The Legal 500

An overview of the Review of Financial Advice and what businesses should do to prepare themselves before January 2014.

In the first case of its kind, the Royal Court gave directions to the qualified member of a foundation's council and had to give full consideration to the law applicable to a Jersey foundation, the Foundations (Jersey) Law 2009. In giving directions, the Court's view appears to have been that a foundation is closer in nature to a company than it is to a trust, albeit that, unlike the position with a company, the council members of a foundation can take advantage of the wide-ranging jurisdiction of the Court to give directions and to bless momentous decisions.

On 18 February 2013, the Cayman Islands Court of Appeal released its judgment in Re FIA Leveraged Fund. The judgment will be of significant interest to directors and managers of investment funds, as it provides helpful clarification as to what steps they will need to take to ensure that in specie distributions are effective and what their duties are when valuing assets to be used in these distributions.

The Royal Court of the Island of Jersey has recently provided some welcome clarification as to the principles that will govern the exercise of its jurisdiction to remove a protector from office. Whilst the Court has exercised this jurisdiction on previous occasions, In the Matter of the A Trust is the first case in which it has been confirmed that the principles to be applied are the same as are currently applied to the removal of trustees from office.  Read more...

This briefing discusses the recent Hong Kong Court of First Instance cases of Li Jianguo v Wei Wei and Pacific Overseas Investment, Yung Kee Holdings and in Pioneer Iron and Steel. It examines some of the potential difficulties facing litigants pursuing winding up petitions or actions for relief from unfair prejudice against BVI and Cayman companies in their home jurisdictions and the potential benefits in taking steps in the BVI and Cayman courts. Read more...

This client briefing examines a number of issues which arise on the redemption of shares by an investor in a BVI investment fund which may lead to disputes between the investor, the fund, and other investors.

This is a short briefing outlining some changes relating to foreign corporate directors which act as a director of Jersey companies and the requirements for details of such a corporate director to be included in an application to form a public Jersey company and in the register of directors of the Jersey company.

This briefing outlines the key features from a regulatory perspective of servicing non-Jersey funds in Jersey.  

This briefing outlines the requirements under Jersey law and JFSC policy for offer documents of non-Jersey funds which are to be circulated in Jersey.

This briefing outlines the requirements under Jersey law and JFSC policy for offer documents of Jersey funds.

The limits of cost recovery in Guernsey litigation is an ever present issue for clients. It is even more acute where external lawyers are engaged because of the need for specialist assistance. This article explores those limits, with a focus on external lawyers' fees and the leading 2008 case of Ladbrokes PLC v Galaxy International Ltd.

In this article we analyse the first decision to consider the impact of the Supreme Court's decision in Rubin v Eurofinance on the extent to which, at common law, courts can continue to provide active assistance to foreign officeholders in cross-border insolvency cases.

On 10 January 2013, the Mutual Funds (Amendment) Law 2012 came into effect requiring Cayman Islands master funds which have a single CIMA-regulated feeder to register with CIMA.

Following the hearing of a preliminary issue in the case of Cesar Hotelco (Cayman) Ltd and others -v- Michael Ryan and others [2012] (unreported at present) the Cayman Islands Grand Court on 19 December 2012 handed down an important and welcome judgment clarifying the relationship between the Cayman Island Registered Land Law (2004 Revision) (the "RLL") and unregistered contractual debentures. This judgment is also important in relation to the issue of acquiescence in the appointment of receivers.

The Guernsey States of Deliberation have approved changes to the Companies (Guernsey) Law, 2008 which include several key changes affecting insolvencies in Guernsey.The Guernsey States of Deliberation have approved changes to the Companies (Guernsey) Law, 2008 which include several key changes affecting insolvencies in Guernsey.

A summary of the key aspects of the Foundations (Guernsey) Law, 2012. 

This briefing gives a summary of the key features of a listed fund.

This briefing gives a summary of the key features of a publicly-offered collective investment fund which is not an expert fund, recognized fund, listed fund or unregulated fund.

This briefing gives a summary of the key features of an unregulated fund.

This briefing gives a summary of the key features of an expert fund.

