Jersey has a great offering for the businesses and families that might relocate. As far as business is concerned, we have a wide range of blue chip financial service businesses,
legal and accounting advisers and support services, as well as an accessible regulator and government. As a result of our skilled, English-speaking workforce, capacity, accessibility (with flights to and from London City, Gatwick and elsewhere) and robust telecoms, Jersey is arguably the leading offshore jurisdiction. This is evidenced by our high ranking in the independent GFCI rankings, in which we place above Guernsey, Isle of Man and Cayman and is supported by a sound legal system, low tax and stable fiscal regimes, all underpinned by a strong commitment to growth. Additionally, possibly more than any other offshore jurisdiction, and aided by our commitment to appropriate regulation and substance of activity, Jersey has invested in building the best possible relationship with EU decision makers. This bodes well for future business opportunities. As for families, Jersey offers high quality housing, first rate schools and health services, beautiful countryside, beaches, great restaurants and the high quality of life all of that provides. If you would like to hear more about my activities or would like to discuss how I might support your business development activities, please contact me on m.deforest-brown@gov.je or call in when you are next in London. ■
“Jersey has a great offering for the businesses and families that might relocate ” www.jerseyfinance.je
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Jersey Finance
Finance Update: For international investors and their advisors
Greater China
New Secondment Exchange Programme
Jersey has made great strides in “building a strong relationship with China in recent years - initiatives like this Secondment Programme really help to reinforce that relationship
”
By Zhaoan Li Head of Greater China Business Development, Jersey Finance
Legal professionals in Jersey and China recently benefitted from a newly established Secondment Exchange Programme, designed to further strengthen Jersey’s growing business links with Greater China. Jersey firms partnered with King & Wood, one of the largest law firms in the region. The Secondment Programme has received a very positive response from both Chinese and Jersey lawyers and it is hoped that the scheme will become a long term arrangement. Lianghua Wang, Partner at King & Wood, was instrumental in helping to establish this programme. The first Jersey participants, Lauren Fletcher and Claire O’Boyle, headed to Shanghai recently for a period of three months. King & Wood will send a number of their lawyers to work on a secondment basis in Jersey firms in the near future. Geoff Cook, Chief Executive, Jersey Finance, said “Jersey has made great strides in building a strong relationship with China in recent years, through regular visits to the Far East, the appointment of Zhaoan and the opening of a representative office in Hong Kong last year. Initiatives like this Secondment Programme really help to reinforce that relationship. Not only will it give Jersey lawyers the opportunity to gain experience in a key market, it will also enable Chinese lawyers to come and see for themselves the kind of high quality work that is done here.”
First Jersey participants Lauren Fletcher, Associate in the Business and Trust Law Group at Ogier, Jersey, recently completed her secondment at King & Wood. Lauren specialises in investment funds (both listed and non-listed), corporate finance and debt listings. As a Legal Secondee in the Foreign Direct Investments team at King & Wood, Lauren assisted with a wide range of matters including legal due diligence on potential domestic acquisitions, silver and aluminium purchases, intellectual property rights, breach of contract, shareholder activism, import and export laws, structuring foreign direct investment in China and private wealth structuring issues. She commented, "The experience of working for a top tier firm in the rapidly growing city of Shanghai has been invaluable. The type of work in which I was involved, although different from my usual practice, was interesting and challenging. It has been useful to gain an understanding of the legal framework, in particular issues affecting foreign vehicles investing into China and outbound investment together with the appropriate method of structuring such investment. I enjoyed meeting with contacts both internally and externally (including representatives of local companies and city firms with offices in Shanghai) to highlight the benefits of Jersey in respect of both inbound and outbound investment, IPOs and private wealth, and to gain a greater understanding of the approach to business in the region."
