The decision as to where to incorporate an offshore company can only be made based on the specific features of the transaction in question. It is not possible to make a general assertion that one jurisdiction is always more appropriate than another. This note does not therefore attempt to guide the reader to any one jurisdiction over another. Instead it highlights some of the features common to the Cayman Islands, British Virgin Islands (the "BVI") and Jersey, describes certain of the legal requirements in respect of companies in each jurisdiction and examines some of the factors to consider when deciding which jurisdiction to use. The Cayman Islands and the BVI are British Overseas Territories, and Jersey is a Crown Dependency, and as such offer all the security and stability traditionally associated with the British flag. Each jurisdiction is responsible for its own internal self-government, while the United Kingdom remains responsible for external affairs, defence and the courts. All three jurisdictions have an independent legal and judicial system. For the Cayman Islands and BVI those are based on English common law, whilst Jersey is additionally influenced by Norman customary law. Each has a right of final appeal to the Privy Council in London. Each jurisdiction benefits from advanced telecommunications, infrastructure and support services, and an educated and well-trained workforce. In all three jurisdictions, policies and legislation have been developed in close partnership with the private sector to ensure that they meet the needs of the financial community. Through this partnership, the respective governments have established sophisticated and efficient supervision and regulation to safeguard their jurisdiction's integrity while creating an operating environment that is highly attractive to private enterprise. CAYMAN ISLANDS BRITISH VIRGIN ISLANDS JERSEY Timing of Incorporation Incorporation in one to two days (within 24 hours on payment of US$488 express service fee). The speed of incorporation means Incorporation often within four - five hours (but up to 24 hours). The speed of incorporation means that Walkers do not usually hold shelf Incorporation in one to two days (within four hours on payment of a £200 expedition fee).Page 2 CAYMAN ISLANDS BRITISH VIRGIN ISLANDS JERSEY that Walkers do not usually hold shelf companies. companies. Types of companies Exempted company Exempted Limited Duration company Ordinary Resident / Non-Resident company Foreign company Segregated Portfolio company Limited by guarantee company BVI Business company Limited / Unlimited company Limited by guarantee company Restricted Purposes company Segregated Portfolio companies Public / Private company Limited / Unlimited company Par Value / No Par Value company Limited by guarantee company Limited Life company Incorporated Cell / Protected Cell company Annual government fees Range between US$732 and US$3,010. Range between US$350 and US$1,100. Annual return filing fee of £150. Legal form A company has separate legal personality. A company is a legal entity in its own right separate from its members and continues in existence until it is dissolved. A company is a legal entity in its own right separate from its members and continues in existence until it is dissolved. Nature of business permitted The objects of a company will be set forth in the memorandum. In a majority of cases, the objects clause will be worded very broadly using a formulation such as, "the objects for which the company is established are unrestricted and the company shall have full power and authority to carry out any object not prohibited by any law". It is usual for the memorandum to contain a very broadly worded paragraph such as, "the business and activities of the company are limited to those business and activities which it is not prohibited from engaging in under any law for the time being in force in the British Virgin Islands". Subject to the Law, any other enactment and its memorandum and articles, a company has unrestricted objects and all the powers of a natural person. Registration requirements Upon the filing of the memorandum, the appropriate filing fees and a An application to incorporate is made by filing the memorandum and articles An application to incorporate is made to the Jersey Registrar of Companies Page 3 CAYMAN ISLANDS BRITISH VIRGIN ISLANDS JERSEY declaration from the subscriber to the effect that the operation of the company will be conducted mainly outside the Cayman Islands, a company shall be deemed to be registered, and the Registrar of Companies (the "Registrar") shall issue a Certificate of Incorporation. The Certificate of Incorporation will generally be issued within five working days, or within two working days upon payment of an additional express service fee to the government. signed by the proposed registered agent (the "RA"), as incorporator with the Registrar of Corporate Affairs (the "Registrar"). The RA must also file its consent to act. The application to incorporate can only be made by the RA. Filing is made online in real time but allow 24 hours to receive filed copies of the memorandum and articles, and a certificate of incorporation. (the "Registrar") by filing a memorandum and articles signed by the proposed subscribers, and paying the relevant filing fee. A description of proposed activities must be given on incorporation as some activities may be regarded as "sensitive". A fee of £200 may also be payable to establish a company as an "International Services Entity" which exempts it from the