Jersey offers a full spectrum of fund regulation, from highly regulated recognized funds which may be marketed widely to the general public to unregulated funds which fulfil certain criteria and therefore may opt out of regulation as a fund in Jersey. This briefing is a general introduction to the range of Jersey investment funds available. 

The purpose of this briefing is to summarise the amendments to the Trusts (Jersey) Law 1984 which came into force on 2 November 2012.

The attempt by Fairfield Sentry's liquidators to recover monies paid out to investors by way of redemption proceeds has been blocked by both the BVI High Court and now the Eastern Caribbean Court of Appeal, both Courts finding that the liquidators have no ability to do so.

The Eastern Caribbean Court of Appeal has re-affirmed that a debt arising out of unpaid redemption proceeds does not confer standing on an investor to apply for the winding up of the company. Read more...

The BVI Business Companies (Amendment) Act, 2012 (the Amendment Act) and the BVI Business Company Regulations, 2012 (the Regulations) came into force on 15 October 2012. The new legislation is designed to refine and upgrade the BVI Business Companies Act, 2004 (the Act) to ensure the British Virgin Islands (BVI) maintains its position as one of the leading corporate domiciles.

Horizon Nominees Limited [2012] JRC 113A

The Jersey Court has confirmed that it will ordinarily not expect subsidiaries of a company under a just and equitable winding up to be placed under a separate process which could give rise to multiple appointments. There will need to be a good reason before separate orders will be made. 

Guernsey law permits a purpose trust to be established with a particular purpose stated in the trust instrument and for which there are no ascertainable beneficiaries.

This document is intended to provide a brief overview of the principal legal and regulatory considerations to be taken into account when establishing a new closed-ended fund (a "Fund") in Guernsey.

This document is intended to provide a brief overview of some of the legal and regulatory considerations to be taken into account when establishing a new open-ended fund (a "Fund") in Guernsey.

On 17 July 2012, La Générale des Carrières et des Mines SARL ("Gécamines"), a state-owned mining company based in the Democratic Republic of Congo ("DRC"), won its appeal to the Judicial Committee of the Privy Council in the long—running litigation brought against it by US distressed debt fund, FG Hemisphere Associates LLC ("FGH").

The Collective Investment Funds (Certified Funds – Prospectuses) Order 2012 (the "CFPO") was made on 17 May 2012. The CFPO amends the regulation of Certified Fund prospectuses. Once it comes into force on 17 November 2012, then subject to transitional arrangements, all prospectuses for Certified Funds must comply with the content requirements of the CFPO irrespective of the type of fund vehicle that is used or whether the fund is open-ended or closed-ended.

Insolvent Jersey company be placed under Administration

English Administration of Insolvent Jersey Company acting as General Partner of a Jersey Limited Partnership - Representation of 18 April 2012

need for formal Letter of Request

Jersey Article 49 Desastre Law - Orders In Aid – Form Of Request

This is an important area and of course one of central concern to settlors. Letters of wishes are almost always, by their express terms, nonbinding (by design and for good reason).

With the arrival of the new year, Mena FM talks to several industry experts about Guernsey as a fund domicile and its growing relationship with the Mena region and the products based there.

From January 2012 a new streamlined regulatory authorisation process for the establishment of privately placed funds is available in Jersey.

The new private placement fund ("PPF") regime will add welcome speed and certainty to the regulation of Closed-ended Funds established or managed in Jersey, providing a cost-effective and non-intrusive regulatory environment for funds making offers to 50 or fewer professional or sophisticated investors worldwide. 

Distributions and dividends

Ever since the legal concept of the company was created, there has been discussion about what the purpose is of companies and why they should exist.

The Mutual Funds (Amendment) Law, 2011 came in to effect on 22 December 2011 and provides for the regulation by the Cayman Islands Monetary Authority ("CIMA") of Cayman Islands master funds in fund structures which include a CIMA regulated feeder fund.

The Royal Court has ruled that restraint orders obtained in Guernsey on requests from foreign authorities can only apply to assets located in the Bailiwick, striking down the extra-territorial effect of a restraint order obtained at the request of the National Prosecuting Authority of South Africa.

