CONSULTATION PAPER - the Jersey Financial Services Commission

CONSULTATION PAPERThe Jersey Financial Services Commission (the “Commission”) invites comments on thisconsultation paper. Heather Bestwick at Jersey Finance Limited (“Jersey Finance”) is coordinatingan Industry response that will incorporate any matters raised by local businesses.Comments should reach Jersey Finance by 8 April 2011.Responses should be sent to:Heather BestwickTechnical DirectorJersey Finance Limited4 th FloorSir Walter Raleigh House48-50 EsplanadeSt HelierJerseyJE1 3UNTelephone: +44 (0) 1534 836000Facsimile: +44 (0) 1534 836001Email: heather.bestwick@jerseyfinance.jeAlternatively, responses may be sent directly to Julian Lamb at the Commission by 8 April2011. If you require any assistance, clarification or wish to discuss any aspect of the proposalprior to formulating a response, it is of course appropriate to contact the Commission. TheCommission contact is:Julian LambDirector, RegistryJersey Financial Services CommissionPO Box 26714-18 Castle StreetSt HelierJerseyJE4 8TPTelephone: +44 (0) 1534 822067Facsimile: +44 (0) 1534 822003Email: j.lamb@jerseyfsc.orgIt is the policy of the Commission to make the content of all responses available for publicinspection unless specifically requested otherwise.MERGER REGISTRATION AND PROCESS FEES 3 of 14

1 CONSULTATION1.1 Basis for consultation1.1.1 The Commission has issued this consultation paper in accordance withArticle 8(3) of the Financial Services Commission (Jersey) Law 1998, as amended(the “Commission Law”), under which the Commission “may, in connection withthe carrying out of its functions - …consult and seek the advice of such persons or bodieswhether inside or outside Jersey as it considers appropriate”.1.1.2 In addition, Article 15(3) of the Commission Law requires that before theCommission may introduce and publish any fee “...the Commission must firstpublish a report that must include –(a) details of the duty or power for or in respect of which the fee is to be determined;(b) details of the proposed fee;(c) a request for comments on the level of the proposed fee; and(d) a date, that is at least 28 days after the publication of the report, before which thosecomments may be made to the Commission”1.1.3 The Commission considers that this consultation paper may be taken to constitutesuch a report as required by the Commission Law to introduce a fee under Article201 of the Companies (Jersey) Law 1991, as amended (the “Companies Law”).1.2 Who will be affected by the proposed changes1.2.1 The proposals within this consultation paper will affect all persons wishing toprogress cross-border mergers in accordance with the Companies (AmendmentNo.5) (Jersey) Regulations 2011 (the “Regulations”), which replaces Part 18B ofthe Companies Law.1.3 Responding to the consultation1.3.1 The Commission invites comments in writing from interested parties on theproposals included in this consultation paper and its likely impact on personswishing to progress a cross-border merger in or outside Jersey. Where commentsare made by an industry body or association, that body or association should alsoprovide a summary of the type of individuals and/or institutions that itrepresents.1.3.2 To assist in analysing responses to the consultation paper, respondents are askedto:1.3.2.1 prioritise comments and to indicate their relative importance; and1.3.2.2 respond as specifically as possible and, where they refer to costs, toquantify those costs.1.3.3 Comments should be provided by no later than 8 April 2011.MERGER REGISTRATION AND PROCESS FEES 5 of 14

2 THE COMMISSION2.1 Overview2.1.1 The Commission is a statutory body corporate established under the CommissionLaw. It is responsible for the supervision and development of financial servicesprovided in or from within Jersey.2.1.2 In addition, the Commission has appointed the Director General as the registrarof companies pursuant to Article 196 of the Companies Law.2.2 Commission’s functions2.2.1 The Commission Law prescribes that the Commission shall be responsible for:2.2.1.1 the supervision and development of financial services provided in orfrom within Jersey;2.2.1.2 providing the States, any Minister or any other public body withreports, advice, assistance and information in relation to any matterconnected with financial services;2.2.1.3 preparing and submitting to the Minister for Economic Developmentrecommendations for the introduction, amendment or replacement oflegislation appertaining to financial services, companies and otherforms of business structure;2.2.1.4 such functions in relation to financial services or such incidental orancillary matters –• as are required or authorised by or under any enactment, or• as the States may, by Regulations, transfer; and2.2.1.5 such other functions as are conferred on the Commission by any otherLaw or enactment.2.3 Guiding principles2.3.1 The Commission’s guiding principles require it to have particular regard to:2.3.1.1 the reduction of risk to the public of financial loss due to dishonesty,incompetence, malpractice, or the financial unsoundness of personscarrying on the business of financial services in or from within Jersey;2.3.1.2 the protection and enhancement of the reputation and integrity ofJersey in commercial and financial matters;2.3.1.3 the best economic interests of Jersey; and2.3.1.4 the need to counter of financial crime in both Jersey and elsewhere.6 of 14 ISSUED 9 MARCH 2011

