Draft Foundations (Continuance) (Jersey) Regulations 200- ("the Continuance Regulations") for lodging and draft Foundations (Amendment No. 1) (Jersey) Regulations 200- ("the Amendment"): approval.

Information about the publication of Ministerial Decisions

A formal published “Ministerial Decision” is required as a record of the decision of a Minister (or an Assistant Minister where they have delegated authority) as they exercise their responsibilities and powers.

Ministers are elected by the States Assembly and have legal responsibilities and powers as “corporation sole” under the States of Jersey Law 2005 by virtue of their office and in their areas of responsibility, including entering into agreements, and under any legislation conferring on them powers.

An accurate record of “Ministerial Decisions” is vital to effective governance, including:

demonstrating that good governance, and clear lines of accountability and authority, are in place around decisions-making – including the reasons and basis on which a decision is made, and the action required to implement a decision
providing a record of decisions and actions that will be available for examination by States Members, and Panels and Committees of the States Assembly; the public, organisations, and the media; and as a historical record and point of reference for the conduct of public affairs

Ministers are individually accountable to the States Assembly, including for the actions of the departments and agencies which discharge their responsibilities.

The Freedom of Information Law (Jersey) Law 2011 is used as a guide when determining what information is be published. While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.

A decision made (01/06/2009) regarding: Draft Foundations (Continuance) (Jersey) Regulations 200- ("the Continuance Regulations") for lodging and draft Foundations (Amendment No. 1) (Jersey) Regulations 200- ("the Amendment"): approval.

Decision Reference: MD-E-2009-0090
Decision Summary Title :	Lodging of Foundations Continuance Regulations and Foundations Amendment to Law		Date of Decision Summary:	1 June 2009
Decision Summary Author:	Finance Industry Development Executive		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:
Written Report Title :	Lodging of Foundations Continuance Regulations and Foundations Amendment to Law		Date of Written Report:	27 May 2009
Written Report Author:	Finance Industry Development Executive		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: Draft Foundations (Continuance) (Jersey) Regulations 200- (“the Continuance Regulations”) for lodging and draft Foundations (Amendment No 1) (Jersey) Regulations 200- (“the Amendment”): approval.
Decision(s): The Minister approved the Continuance Regulations and the Amendment, together with the attached reports, and requested that they be lodged au Greffe so as to allow both to be debated by the States on 14 July 2009 (subject to the Foundations (Jersey) Law 200- (“the Law”) having been registered at the Royal Court before this date).
Reason(s) for Decision: The Law, which has been adopted by the States and is awaiting the approval of Her Majesty in Council, provides for the States to make regulations for the continuance as Jersey foundations of other bodies corporate (whether or not in Jersey) and also for Jersey foundations to be permitted to seek continuance as foreign bodies corporate. The Continuance Regulations make such provision. In the process of preparing the Continuance Regulations, it became apparent that the phrase “body corporate” as it appears in the enabling provision may be ambiguous with reference to foreign bodies. The Amendment therefore inserts a definition of this phrase in the Law (under separate regulation making powers included in the Law) in order to make it clear. Industry, through Jersey Finance, have expressed a desire that these regulations be in place as soon as possible after the Law comes into force, which will be 28 days after it is registered at the Royal Court. This is to enable foreign foundations to seek continuance in Jersey at the earliest possible date. Therefore the Continuance Regulations and the Amendment are to be lodged before the approval of the Law, with the intention that they may be debated by the States at the earliest opportunity after the Law is registered.
Resource Implications: There are no measurable financial or manpower costs for the States. The Commission and the registrar will have costs associated with considering proposed continuances for approval but these costs will be passed on to those seeking continuance. Overall, the measures will be revenue positive.
Action required: To approve the Continuance Regulations and the Amendment and the attached reports and in each case to sign the declaration of compatibility with the European Convention on Human Rights and for the documents to be lodged au Greffe so as to allow the Continuance Regulations and the Amendment to be debated by the States on 14 July 2009.
Signature:		Position: Minister for Economic Development
Date Signed:		Date of Decision (If different from Date Signed):

Draft Foundations (Continuance) (Jersey) Regulations 200- ("the Continuance Regulations") for lodging and draft Foundations (Amendment No. 1) (Jersey) Regulations 200- ("the Amendment"): approval.

LODGING OF FOUNDATIONS CONTINUANCE REGULATIONS AND

FOUNDATIONS AMENDMENT TO LAW

FOUNDATIONS (CONTINUANCE) (JERSEY) REGULATIONS 200- (“THE CONTINUANCE REGULATIONS”)

FOUNDATIONS (AMENDMENT NO 1) (JERSEY) REGULATIONS 200- (“THE AMENDMENT”)

1 THE ISSUE AND RECOMMENDATION

It is recommended that the Minister for Economic Development (“the Minister”) should approve the Continuance Regulations and the Amendment and the attached reports and in each case to sign the declaration of compatibility with the European Convention on Human Rights and also sign the Decision Summary and that the documents should be lodged au Greffe so as to allow the Continuance Regulations and the Amendment to be debated by the States on 14 July 2009 (subject to the Foundations (Jersey) Law 200- (“the Law”) having been registered at the Royal Court before this date).