The Royal Court has delivered its first judgment on a contested company administration application since the introduction of the Companies (Guernsey) Law, 2008. The Court has ordered the appointment of Joint Administrators to Propinvest Group Limited, the Guernsey holding company of a substantial property group.

The Guernsey government has recently approved the introduction of specific Bailiwick of Guernsey legislation to allow celebrities, sports professionals and other media personalities to register and protect their identity in Guernsey. The proposed legislation will make Guernsey the first jurisdiction in the world to offer a registered image right.

In the Matter of the Y Trust [2011] JRC 135

The case involved an application by the trustee for a blessing in relation to its decision to distribute the assets of the Trust, which was inconsistent with its previous indication (described as a final decision) that the trust assets would be split 50 % for the benefit of the settlor's eldest son (A) and 50 % for the benefit of the settlor's younger son (B) as well as B's three children and his grandchild.

This briefing was published in the Cayman Financial Review, Fourth Quarter 2011.

A trustee is duty bound to act strictly in accordance with the terms of the trust and within the parameters of the powers that it is granted. A trust instrument may provide a trustee with the power to adapt a trust structure to changing circumstances, thus ensuring that it does not fall out of step with convention, with beneficiaries' circumstances or with changes in the law but sometimes it does not.

In a judgment handed down this summer the Guernsey Court of Appeal has, in the case of Garnet Investments Limited v the Chief Officer of Customs and Excise, overturned the judgment of the Royal Court which quashed the decision of the Financial Intelligence Service (the "FIS") by which the FIS refused to grant consent to a Guernsey bank to transfer funds held by Garnet with the bank.

In August, the Grand Court of the Cayman Islands handed down its judgment in the case of Weavering Macro Fixed Income Fund Limited (in liquidation) v Stefan Peterson and Hans Ekstrom (the "Judgment"), and it has triggered a frisson of excitement in the industry for the extent to which the Court has sought to establish how directors of Cayman Islands openended funds should approach the discharge of their fiduciary and other duties to the funds of which they are directors.

The Companies (Jersey) Law 1991 sets out the meaning of "director" in these terms: "director" means a person occupying the position of director, by whatever name called It is a definition that is, paradoxically, both straightforward and circular and it raises issues that are difficult enough to need to have been considered by the Supreme Court in a recent case about a similar English law provision.

In the Matter of the Y Trust [2011] JRC 135

In this case, the Court provided some helpful guidance on its approach to applications by trustees for blessing of their decisions, which included consideration of the role of the principles of natural justice and legitimate expectations in the decision making process and the position where the decision at issue has already been part performed. 

Guernsey’s funds industry goes back over 30 years when the first retail unit trusts were established. At that time, Jersey had already established a firm foothold with these retail products. Lacking first mover advantage encouraged Guernsey to find alternative source of revenues from the funds sector and thus the Island opened its arms to alternative product types that weren’t necessarily acceptable in Jersey. From the late 1980’s onwards, Guernsey began to attract the then smaller closed ended fund market and many smaller management firms and start-up funds.

Introduction
The duties and liabilities of the directors of a company under Cayman Islands law arise from:
• the common law – the duties have developed over many years by way of analogy with other legal relationships, particularly the relationship between principal and agent and between trustee and beneficiary.

Trade Mark procedural requirements and fees Registration of Trade Marks in the Cayman Islands is an extension of rights held by the Trade Mark owner in the United Kingdom or in the European Union. Section 9 of the Patents and Trade Marks Law provides that upon registration in the Cayman Islands a Trade Mark owner is afforded such rights and remedies as are available to him in the United Kingdom. Please see below the requirements and charges for registration of Trade Marks in the Cayman Islands.

Introduction
In simple terms, a trust is a legal arrangement whereby one or more persons (the trustees) hold and deal with property (the trust fund) on behalf of other persons (the beneficiaries). A trust is created when one person (the settlor or grantor) transfers property to the trustees who are legally obliged to deal with such property for the benefit of the beneficiaries.

This briefing considers the recent First Tier Tax Tribunal case of Revenue and Customs v Panos Parissis and Adrian Towland and Ian Harrison [2011] and its practical implications for offshore trustees.

