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Lessons to be learned from EVIC v Greater Europe

January 2013 - Finance. Legal Developments by Ogier .

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A recent judgment of Jersey's Royal Court will be of interest to directors and managers of closed ended funds.
The Jersey courts, in line with other common law jurisdictions, have a wide discretion to order a just and equitable winding up pursuant to the Companies Law. Perhaps of most relevance to investment funds is the ordering of a just & equitable winding up on the basis that the company has lost its substratum.

The traditional basis for a loss of substratum is that where it is impossible for a company to carry on the business for which it was established, then it must be wound up, even if the directors or a majority of the shareholders wish the company to continue in business. For these purposes the identification of the business for which the company was established has traditionally included the sector of commerce and also particular features of the manner in which the business was to be carried on.  However, the focus in EVIC v Greater Europe was on the closed-ended nature of the