1. Special Purpose Vehicles in Jersey
A special purpose vehicle is a vehicle established for one specific purpose or transaction. A special
purpose vehicle may be established where it is desirable to isolate the purpose or transaction from
the other activities of a party involved in the transaction, or where the transaction dictates that
the vehicle should not be treated as controlled or owned by any other party to that transaction.
Examples for uses of special purpose vehicles are in securitisations, debt defeasance, off balance sheet investment
and Islamic funding.
Jersey's low tax regime coupled with the availability of experienced professional resources make it an ideal
environment in which to establish special purpose vehicles meeting the requirements of corporate and financial
Jersey is self-governing in all domestic matters, including taxation. The legislative assembly is the States of Jersey.
The Island is neither a member state nor an associate member of the European Union but is a member of the
Organisation for Economic Co-operation and Development ("OECD").
The Jersey authorities regulate the development of business in the Island in order to protect the interests of both
the inhabitants and investors and they seek to maintain Jersey's reputation in the financial world for integrity and
Whilst trusts have occasionally been utilised as special purpose vehicles, the most widely used special purpose
vehicle is an "orphan" company, that is, one in which the equity share capital is held by the trustees of a general
charitable or purpose trust. This guide concentrates on the corporate special purpose vehicle owned by the
trustees of a charitable trust established specifically to hold the shares of that company (referred to hereafter as
Legal and taxation framework for incorporation of SPV
− Jersey companies are governed by the Companies (Jersey) Law 1991 (the "1991 Law").
− The liability of a shareholder of a Jersey company is limited so that a holder of fully paid up shares will incur no
further liabilities (save in very specific and limited circumstances on insolvency following redemptions and
repurchases of shares).
− Shares may be issued as ordinary, deferred, preference or redeemable shares with differing rights as to
dividend, voting, winding up etc., and may be issued at par or at a premium, generally at a price not exceeding
one thousand times the par value.
− There is no requirement to issue more than 2 shares, or to have any minimum level of authorised or paid up
− Jersey Trusts are created and governed pursuant to the Trusts (Jersey) Law 1984, as amended, (the "1984
Law"). The 1984 Law is essentially a permissive law which provides, in effect, that the terms of the particular
trust determine the duties and obligations of the trustee thereof.
2. − In order to establish that the trustees of a charitable trust which owns an SPV have acted properly they must
ensure that any SPV owned by them makes some residual profit which is distributed to them to be paid to
charity in accordance with the terms of the trust.
− There is no registration or other formality required in order to establish a charitable trust in Jersey.
− A Jersey company owned by non-Jersey residents may obtain exemption from assessment to Jersey income
tax. It is usual for SPVs to be held by a trustee (who may be Jersey resident) upon trusts for charities outside
the Island or tax exempt charities in the Island, and thereby qualify for exempt status.
− An exempt company is exempt from income tax on income arising outside Jersey and (by longstanding
concession) bank interest arising in Jersey. The company is not required to deduct Jersey income tax from
payments of interest or dividends; neither need it make a return of income (save in respect of Jersey income,
other than bank deposit interest.)
Directors of an exempt company can meet in Jersey and conclude contracts without incurring income tax on
profits. The Comptroller of Income Tax takes the view that clerical functions do not amount to the carrying
on of a trade.
− There are no other corporate, capital transfer or stamp taxes.
Establishment of a Jersey Special Purpose Vehicle
− Under the 1991 Law a company must be a public company if it has more than 30 members or if it circulates a
− Prior to incorporation, an application must be made seeking consent to issue shares pursuant to the Control
of Borrowing (Jersey) Order 1958 (as amended) (the "COBO Legislation").
− Once the necessary information and forms have been submitted to the Registrar, and provided everything is in
order, in most cases a company will be incorporated within two or three working days of the papers being
submitted. In urgent cases upon the payment of an additional £40 fee the SPV can be incorporated within 2
hours of the documents being submitted to the Registrar.
− A judicial fee is payable on the incorporation of a Jersey company and this is currently £120. Treasury Duty is
also payable on incorporation of 0.5% of the company's authorised share capital, subject to a minimum of £50.
Thus the minimum amount payable to the Jersey authorities on incorporation will be £170. The maximum
capital duty payable is £5,000.
− There is no duty payable on the issue or transfer of shares by a Jersey company.
Administration of a Jersey Special Purpose Vehicle
− A Jersey company must have at least two shareholders, unless it is a wholly-owned subsidiary.
− A public company is required to file audited accounts.
− A Jersey company must have a registered office in Jersey, the address of which must be given on all business
stationery. Every company must keep a register of shareholders at its registered office or at such other place
as is notified to the Registrar of Companies. A company must keep a register of its directors and secretary.
The register of directors of a public company must be filed annually. There is no requirement that a company
keep a register of mortgages or charges.
− The directors of a Jersey company are not required to be resident in Jersey.
3. − A public company must have at least two directors. A private company must have at least one director.
Bodies corporate are not permitted to act as directors.
− Directors' meetings may be held in Jersey although there is no requirement that they must be held in Jersey.
Subject to satisfying certain criteria specified in the 1991 Law, it is permissible to hold meetings by telephone.
− The Secretary of a public company is required to be appropriately qualified.
− The ongoing statutory requirements are fairly straight-forward. The company must make an annual return
(and pay an annual fee, currently of £120) to the Registrar before the end of February in each year. In order
to maintain exempt status the annual application must be made and the fee paid (currently £500) before the
end of March in each year.
Issues of securities by Jersey Special Purpose Vehicles
− If the company raises money by the issue of securities further consents may be required under the COBO
Legislation. These are obtained immediately prior to the issuance of the securities. In order to obtain these
consents substantially final drafts of all material documents need to be sent to the Financial Services
Commission in Jersey.
− There are no fees payable to the Jersey authorities in respect of such approval.
− If any securities are offered to the public the Prospectus must be filed with the Jersey Registrar of Companies
in Jersey and it must also contain certain information and statements pursuant to the Companies (General
Provisions) (Jersey) Order 1992 (the "1992 Order").
This Client Briefing cannot form a complete check list and refers only briefly to the provisions of
the various laws relevant to this area. Specific legal advice should always be sought in particular
For further information or advice, please contact one of the following:-
The Mourant Group
22 Grenville Street
Jersey JE4 8PX
Tel +44 1534 609000
Fax +44 1534 609333
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© The Mourant Group 1998