The Segregated Portfolio Company ("SPC") is a single legal entity within which may be established various segregated portfolios. The assets and liabilities of each segregated portfolio are legally separate from those of the other segregated portfolios. When the SPC was first introduced in the Cayman Islands in 1998, the use of the SPC structure was restricted to licensed insurers.

The Companies (Jersey) Law 1991 sets out the duties owed by a director of a company in these terms:
"A director, in exercising the director's powers and discharging the director's duties, shall:
a. act honestly and in good faith with a view to the best interests of the company; and
b. exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances."

Introduction
The Royal Court has recently handed down a judgment which has reiterated the willingness of the Jersey Court to plough its own furrow and decline to follow English authority when satisfied it is inappropriate to do so.

Whilst the Beatles may have been content to "let it be", it is hoped that this article will highlight and prompt consideration of a little known provision in the Companies (Guernsey) Law, 2008 (as amended) ("the Law") that may have significant consequences for shareholders and investment companies alike.

Key Points:
• The Cayman Islands Shipping Registry (CISR) is a category 1 British Registry, open for registration of vessels of any size and type provided that they meet international standards.
• The CISR is the most popular registry for registering super yachts.
• A vessel registered in the Cayman Islands is a "British ship" and is entitled to fly the Red Ensign flag.

With a number of major regulatory directives on the horizon, the question of domiciliation is an important one for hedge funds. HFMWeek talks to two industry experts about the relative merits of on and offshore domicilliation, and how offshore jurisdictions are adapting to these new regulatory pressures.

A version of this article appeared in HFMWeek on 9 June 2011.

Jersey has now introduced two new types of limited partnerships: the "Separate Limited Partnership" and the "Incorporated Limited Partnership".

There are challenges and opportunities for the Cayman Islands in the wake of the global recession. A version of this article appeared in the April 2001 edition of The American Lawyer published by ALM Media, LLC. 

The establishment of, and raising of money by, closed-ended funds in Guernsey requires the consent of the Guernsey Financial Services Commission (the "Commission") pursuant to the provisions of the Control of Borrowing (Bailiwick of Guernsey) Ordinance, 1959 to 1989, as amended ("COBO").

This briefing provides a concise outline of the regulation of investment funds in Guernsey and an overview of the structures available in Guernsey and their tax treatment.

Our English clients regularly ask us the same question: "What are the main differences between commercial property transactions in England and Jersey and what can we expect when we transact in Jersey?"

A version of this briefing appeared in the Practical Law Company Dispute Handbook, February 2011.

Guernsey is a 'European' offshore jurisdiction with a flexible regulatory regime which lends itself to the establishment of hedge funds.

A version of this briefing appeared on www.hedgeweek.com on 1 March 2011.

Most hedge funds do not give active consideration as to how they are to be liquidated in their constitutional documentation. Unfortunately this can have serious consequences for the fund. 

A version of this briefing appeared in The Lawyer Offshore Report on 2 May 2011.

From initially being seen as a threat, the ever-flexible Cayman is tackling the new regulatory environment head-on, says Robert Duggan.

Certain technical enhancements have recently been made to the Companies Law of the Cayman Islands by virtue of the Companies (Amendment) Law, 2011. Key changes are referenced below.

Although property law in Jersey and Guernsey has similar roots in Norman customary law, the laws and systems in each Island have developed separately. Consequently, so has the way in which leases of property are dealt with. There are certainly many similarities but, as we have set out below, there are some distinct differences of which those leasing property in both islands should be aware.

An exempted company incorporated in the Cayman Islands may apply to be de-registered by way of continuation pursuant Section 206 of the Companies Law (2010 Revision) (the "Law"). A company (the "Company") is capable of being de-registered pursuant to the Law if:

A company incorporated outside the Cayman Islands may apply to be registered by way of continuation as an exempted company limited by shares under Section 201 of the Companies Law (2010 Revision) (the "Law"). A company (the "Company") is capable of being registered by way of continuation as an exempted company under the Law if:

Absence of tax
The Cayman Islands have no direct taxes of any kind. There are no corporation, capital gains, income, profits or withholding taxes.

