Directors' Liabilities and Indemnities under the Companies (Guernsey) Law 2008
The Companies (Guernsey) Law 2008 (the "2008 Law") introduced some significant changes to the provisions of the memorandum and articles of Guernsey companies from 1 July 2008. However, transitional provisions are in place to allow pre-1 July 2008 companies until 1 July 2011 to bring their constitutional documents into line with the 2008 Law.
The provisions enabling directors to receive indemnities from a company under the 2008 Law are significantly narrower than those previously in force under the Companies (Guernsey) Law 1994 (the "1994 Law").
In summary, the new law provides that:
- A company cannot exempt a director or indemnify him for any liability in connection with any negligence, default, breach of duty or breach of trust in relation to a company (whether arising from his own acts or the acts of others).
- A company or an associated company may purchase insurance to cover directors' and officers' liabilities for negligence, default, breach of duty or breach of trust.
There is a significant revision to the definition of the types of act for which a director may be indemnified. The 1994 Law did not deal with issues regarding general common law liabilities relating to negligence, default, breach of duty or breach of trust. Indemnities in respect of such acts are now clearly rendered void by the provisions of the 2008 Law.
Jersey Partnership Law Update
The Limited Partnerships (Amendment) (Jersey) Law 2009 came into force on 1 March 2009. The Law makes a number of amendments to the Limited Partnerships (Jersey) Law 1984, including the introduction of new provisions to ensure that a limited partnership has the occupier's authorization to use premises as its registered office and to enable the general partners to request a limited partnership's deregistration.
Further draft legislation relating to partnerships is expected to be put before the States of Jersey later this year, including the Incorporated Limited Partnerships (Jersey) Law 200- (the "ILP Law"), and the Separate Limited Partnerships (Jersey) Law 200- (the "SLP Law"). The ILP Law will provide for the establishment of incorporated limited partnerships ("ILPs") and the SLP Law for separate limited partnerships ("SLPs"). The SLP will have legal personality but without being a body corporate (as is the case for a Scottish limited partnership) and the ILP will be a body corporate.
With one or two exceptions the principles are effectively the same as those which already apply under the codes applicable to Jersey licensed fund services business.
Jersey and Guernsey Takeovers and Mergers
The Companies (Takeovers and Mergers Panel) (Jersey) Law 2009 (the "Law") came into force on 1 July 2009. Since its creation in 1968, the UK Panel for Takeovers and Mergers (the "Panel") has regulated takeovers in the UK and the Crown Dependencies on an informal basis by reference to the City Code on Takeovers and Mergers (the "Code"). However, following implementation by the UK of the EU Directive on Takeover Bids (2004/25/EC) (the "Directive"), the UK gave the Code (the rules within which derive from the Directive) a statutory footing by the enactment of Chapter 1 of Part 28 of the UK Companies Act 2006 (the "UK Law").
The Panel, together with the States of Jersey, considered that, as the Code had been placed within a statutory framework for the UK, it was appropriate to establish a similar framework in Jersey. The Law provides the necessary framework, closely following the UK Law, and the Panel has been empowered to continue its role within that framework as the body which oversees takeovers and mergers in Jersey. An equivalent system has been implemented in Guernsey pursuant to the Companies (Panel on Takeovers and Mergers) Ordinance, 2009.
jersey Partnership Law Update
The Companies (Amendment No.4) (Jersey) Regulations 200- are expected to come into force early this year. The regulations insert a substitute Part 16 into the Companies (Jersey) Law 1991, as amended (the "Companies Law"), and have been proposed for two reasons:
- To respond to the impact on Jersey-based auditors of European Union Directive 2006/43/EC which aims to introduce harmonised provisions in all EU member states relating to auditor eligibility and independent oversight (or quality assurance).
- To improve the Island's level of compliance with "IOSCO Principle 16": the International Organisation of Securities Commissions' standard relating to accounting and auditing matters.
The Companies (Amendment No.10) (Jersey) Law 2009 came into force in November 2009. The law amends the Companies Law and (i) provides an additional right of appeal against certain directions of the JFSC, (ii) clarifies the law with regard to distributions and reductions of share capital, (iii) introduces a new offence where companies do not comply with obligations regarding the keeping of a registered office in Jersey, and (iv) introduces provisions permitting companies to specify in their articles of association a higher than two-thirds majority for the passing of special resolutions.
The Companies (Amendment No. 3) (Jersey) Regulations 2009 came into force on 3 March 2009. The Regulations amend the Companies Law by widening the definition of "open-ended investment company" to include other funds whose shares may be subject to frequent redemption, as well as making other minor amendments.
Jersey Partnership Law Update
As noted above, the Companies (Guernsey) Law, 2008 (the "2008 Law") came into force on 1 July 2008. The 2008 Law consolidates the various companies laws enacted from 1994 to 2008 and all of the Ordinances made thereunder (including, for example, the Protected Cell Companies Ordinance 1997 and the Incorporated Cell Companies Ordinance 2006) as well as introducing a number of entirely new concepts into Guernsey law. The 2008 Law has been amended and supplemented by amendment ordinances regulations which, among other things, provide for a transitional period for the implementation of certain provisions, amend the provisions dealing with disclosure of directors' interests, provide that the restrictions concerning the issue of shares by directors have not yet come into force and provide more detail on the audit exemptions avaliable and provisions concerning beneficial ownership of Guernsey companies and financial assistance.