Jersey goods and services tax. Government regulatory approvals No governmental or regulatory approvals are required for incorporation and listing of a company which is not otherwise regulated as a bank, trust company, mutual fund, mutual fund administrator, insurance company or company manager. No governmental or regulatory approvals are required for incorporation and listing of a company which is not otherwise regulated as a bank, trust company, mutual fund, mutual fund administrator, insurance company or company manager. Consent by the Jersey Financial Services Commission ("JFSC") to the issue of shares is required and is provided as of course on incorporation of a Jersey company. Certain financial services activities are regulated and require a licence or other authorisation from the JFSC eg companies wishing to operate as deposit taking institutions, trust companies or insurance companies. Name A name can be reserved (US$74 for one month) in anticipation of the incorporation of a company. It is NOT necessary for a company's name Generally, the name of a limited company, must end with the word 'Limited', 'Corporation', 'Incorporated'; 'Societe Anonyme' or 'Sociedad A name should be reserved in anticipation of the incorporation of a company and this may be done online without cost. The Registrar may Page 4 CAYMAN ISLANDS BRITISH VIRGIN ISLANDS JERSEY to contain words or abbreviations such as 'Limited', 'Ltd', 'Inc', 'Corp' etc but there are certain names for which the consent of the Registrar is required, for example, names including the words 'royal', 'imperial', 'bank', 'assurance', 'insurance'. Dual company names permitted; one in English and one in a foreign script (which need not be a direct translation of the English name). Anonima'; or the abbreviation 'Ltd', 'Corp', 'Inc' or 'S.A.'. The name of an unlimited company must end with the word 'Unlimited' or the abbreviation 'Unltd'. If required a name can be reserved (US$25 for 90 days). refuse to register the name where in the Registrar's opinion the name is misleading or otherwise undesirable. The name of a limited company, must end with the word 'Limited', 'Ltd', 'avec responsabilite limitee', 'a.r.l.', 'public limited company' or 'PLC'. Annual general meetings No AGM is required. No AGM is required. Unless all shareholders of a company agree in writing to dispense with the requirement for an AGM, an AGM must be held each year and the first AGM must be held within eighteen months of incorporation. In the case of a public company not more than eighteen months may elapse between AGMs and in the case of a private company not more than 22 months may elapse between AGMs. AGMs need not be held in Jersey. Registered office A company must have a registered office situated in the Cayman Islands to which all notices and communications may be addressed. A company must have a registered office which is a physical address in the BVI, and a RA. In most, if not all cases, the office of the RA is also the registered office of the company. A company must maintain a registered office situated in Jersey to which all notices and communications may be addressed. Restrictions on number of A company must have a minimum of A company must have a minimum of A private company must have a Page 5 CAYMAN ISLANDS BRITISH VIRGIN ISLANDS JERSEY shareholders one shareholder at any time. Unless provided for in the articles, there is no maximum number of shareholders. A company must have at least one share in issue, but there is no minimum paid-in capital requirement and companies may elect one or more currencies in which shares are issued. one shareholder at any time. Unless provided for in the articles, there is no maximum number of shareholders. A company must have at least one share in issue, but there is no minimum paid-in capital requirement and companies may elect one or more currencies in which shares are issued. minimum of one shareholder at any time. A public company must have a minimum of two shareholders at any time. Unless provided for in the articles, there is no maximum number. A company must have at least one share in issue, but there is no minimum paid-in capital requirement and companies may elect one or more currencies in which shares are issued. Residency requirements There are no residency or qualification requirements for directors or shareholders of a company. Corporate directors are permitted. However, if the company applies to the Cayman Islands Monetary Authority ("CIMA") for a particular licence, there may be residency requirements for the director. A company is not required to hold board meetings or shareholder meetings in the Cayman Islands or anywhere else unless so required by its articles. There are no residency or qualification requirements for directors or shareholders of a company. Corporate directors are permitted. A company is not required to hold board meetings or shareholder meetings in the BVI or anywhere else unless so required by its articles. There are no residency or qualification requirements for directors or shareholders of a company. Corporate directors are permitted. No requirement by law to appoint Jersey resident directors or officers, a resident representative or any other service provider in Jersey save if necessary in order to have a Jersey registered office. However, the JFSC normally requires two Jersey resident directors for 'special purpose vehicles' and for fund services businesses. Directors A minimum of one director is required but we would recommend that at least two directors be appointed. We would also recommend the