This briefing provides an overview of some of the principal provisions of the Companies Law (as amended) (the "Companies Law").

What is a scheme?
A scheme is a court-sanctioned compromise, arrangement, reconstruction or amalgamation entered into between a company and its creditors or members (or any class of them) in accordance with section 86 (and, for reconstructions and amalgamations, section 87) of the Companies Law (as amended). A scheme must involve an element of accommodation on each side for it to be effective as a scheme of "arrangement".

A version of this briefing appeared in HFM Week Special Report, Cayman 2011, in April 2011.

A version of this briefing appeared in Cayman Funds 2011, published by Newton Media, April 2011.
It's a sad reflection on the recent state of the hedge fund industry that the term 'soft wind-down' has become one of the most frequently used in the last three years. Simon Palmer takes a look.

2010 in review

The Special Trusts Alternative Regime or "STAR" is a creature of statute. It was introduced in the Cayman Islands by the STAR Law in 1997 but since then, has been incorporated in Part VIII of the Cayman Islands Trusts Law, appearing in the 2009 Revision at sections 95 to 109.

The current economic climate has seen an increase in disputes between landlords and tenants upon the termination of their leases. The risk of claims certainly increases when premises are not immediately re-let and landlords are keener than ever to maximise the value of their properties.

On 9 December 2010, the UK Government released new draft legislation aimed at tackling arrangements involving trusts and other vehicles to avoid, reduce or defer liabilities to income tax on rewards of an employment or to avoid restrictions on pensions tax relief.

Introduction Jersey's legislature has approved the Companies (Amendment No.5) (Jersey) Regulations 2011 (the Regulations) which permit a Jersey company to merge with a non-Jersey company. The Regulations come into force on 23 February 2011. The ability to undertake cross border mergers may be useful in a variety of cases including where they can be implemented without triggering a disposal for foreign capital gains tax purposes. This briefing sets out the principal provisions of the Regulations.

It is with much sadness that we report the death in London on Wednesday, 9 March 2011 of Hastings-Bass, at the premature age of 36. In the years since its birth, Hastings-Bass had become a household name amongst, and highly popular with, trustees around the common law world.

The English law of tort has developed significantly over recent years and it has become increasingly difficult to claim in negligence for "pure economic loss".

On 13 December 2010 the Privy Council overturned the decision of the Cayman Islands Court of Appeal (the "CICA") in Culross Global SPC Limited v Strategic Turnaround Master Partnership Ltd [2010] UKPC 33.

Most hedge funds do not give active consideration as to how they are to be liquidated in their constitutional documentation. Unfortunately this can have serious consequences for the fund.

Directors are responsible for managing the business of their company and amongst the difficult problems that directors face in doing so is finding a path between diverse and sometimes conflicting interests that affect the company and the people interested in it.

During the lifetime of a company some of the most difficult problems that a director faces are encountered if the company is in financial difficulty: not yet unable to pay its bills and insolvent but with a possibility that it may get to that position. At that stage the decisions made by a director may affect not only the survival and future of the company but also the director's own position.

A version of this briefing features in "Getting the Deal Through - Insolvency and Restructuring 2010" published by Law Business Research.

Turning around Strategic Turnaround: Privy Council reverses decision of Cayman Islands Court of Appeal

A recent, and largely unheralded, change to the tipping off provisions is set to have a significant impact on financial services businesses in Guernsey.

Jersey has long enjoyed an excellent reputation as a jurisdiction in which to establish an investment fund. For Chinese fund promoters wanting to establish a fund and for Chinese investors investing in a fund, Jersey offers many advantages.

The September 2010 edition of The Global Financial Centres Index (GFCI), which provides profiles, ratings and rankings for 75 financial centres, highlighted a familiar trend noting that Asian centres continue to exhibit good growth with Shanghai entering the top 10 and Seoul gaining four places and moving into the top 25 for the first time.

Taking security over shares, bank accounts, rights under contracts and other types of intangible property in Jersey is governed by the Security Interests (Jersey) Law 1983 (the 1983 Law). The 1983 Law is set to be replaced in late 2011 or in early 2012 by the Security Interests (Jersey) Law 201- (the new Law). The new Law provides Jersey with a modern, efficient regime for the creation and enforcement of security interests in intangible property.