BACKGROUND

The Law was adopted by the States on 22nd October 2008. It has not yet received the approval of Her Majesty in Council. In accordance with its provisions, it will come into force 28 days after it is registered at the Royal Court.
The Law will introduce a new type of wealth-management vehicle, to be known as a “foundation”. A foundation will be a distinct legal entity like a company, but, unlike a company, it will not have shareholders. It will have easily recognised liabilities and accountabilities, openly recorded on a public registry in the same way as a company. It will hold assets in its own name for the purposes set out in its constitutive documents. For clients and authorities originating in jurisdictions not familiar with the concept of trust, a foundation may be a more acceptable offering.
As well as being used for wealth management and estate planning, foundations may also have applications in more specialized areas, such as long-term charitable aims or securitizations, where it is desirable that property be given to a legal entity and applied for specific purposes. As with companies and trusts, the use of foundations will be subject to compliance with the Commission’s policy on sensitive activities.
Article 56(1) of the Law provides that:

The States may, by Regulations, provide –

(a) for the dissolution of foundations;

(b) for the continuance in Jersey as foundations of bodies corporate, whether or not incorporated in Jersey;

(d) for the merger of foundations, including the merger of foundations with any bodies corporate, whether or not incorporated in Jersey.

The Continuance Regulations are the regulations envisaged in sub-paragraphs (b) and (c) of this paragraph.
Article 52 of the Law provides for the States to amend Parts 1 and 2 of the Law by the regulations. The Amendment is an amendment to Part 1, clarifying what is meant by “body corporate” in the passage quoted above.

THE CONTINUANCE REGULATIONS

The Continuance Regulations introduce the concept of a ‘Recognized Entity’. These are bodies corporate, outside of Jersey, to be designated by the Minister as being suitable to be permitted to continue in Jersey. In the first instance, it is intended that the following entities will be designated as Recognized Entities: Panama Private Interest Foundations, Bahamas Foundations, Liechtenstein Stiftungs, Liechtenstein Anstalts, St Kitts Foundations and Nevis Multiform Foundations.
The Continuance Regulations will provide for three types of continuance. Firstly, they will provide for Jersey companies to continue as foundations. Secondly, they will provide for Recognized Entities to continue as foundations. Thirdly, they will provide for foundations to continue as Recognized Entities.
The provision for companies to continue as foundations is intended to allow for structures which all ready exist involving Jersey companies, but which would be better structured as foundations now that that option is available. In order to safeguard shareholder interests, such a continuance will require the consent of all shareholders. As it is envisaged that most companies seeking continuance will be special purpose vehicles, with only a small number of shareholders, this requirement is not considered as onerous by the industry steering group. There is also an additional requirement of Commission approval to protect the public interest.
The provisions for Recognized Entities to continue as foundations or for foundations to continue as Recognized Entities generally reflect the similar provision in the Companies (Jersey) Law 1991 for companies to continue into and out of Jersey. Again, the consent of the Commission is required for any continuance. Such consent will be refused if the continuance would be contrary to Jersey’s (a) reputation and integrity, (b) economic interests or (c) international standing.
The Commission will charge a fee for considering continuance applications and will also be entitled to recover its expenses. It may require security in advance for its expenses, although it is anticipated that this will only rarely be required.
As a further protection, notice of any proposed continuance must be published and any person aggrieved by the proposed continuance may apply to the Royal Court for an order restraining the continuance. The Court will only make such an order if it is satisfied that the applicant will suffer unfair prejudice if the continuance takes place.

THE AMENDMENT

During the preparation of the Continuance Regulations, it became apparent that the phrase “body corporate” in Article 56 of the Law might not be as clear as it could be in relation to entities in foreign jurisdictions which did not themselves have such a concept. Therefore the Amendment will insert a definition of “body corporate” into Article 1(1) of the Law, making clear that this term includes anything equivalent or similar too something which is, in Jersey law, a body corporate, e.g. a company or a foundation.
In addition, the opportunity has been taken to amend Article 10 of the Law to make clear that the provision that a foundation's business address is to be taken as its place of administration is subject to the foundation charter. This amendment was requested by industry too late to be included in the original Law.

HUMAN RIGHTS IMPLICATIONS

5.1 The Law Officers’ Department have stated that in their opinion there are no human rights implications arising from either the Continuance Regulations or the Amendment.

RECOMMENDATION

6.1 It is recommended that the Minister should approve the Continuance Regulations and the Amendment and the attached reports and also sign the Decision Summary and that the documents should be lodged au Greffe so as to allow the Continuance Regulations and the Amendment to be debated by the States on 14 July 2009 (subject to the Law having been registered at the Royal Court before this date).

JAMES MEWS

Finance Industry Development Executive