Companies (Amendment No. 11) (Jersey) Law 201-: Green Paper Consultation: Supplementary Response Paper

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A decision made 20 December 2013:

Decision Reference: MD-C-2013-0158
Decision Summary Title :	Supplemental Response paper to Amendment to the Companies (Jersey) Law 201- Green Paper Consultation		Date of Decision Summary:	20th December 2013
Decision Summary Author:	Director, Finance Industry Development		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	Supplemental Response Paper regarding Companies Law Amendment No. 11		Date of Written Report:	17th December 2013
Written Report Author:	Director, Finance Industry Development		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: Supplemental Response Paper to the Companies (Amendment No, 11) (Jersey) Law 201- Green Paper Consultation
Decision(s): The Minister authorised the publication of the Supplementary Response Paper to the Green Paper consultation concerning the 11th set of proposed amendments to the Companies (Jersey) Law 1991 (“the Law”).
Reason(s) for Decision: Following a Green Paper seeking the views of the public over proposed amendments to the Law, the Minister for Economic Development published a summary of the responses to the consultation on 5 February 2013. The responses led to further consultation on three of the amendments. Subsequently, further written representations were received under a closed consultation process and further advice from external advisers was also sought. This Supplemental Response Paper summarises the responses received during the further consultation and sets out the final position in respect of each of the three amendments.
Resource Implications: This decision has no additional financial or manpower implications for the States of Jersey.
Action required: The Supplementary Response Paper is to be approved and published by the Communications Unit.
Signature:		Position: Deputy Chief Minister
Date Signed:		Date of Decision (If different from Date Signed):

Companies (Amendment No. 11) (Jersey) Law 201-: Green Paper Consultation: Supplementary Response Paper

CHIEF MINISTER

Supplemental Response Paper regarding Companies Law Amendment No 11

Background and Recommendation

A Supplemental Response Paper regarding changes to the Companies Law has been drafted to confirm 3 outstanding points of policy which were not finalised at the time that the Response Paper was published.

It is recommended that the Chief Minister approves the draft Supplemental Response Paper, signs the Decision Summary, and instructs the Supplemental Response Paper to be published.

Development and Consultation

On 25 November 2011 the Minister for Economic Development (“the Minister”) (who was the relevant Minister prior to responsibility passing to the Chief Minster in mid-2013) published a Green Paper inviting comments on 34 separate proposals for amendments to the Companies (Jersey) Law 1991 (“the Law”), including:

An amendment to Article 17, which provides that a private company with more than 30 members shall be treated as if it were a public company (proposed amendment 3).

An amendment to the definition of a ‘distribution’ contained in Article 114, so as to make it clear that any transaction between a company and its members which does not reduce the net assets of the company falls outside its scope (proposed amendment 24);

The introduction of a procedure for the ratification of distributions made in contravention of the procedure set out in Article 115, which requires the directors of the company authorising the distribution to make a solvency statement (proposed amendment 25).

The Minister published a summary of the responses to the consultation on 5 February 2013. In relation to proposed amendment 3, the Minister indicated in the Response Paper that he had decided to abolish the 30 member limit for a private company altogether.

In relation to proposed amendments 24 and 25, the Response Paper noted that the responses received had raised a number of issues. These required further reflection and consultation before a final decision was made whether, and in what way, to proceed with those proposed amendments.

Following the publication of the Response Paper there was further consultation with interested parties in relation to amendments 24 and 25. The scope of this consultation was subsequently extended to include certain issues arising in connection with proposed amendment 3, which were raised by the Jersey Financial Services Commission (“JFSC”) after publication of the Response Paper.

Further written representations were received from two of the major law firms in Jersey (Mourant Ozannes and Carey Olsen) and further advice was sought from external advisers (a practising UK barrister and a Professor of Law and Finance at the University of Oxford).

A meeting was also held with the Companies Law Steering group who accepted the position set out in the draft Supplemental Response Paper in respect of these changes.

The draft Supplemental Response Paper summarises the responses received during the further consultation and sets out the Chief Minister’s final position in respect of each of the three amendments.

Financial and manpower implications

There are no financial or manpower implications for the States of Jersey arising from the adoption of the draft Regulations.

Recommendation

It is recommended that the Chief Minister approves the draft Supplemental Response Paper, signs the Decision Summary, and instructs the Supplemental Response Paper to be published.

Director, Finance Industry Development

17 December 2013