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Press Release - 7 July 2003

CONSULTATION STARTS ON NEW REGIME GOVERNING THE WINDING UP OF JERSEY COMPANIES

Proposals for new regulations for Jersey companies aimed at increasing creditor protection and providing further safeguards to the Island's reputation are being discussed between the local business community and the Jersey Financial Services Commission.

The new proposals are designed to ensure that Jersey continues to provide a high quality, flexible environment for commercial activity. Responses are required by 30 September and if the proposals are adopted, they are expected to take effect by the end of 2003.

The key changes, proposed via a consultative document issued by the Jersey Financial Services Commission, are:

  • Introduction of a power to wind up companies in the public interest. This might happen if, for example, a company is found to be owned by individuals who could pose a significant reputational threat to the Island;
  • Clarification of the regime governing the circumstances under which a company may redeem shares. This will include the introduction of a requirement for directors to sign a declaration of the purpose of the transaction and will apply criminal sanctions to directors who redeem shares improperly;
  • A new power allowing Jersey's Royal Court, when making an order disqualifying an individual from being a director, to extend that order to other private or public offices held by that individual; and
  • Clarification of the status of certain contractual relationships in the event of a subsequent insolvency of a contracting Jersey party.

The consultation paper also covers a number of technical issues in relation to the winding-up of Jersey companies. These include reconsideration of the circumstances where a Jersey company may enter into a summary (solvent) winding up, and where a previous shareholder can be required to contribute to the assets of an insolvent company when it is wound up.

In addition, the consultation paper, which was issued in close collaboration with the Viscount's Department at the Royal Court, sets out proposed changes to the regime governing d├ęsastres (bankruptcies), both corporate and individual.

Richard Pratt, Director General of the Jersey Financial Services Commission, said:
"The Commission believes that the proposals will further protect both the Island's reputation and the position of creditors who transact with any Jersey company. At the same time, the proposals will simplify complex areas of law while retaining the flexibility that characterises Jersey companies.

"The Commission believes that the proposals are of interest to all of those who transact with Jersey companies as well as the Island's finance industry, and would welcome responses from all sections of the community."

For further information please contact:

Roger Bignell
Director Authorisation
Jersey Financial Services Commission

Tel: +44 (0) 1534 822040
Fax: +44(0) 1534 822003
E-mail: r.bignell@jerseyfsc.org

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