Jersey corporate Advocates act on M&A, cross-border finance, governance, and JPF structures. solicitors.je is an independent directory. We can point you towards Jersey firms that work in this area.
Corporate transactions in the Channel Islands require more than standard legal advice. Specialist Jersey corporate Advocates act on high-value corporate mandates.
Jersey corporate law has its own nuances, so take advice on both the transaction and the regulatory requirements before you proceed.
The routes to acquiring a Jersey company
A Jersey company can change hands through a private purchase of its shares, a takeover offer to all shareholders, a court-sanctioned scheme of arrangement, or a statutory merger. The rules for the last three are in the Companies (Jersey) Law 1991, which has its own procedures and numbering, separate from UK company law. In that Law, "the court" means the Royal Court.
Takeover offers and squeeze-out
Part 18 of the Companies Law covers takeover offers. Under Article 117, an offeror that has acquired, or contracted to acquire, at least 9/10ths of the shares the offer relates to can give notice to buy out the remaining holders. For a par value company the threshold is measured by nominal value; for a no par value company, by number of shares.
The timing is strict. The threshold must be reached within 4 months of the date of the offer, and the notice must be given within 2 months of reaching it. Article 119 gives remaining minority holders the reverse right, to require the offeror to buy them out, and Article 121 deals with applications to the court.
Schemes of arrangement
Article 125 lets a company propose a compromise or arrangement with its members or creditors, or a class of them. The court orders the meetings. The scheme binds the class if it is approved by a majority in number representing 3/4ths in value of the creditors, or by members holding 3/4ths of the voting rights, of those present and voting, and the court then sanctions it. The court's order has no effect until the Act of the court is delivered to the registrar.
Statutory mergers
Part 18B allows two or more bodies to merge and continue as one. The directors of each merging company must put the merger agreement to members for approval by special resolution (Article 127F). Each merging company must send written notice of the merger to creditors it knows to have claims for a liquidated sum over £25,000, within the period set by Article 127FC.
A member who did not vote in favour may apply to the court on the ground that the merger would unfairly prejudice their interests, but not more than 21 days after approval (Article 127FB). Where a merging body is not a company, the consent of the Jersey Financial Services Commission is required (Article 127FF).
On completion, Article 127FN transfers to the merged body all the property and rights of each merging body, together with its liabilities, contracts and pending legal proceedings. Due diligence on the target's liabilities therefore matters just as much as it does on a share purchase.
Approvals outside the company itself
Competition clearance
Article 20 of the Competition (Jersey) Law 2005 prohibits executing a merger or acquisition of a type prescribed by Ministerial Order without the approval of the Jersey Competition Regulatory Authority. The consequence of a breach is serious: title to shares in a Jersey company that is party to the deal, and title to property in Jersey, does not pass under its terms. The types of deal caught are set by Order, so check the Order in force against the parties' activities before signing.
The Takeover Code
The Companies (Takeovers and Mergers Panel) (Jersey) Law 2009 provides for a body to supervise takeovers. The Companies (Appointment of Takeovers and Mergers Panel) (Jersey) Order 2009 appoints the UK Panel on Takeovers and Mergers to that role. Whether the Panel's rules apply to a given Jersey target turns on the target's circumstances, so confirm it at the outset of any public deal.
Housing and work licences
Businesses in Jersey generally need a licence under the Control of Housing and Work (Jersey) Law 2012. Article 25 provides that after a significant change in its ownership, a business no longer has an appropriate licence unless the person carrying it on applies for a new one within 60 days. Ministerial guidance sets what counts as significant, and businesses listed on a recognised stock exchange are excluded from this rule. Carrying on a business without an appropriate licence is an offence.
Questions to settle before heads of terms
- Which route (share purchase, takeover offer, scheme or merger) suits the shareholder base and the level of certainty the buyer needs?
- Is the deal of a type that needs prior approval under a Competition Law Order, and how does that fit the timetable?
- Does the Takeover Code apply to the target?
- Who will apply for the target's housing and work licence after completion, and is the 60-day window diarised?
- Does the target hold any regulatory registration that carries its own change-of-control requirements?
- Which law will govern the sale agreement? The company-law steps above stay governed by Jersey law whatever the contract says.
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