The future of financial law - what should Jersey do next?

Matthew Shaxson is a partner in Ogier's Jersey corporate team and the co-head of the firm's Global Regulatory Group – for a recent editorial feature, he was asked about potential innovations to the Island's financial laws.

"Given Brexit there is probably all the more reason to look at ways to make Jersey more attractive to non-EU investors and intermediaries.

As such, I would like to see legislation to permit the establishment of "limited liability companies" ("LLC") aligned with the Delaware LLC model. LLCs are a hybrid between companies (which have a legal personality and limited liability for its members) and limited partnerships (which have the flexibility to arrange its affairs how its members chose as a matter of contract). The Jersey LLC would be a body corporate with the freedom of members to agree how its affairs are managed, including the ability for the LLC to be managed by non-member manager.

On the one hand, I would like to see the LLCs to have the same winding up and insolvency provisions as those for Jersey companies (as is the case for incorporated limited partnerships) and the ability to merge with other LLCs, for Jersey companies to be able to convert to an LLC or foreign LLCs migrate to become a Jersey LLC. On the other, I would like to see the flexibility for the members to allocate the LLC's profits and losses in a manner more akin to a partnership.

The primary benefit of Jersey LLCs would be their appeal to those already familiar with existing Delaware LLCs so that, for instance, US managers need not be troubled by the intricacies of Jersey specific entities or new legal concepts when preparing the Jersey LLC documentation, which in any event should closely follow the Delaware documentation.

That said, there should be no reason why a Jersey LLC could not be used for non-fund uses, such as joint venture vehicles, acquisition vehicles and more general corporate transactions, all of which would benefit from member's limited liability coupled with flexible capital arrangements."

This article first appeared in Business Brief.

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