Limited liability companies (LLCs) – regulatory considerations

1 Law and Regulations

On 1 September 2022, the Limited Liability Companies (Jersey) Law 2018 (LLC Law) and three sets of Regulations came into force:

  • General Provisions Regulations - these relate to accounts and audit, prospectuses, takeovers, compromises and arrangements, mergers, demerger, continuance, economic substance test and investigations
  • Winding Up and Dissolution Regulations - these relate to summary winding up, creditors’ winding up, transactions at an undervalue and preferences and liquidators
  • Consequential Amendments Regulations - these amend 35 Laws, Regulations and Orders, such as the AIF Regulations, Control of Borrowing (Jersey) Law 1947 and the COBO, FSJL and several of its Orders (including certain Exemptions Orders)

On 14 February 2023, two further sets of Regulations came into force:

2 Legal status

Limited liability companies (LLCs) are registered under the LLC Law and are based on a US equivalent model. They should not be confused with companies incorporated under the Companies Law.

An LLC has legal personality that is separate from that of its members.

At registration, an LLC may be a body corporate or an unincorporated body.

3 Governance and ownership

Subject to the LLC Law, an LLC is governed by the terms of its LLC agreement. The LLC Law provides for various default positions where the LLC agreement is silent.

Ownership of the LLC vests in its member(s), which may hold LLC interests on the terms of the LLC agreement. An LLC may have a sole member.

If an LLC agreement does not provide for the appointment of managers or, it does but none are appointed, the management of an LLC vests in its members.

An LLC must have a secretary that is either (a) a member or manager being a person ordinarily resident in Jersey or a company with a registered office in Jersey; or (b) registered to provide such services under the FSJL.

4 Disclosure requirements

LLCs are subject to the Financial Services (Disclosure and Provision of Information) (Jersey) Law 2020 and as such, will be required to disclose to the Registry information on the beneficial owners and the significant persons (being managers or managing members) of the LLC and, to provide notification to the Registry of any changes to that information within 21 days.

LLCs will also be required to submit an annual confirmation statement to the Registry disclosing up to date information on the beneficial owners and the significant persons of the LLC and its registered office address.

A nominated person must be appointed to act as the LLC’s main contact with the Registry for the purpose of making the disclosures set out above.

5 Restrictions on use

As with all vehicles, we will review any application to register under the LLC Law, having regard to the proposed activities of the LLC and all other relevant legislation and regulatory requirements, including the Sound Business Policy.

LLCs are not currently permitted to carry on the following regulated activity:

  • banking business under the BBJL
  • CIF activity under the CIFJL, or
  • insurance business under the IBJL.

Although the LLC Law makes provision for series, the relevant provisions of the LLC Law have not yet been brought into force.

Outside of the above restrictions, LLCs may otherwise be used for any purpose permitted by law and regulation.

The requirement for administration services to be provided by a regulated Trust Company Business will still apply to Jersey non-financial services trading businesses.

6 General establishment requirements

At registration, an LLC, is granted a consent by us under Article 11A of the COBO Control of Borrowing (Jersey) Order 1958.

All COBO consents are conditioned such as to require the LLC agreement to be in writing.

COBO consents are also conditioned to require administration services to be provided to an LLC on establishment and on an on-going basis by a person registered under the FSJL to carry on TCB unless, the LLC is registered as a non-financial services trading business (in which case, this additional requirement will not apply).

7 Providing TCB services to an LLC

The following activities and classes of TCB permit the provision of TCB services to an LLC:

  • Class F - acting as a company, partnership or foundation formation agent or an LLC registration agent
  • Class I - acting or arranging for another person to act as secretary, alternate, assistant or deputy secretary of a company, as secretary of an LLC or as secretary of a limited liability partnership
  • Class J - providing a registered office or business address for a company, an LLC, a partnership or a foundation
  • Class K - providing an accommodation, correspondence or administrative address for a company, an LLC, a partnership or a foundation or for any other person
  • Class M - acting as or fulfilling or arranging for another person to act as shareholder, member, unitholder or as a nominee for another person
  • Class OB - acting as or fulfilling the function of or arranging for another person to act as or fulfil the function of a member or manager of an LLC

Under the FSJL, if a corporate or a natural person is providing manager or member services to an LLC ‘by way of business,’ the manager or member must be registered under Part 2 of the FSJL to carry on trust company business that permits the provision by that manager or member of the services mentioned in Article 2(4)(d) of that Law unless any exemptions to registration under the FSJL apply.

If you require to be registered to provide TCB services to an LLC, you will need to apply to our Authorisations Team:

  • outlining your intention
  • detailing any capacity or competency considerations
  • attaching an updated business plan and business risk assessment

An LLC application will be subject to the relevant LLC application fee.

Glossary

BBJL

Banking Business (Jersey) Law 1991

CIFJL

Collective Investment Funds (Jersey) Law 1988

Commission Law

Financial Services Commission (Jersey) Law 1998

FSJL

Financial Services (Jersey) Law 1998

IBJL

Insurance Business (Jersey) Law 1996

JFSC, we, us

Jersey Financial Services Commission

LLC

“Limited Liability Company” means a limited liability company registered under either the LLC Law or a body established under an equivalent law of a jurisdiction outside Jersey.

LLC Law

Means the Limited Liability Companies (Jersey) Law 2018

TJL

Trusts (Jersey) Law 1984