The Securities Investment Business Law (2004 Revision) (the "Law") provides for the licensing and control of "securities investment business" (as defined below) carried on in, or from, the Cayman Islands. Under the Law, a person shall not carry on or purport to carry on securities investment business unless such person holds a licence granted under the Law or is exempt from holding a licence.

The implementation of the EU savings tax directive by the Cayman Islands and its impact on Cayman Islands mutual funds

The Cayman Islands' Court of Appeal recently heard an appeal on the ability of a fund to suspend redemptions and the payment of redemption moneys.

The Exempted Limited Partnership Law (as amended) (the "ELPL") governs the formation and operation of Cayman Islands Exempted Limited Partnerships ("ELP").

The implementation of the EU savings tax directive by the Cayman Islands and its impact on Cayman Islands mutual funds

What is Civil Recovery? Variously styled as ‘civil forfeiture’, ‘asset recovery’ and ‘confiscation without conviction’, the power of the state to pursue in the civil courts those who hold property acquired with the proceeds of unlawful conduct has existed in other jurisdictions for some time, but is still a recent development here in the Cayman Islands.

Prior to 1983, the majority of sales and purchases in respect of "freehold" stand alone properties were effected by way of a contract passed before the Royal Court. Apartments could only be transferred by the sale of a block of shares in a property holding company and only where there was no mortgage taken against the shares.

Carla Benest, Associate of Mourant du Feu & Jeune, explains the employment aspects of complying with anti money laundering and financing of terrorism legislation ("AML Legislation").

March 2010 - Mourant du Feu & Jeune's employment law team presented a mock tribunal, in conjunction with the Jersey Branch of CIPD, to seek to give employers an understanding of what is involved in defending a tribunal claim. Carla Benest, an Associate of Mourant du Feu & Jeune, explains more.

HSH Cayman v ABN AMBRO Bank – Examining the Consequences of Non-Compliance with the Companies Winding Up Rules, Cayman Islands

Apartment living is on the increase and is certainly enjoying its new sophisticated image with many new and fashionable addresses bringing apartments to the Jersey market. However 'a la mode' an apartment may be though, the legalities remain the same and, in Jersey, these apartments will be bought by way of a Share Transfer or Flying Freehold transaction, or will be rented under the terms of a Lease. Invariably, each of these modes of transfer will include a mechanism whereby the purchaser or tenant will be expected to contribute to an annual Service Charge. The terms of this mechanism are set out in the Articles of Association of the Share Transfer Company or the Declaration of a Flying Freehold Association or the Lease of a rented property. There is often a misconception that the Service Charge is an unwelcome additional cost peculiar to apartment living. This article will attempt to negate this premise or least highlight the fact that this is certainly not always the case.

A look at some of the legal jargon a prospective purchaser may encounter when involved in the legal process of buying a property in Jersey.

Ever since the Goods and Services (Jersey) Law 2007 introduced a 3% sales tax in 2008, GST has been the buzzword of the Property world. The impact of GST on Property transactions is far-reaching and with the proposed amendments to the GST Law and the GST Regulations 2007 the importance of keeping track of the legislation cannot be overstated. Most people are aware of the prima facie rule that GST is not chargeable on residential property transactions, due to such supplies being zero-rated under the GST Law. This article will highlight some exceptions to this rule.

This Article is intended to summarise the legal position of individuals who are allocated Housing qualifications under Regulation 1(1)(j) of the Housing (General Provisions) (Jersey) Regulations 1970 (the "Housing Regulations").

Carla Benest, Associate of Mourant du Feu & Jeune, explains the employment aspects of complying with anti money laundering and financing of terrorism legislation ("AML Legislation").

March 2010 - Mourant du Feu & Jeune's employment law team presented a mock tribunal, in conjunction with the Jersey Branch of CIPD, to seek to give employers an understanding of what is involved in defending a tribunal claim. Carla Benest, an Associate of Mourant du Feu & Jeune, explains more.