A minimum of one director is required but we would recommend that at least two directors be appointed. We would also recommend the A company must have a minimum of one director in the case of a private company and a minimum of two directors for a public company. Page 6 CAYMAN ISLANDS BRITISH VIRGIN ISLANDS JERSEY appointment of a company secretary, but suggest that a sole director should not also be company secretary. appointment of a company secretary, but suggest that a sole director should not also be company secretary. Corporate directors are permitted. Every company must have a secretary (which can be a company). A sole director may not also act as secretary. Powers and liabilities of directors The articles will invariably provide that the business of the company shall be managed by the directors. Shareholders do not generally participate in the management of the company's business. Directors owe fiduciary duties to the company. These duties are owed to the company itself, and not generally to individual shareholders. In the event of a breach of duty, the directors may be personally liable to account to the company. The articles will invariably provide that the business of the company shall be managed by the directors. Shareholders do not generally participate in the management of the company's business. Directors owe fiduciary duties to the company. Generally, BVI law requires that a director of a company, in exercising his powers or performing his duties, to act honestly and in good faith and in what the director believes to be in the best interests of the company. The articles will invariably provide that the business of the company shall be managed by the directors. Shareholders do not generally participate in the management of the company's business. Directors owe fiduciary duties to the company. These duties are owed to the company itself, and not generally to individual shareholders. In the event of a breach of duty, the directors may be personally liable to account to the company. Books and records The company must keep a register of its shareholders, which is not open to public. The register need not be kept in the Cayman Islands. A company can maintain one or more branch registers of such category or categories of members as it may determine. A duplicate of any such branch register must be maintained with the principal register and be updated within 21 days of any change being made to the branch register. The company must keep: memorandum and articles; register of shareholders and directors; and copies of all notices and other documents filed by the company with the Registrar in the previous ten years. The memorandum and articles are publically available. There are provisions under the Act for the company to voluntarily file a copy of its register of shareholders and directors with the Registrar whereupon such registers would be A company must maintain the following records in Jersey: memorandum and articles; register of directors and secretary; register of shareholders; and a minute book of directors and shareholders meetings. The share register, memorandum and articles, and in the case of public companies the register of directors, are available for public inspection. There is no register of charges in Page 7 CAYMAN ISLANDS BRITISH VIRGIN ISLANDS JERSEY The company must keep at its registered office a register of all mortgages and charges which is open to inspection by any creditor or shareholder of the company at all reasonable times. The company must keep at its registered office a register of its directors and officers, and shall send a copy to the Registrar. The register of directors and officers is not open to public inspection and there is no statutory right for any person to review it. The company must keep proper books of account, at any place inside or outside Cayman, giving a true and fair view of the state of the company's affairs and to explain its transactions. The books of account must be maintained for a minimum period of five years from the date on which they were prepared. Any company that knowingly and wilfully fails to comply with the foregoing shall be subject to a penalty. The only publicly available information in respect of a company is its name, company number, date of incorporation, registered office, the type of company and whether the publically available. The company must keep a register of charges at its registered office or at the office of its RA. There are provisions under the Act for the company to voluntarily file its register of charges on the public register of registered charges with the Registrar or, alternatively, the chargee itself may authorise the filing with the Registrar. Filing generally gives priority over any subsequent or unregistered interests. The company must have a common seal and an imprint of the seal must be kept at the office of the RA. As regards financial records, essentially, the company must keep records that are sufficient to show and explain its transactions and enable its financial position to be determined with reasonable accuracy. Records may be kept inside or outside the BVI. Jersey. Every company must keep accounting records which are sufficient to show and explain its transactions and are such as to disclose with reasonable accuracy, at any time, the financial position of the company at that time and enable the directors to ensure that any accounts prepared by the company comply with the requirements of the Law.Page 8 CAYMAN ISLANDS BRITISH VIRGIN ISLANDS JERSEY company is active or has been struck off. The