The Financial Assistance Regime In Jersey

Article 58 of the Companies (Jersey) Law 1991 ("CJL") restricts the giving of financial assistance by a Jersey company ("JCo") or any of its subsidiaries which is a Jersey company, for the purpose of the acquisition of shares in JCo or in reducing or discharging a liability incurred for the purpose of the acquisition.

Article 58 is modelled on, but is different in some important respects from, sections 151 to 158 of the Companies Act 1985 of the United Kingdom.

This briefing provides an overview of the Article 58 regime, identifies some of the key differences between Article 58 and sections 151 to 158 of the Companies Act 1985 of the United Kingdom ("CA85"), highlights the legal consequences of a breach of Article 58 and summarises the "whitewash" procedure which will make lawful for the purposes of Article 58 any transaction which would otherwise be unlawful under that Article.