“The experience of working for a top tier firm in the rapidly growing city of Shanghai has been invaluable ” If you would like to contribute to the next issue of Finance Update please email: lucy.braithwaite@jerseyfinance.je
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Jersey Finance
Finance Update: For international investors and their advisors
Greater China
“Jersey has made great strides in building a strong relationship with China in recent years - initiatives like this Secondment Programme really help to reinforce that relationship
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Claire O’Boyle also joined King & Wood on secondment recently. As an Associate in the Corporate Department at Carey Olsen, Jersey, Claire’s area of expertise is in corporate finance, particularly AIM and Main Market LSE listings, mergers and acquisitions and general corporate transactions. Before leaving Jersey for Shanghai, she was working as part of the Carey Olsen team advising West China Cement Limited on its successful global offering and listing on the Hong Kong Stock Exchange (HKEx). At King & Wood, Claire worked in the Securities Department and found the chance to assist on HKEx IPOs a great opportunity to become more familiar with how the Exchange works. Claire also assisted on a NASDAQ IPO from the underwriter’s side and attended various marketing and networking events. She commented "Being able to see at first hand the rapidly expanding and advancing nature of China’s - and particularly Shanghai’s economy and development and to gain a better understanding of how business is conducted in this region was hugely beneficial. King & Wood is one of the biggest law firms in China so the quality of the transactions in terms of value, complexity and clients was very high."
Claire O’Boyle, Carey Olsen; Zhaoan Li, Jersey Finance; and Lauren Fletcher, Ogier
The new Secondment Programme is an exciting development for Jersey. The ongoing transfer of knowledge and skills between the jurisdiction and China will undoubtedly serve to strengthen links and develop business in the region. ■
www.jerseyfinance.je
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Jersey Finance
Finance Update: For international investors and their advisors
Greater China
Hong Kong Stock Exchange listings and IPO update in global equity markets “hasTheledpick-up to increased appetite, from a low base, for IPOs from which Jersey has benefitted
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By Guy Coltman Partner, Carey Olsen
Following the decision of the Hong Stock Exchange to approve Jersey as a jurisdiction of incorporation for admission to the Exchange, the first Chinese business held through a Jersey company has been listed successfully. West China Cement Limited (WCC), a leading cement producer in the Shaanxi province of China and recognised in 2009 by Forbes magazine as one of ‘Asia’s 200 Best Companies with a Market Capitalization Under US$1billion’, completed its global offering and listing on the Hong Kong Stock Exchange (HKEx) on 23 August 2010. The global offering, which comprised of a Hong Kong public offering and an international placing, was substantially oversubscribed and raised approximately HK$1,280 million. WCC de-listed from AIM in conjunction with its admission to the HKEx. Carey Olsen advised WCC on the Jersey legal aspects of the transaction, which went smoothly from a Jersey perspective, with no material Jersey issues.
exchanges both in Europe and North America. The ability to list in Hong Kong, together with the advantages of using Jersey companies to list on the London market (Takeover Code application, CREST settlement, no stamp duty, tax neutrality and a flexible yet recognised company law regime), now opens the possibility of dual listings on those markets on a basis that is not open to many other competitor jurisdictions. The WCC listing follows on from an increase in activity in the Initial Public Offering (IPO) market, which has directly affected business levels in Jersey. Carey Olsen, along with other law firms, is experiencing an increase in transactions in this sector across a variety of markets. The pick-up in global equity markets has led to increased appetite, from a low base, for IPOs from which Jersey has benefitted. Jersey therefore continues to be a popular jurisdiction in which to incorporate listing vehicles - a trend which it is hoped will continue in the Greater China market going forward. ■
While Jersey and Hong Kong company law are largely based on English company law, where there are differences between the two, the HKEx will expect any issues to be bridged by way of amendments to a Jersey company’s articles of association (it's key constitutional document). To all intents and purposes, the protections and control afforded to shareholders and the company’s internal management will therefore largely reflect the norm under Hong Kong law and will be in line with market expectations. The WCC listing is a landmark transaction for Jersey. Typically, Jersey companies are mainly used for listing on the London market (both Main Market and AIM), as has been seen by the recent successful listing on AIM of Asia Ceramics Holdings plc. However, listings of Jersey companies have also been made on Euronext, NASDAQ, the Australian Stock Exchange and other
If you would like to contribute to the next issue of Finance Update please email: lucy.braithwaite@jerseyfinance.je
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