memorandum and articles are not publicly available. Auditors No requirement to appoint auditors or to file accounts with any Cayman Islands governmental authority (unless regulated by CIMA as a fund). No requirement to appoint auditors or to file accounts with any BVI governmental authority (unless regulated by the FSC). Public company accounts must be audited and available on request to shareholders and be filed with the JFSC. A private company need not have its accounts audited. Liability of limited shareholders No contribution shall be required from any shareholder exceeding the amount, if any, unpaid on the shares in respect of which he is liable. No contribution shall be required from any shareholder exceeding the amount, if any, unpaid on the shares in respect of which he is liable. No contribution shall be required from any shareholder exceeding the amount, if any, unpaid on the shares in respect of which he is liable. Distributions A company may make distributions by way of dividend out of profits or its share premium account provided that there are no restrictions in its memorandum or articles. Under the Act, any distribution of the company's money or assets can be made if the directors, by resolutions authorising the distribution, express satisfaction that, on reasonable grounds, the company will, immediately after the distribution, satisfy the solvency test. In essence distributions may be made at any time and from any source provided that the directors who authorise the distribution make a solvency statement in accordance with the requirements of the Law. Treasury Shares Yes Yes Yes Mergers Two or more companies may merge in accordance with the provisions of Cayman law. Two or more companies may merge in accordance with the provisions of BVI law. Two or more companies may merge in accordance with the provisions of Jersey law. Prospectus circulation/filing No prospectus filing requirements No prospectus filing requirements Consent of the Registrar is required to Page 9 CAYMAN ISLANDS BRITISH VIRGIN ISLANDS JERSEY exist in the Cayman Islands for a public company and there is no Cayman Islands governmental or regulatory review. exist in the BVI for a public company and there is no BVI governmental or regulatory review. the circulation of a prospectus and a final copy of such prospectus must be filed with the Registrar. Dissolution A company may be wound up voluntarily in certain circumstances. The winding up of a company will occur automatically, however, to the extent that the necessary procedures have not been followed, the passing of the fixed duration or the occurrence of a certain event is grounds for a petition to the court by a creditor or shareholder on the basis that the company did not wind itself up as required. A company may be liquidated voluntarily if it has no liabilities; or it is able to pay its debts as they fall due. Alternatively, the Registrar has the power under the Act to strike a company off the register. Various provisions are made under the Act for the restoration of both struck off and dissolved companies. A company may be wound up voluntarily in various circumstances including: 1. summarily by special resolution of members, provided the directors can make a statutory solvency statement; 2. by way of a creditors winding up; or 3. by order of court where is it just and equitable to do so. A company may be reinstated on application to court by an interested person within ten years of dissolution. Tax No tax is imposed. A company may apply for an undertaking from the Governor to the effect that, for a period of 20 years from the date of such undertaking (extendable by a further ten years) no tax will be imposed. No tax is imposed. BVI has signed a number of Tax Information Exchange Agreements and has no double tax treaties. A company will generally be subject to a zero percent tax rate (certain regulated businesses, banks and utilities pay at a higher rate). Jersey has a goods and services tax at a rate of five percent, however, companies beneficially owned outside Page 10 CAYMAN ISLANDS BRITISH VIRGIN ISLANDS JERSEY Cayman has signed a number of Tax Information Exchange Agreements and has a double tax treaty with the UK. Jersey which do not supply goods or services in Jersey should qualify for "international service entity" status which takes them outside the scope of this regime provided that a fee of £200 is paid each year. Jersey has signed more than 30 Tax Information Exchange Agreements, has full double tax agreements with the UK, Guernsey, Isle of Man, Malta, Estonia, Luxembourg, Qatar, Singapore and Honk Kong China. Updated: December 2014Page 11 For further information please refer to your usual contact or: British Virgin Islands - John Gosling, Partner | [email protected] | +1 284 852 2227 Cayman Islands - Antonia Hardy, Partner | [email protected] | +1 345 814 6830 Dubai - Daniel Wood, Partner | [email protected] | +971 4 363 7912 Dublin - Dominic Conlon, Partner | [email protected] | +353 1 470 6644 Hong Kong - Denise Wong, Partner | [email protected] | +852 2596 3303 Jersey - Nigel Weston, Partner | [email protected] | +44 (0)1534 700 788 London - Alexandra Corner, Partner | [email protected] | +44 (0)20 7220 4989 Singapore - John Rogers, Partner | [email protected] | +65 6595 4673 The information contained in this memorandum is necessarily brief and general in nature and does not constitute legal or taxation advice. Appropriate legal or other professional advice should be sought for any specific matter.
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