3 PROPOSALS3.1 Overview3.1.1 The Regulations were adopted by the States of Jersey on 16 February and cameinto force on 23 February 2011.3.1.2 Broad agreement from Industry has been obtained, via the Cross-Border MergerWorking Group that standard fees for mergers should be simple to understandand, where possible, avoid complicated calculated fee scales.3.2 Merger Fees3.2.1 The proposed schedule of fees for cross-border mergers, which is appended tothis consultation paper as the draft Companies Fees Notice (Appendix B),provides the detail of the proposed fees. Specific fee changes are highlighted inred at Part 2, ”Fees paid to the Commission”, at item 1 in respect of Article127FG(1) of the Companies Law.3.2.2 As noted in 3.1.2, merger fees should be easy to understand and avoidcomplicated fee scales. The proposed standard fee is banded into three bands:3.2.2.1 mergers with up to and including five merging bodies;3.2.2.2 mergers with more than five merging bodies; and3.2.2.3 mergers which are either one of the above, but are in additionconsidered by the Commission to be complex in nature.3.2.3 The Commission will initially determine an application to be complex if any oneor more of the following factors is/are present:3.2.3.1 the activity of any one of the merging bodies falls within the scope ofthe Commission’s Policy on Sensitive Activities;3.2.3.2 the activity and/or jurisdiction of a merging body and/or the mergedbody is connected with a higher risk jurisdiction;3.2.3.3 any one of the merging bodies is unique and/or specific to a foreignjurisdiction(s);3.2.3.4 the activity of any one merging body is an activity that would, ifconducted in Jersey, be subject to supervision or oversight by theCommission; or3.2.3.5 the industry sector in which any one merging body engages is subjectto local and or international trading controls/restrictions.3.2.4 The criteria may change as cross-border mergers increase and as generalCommission guidance and policy also develops.3.2.5 The proposed merger fees were compared to other jurisdictions, includingGuernsey. It is understood that any Guernsey cross-border merger will cost£2,500.MERGER REGISTRATION AND PROCESS FEES 7 of 14

4 QUESTIONSReferenceQuestion4.1 Do you agree with the proposal that, wherever possible, cross-border mergerfees should be easy to understand and avoid complicated fees scales? If not,please provide a suggestion for an alternative mechanism.4.2 Do you consider the level of the proposed cross-border merger feesappropriate? If not, please provide an alternative suggestion as to theappropriate level for such fees.8 of 14 ISSUED 9 MARCH 2011

APPENDIX AList of representative bodies who have been sent thisconsultation paper.• Jersey Finance Limited• Registry User Group• Cross-Border Merger Working GroupMERGER REGISTRATION AND PROCESS FEES 9 of 14

APPENDIX BJERSEY FINANCIAL SERVICES COMMISSIONDRAFT COMPANIES FEESNotice published in accordance withArticle 15 of the Financial Services Commission (Jersey) Law 1998 as amendedArticle 201 of the Companies (Jersey) Law 1991 as amendedCommencement dateThe fees set out in this notice are effective from XX April 2011.InterpretationIn this notice –“Additional Charge Regulation” means the Companies (Annual Returns – Additional Charge)(Jersey) Regulations 2008, as amended.“Commission” means the Jersey Financial Services Commission“Commission Law” means the Financial Services Commission (Jersey) Law 1998 as amended“Law” means the Companies (Jersey) Law 1991 as amended.SCHEDULE 1PART 1FEES TO BE PAID TO THE COMMISSIONItemArticle(s) ofthe LawFunction of RegistrarFee13, 7, 127YBand 127YHReceipt of documents on an application to form a company(including the formation of a cell of a cell company as acompany separate from the cell company) and the issue ofa certificate of incorporation.“Fast” incorporation service to form a company, in additionto the fee payable upon receipt of documents on anapplication to form a company.£200£20010 of 14 ISSUED 9 MARCH 2011

ItemArticle(s) ofthe LawFunction of RegistrarFee23, 7, 127YBand 127YHReceipt of documents on an application to create a cell(whether incorporated or protected) of a cell company andthe issue of a certificate of incorporation or recognition, asthe case may be.No fee3 11 and 100Receipt of documents following a special resolution by acompany to convert to or from a cell company and the issueof an amended certificate of incorporation.£500411, 100,127YB and127YLReceipt of documents following an agreement to transfer acell between cell companies and the issue of a newcertificate of incorporation or recognition, as the case maybe.£50071 and127YEReceipt of annual return for a company (other than by acompany whose income is exempted from income tax byvirtue of Article 115(a) of the Income Tax (Jersey)Law 1961).£150 *Plus, where the company is a cell company, in respect ofeach cell of the company.£150 *5CommissionLaw15(6)Plus(a) where the annual return is delivered after the end ofFebruary in the year in which it is due but before theend of April in that year, in respect of the company andin respect of each cell of the company (if any); or(b) where the annual return is delivered after the end ofApril in that year, in respect of the company and inrespect of each cell of the company (if any).£100£200Receipt of copy of resolution or agreement:6 100(4)(a) more than 21 days but not more than 60 days after thedate on which the resolution or agreement was passedor made; or(b) more than 60 days after the date on which theresolution or agreement was passed or made.£25£507 106 Delivery of accounts under Article 106 of the Law. £258 106(5)Late filing fee if accounts are delivered:(a) more than 7 months but not more than 9 months afterthe end of the financial period to which they relate; or£100* The Commission requires the payment to it of £35 pursuant to Article 201(1) of the Law. Pursuant toArticle 201(2) of the Law, an additional amount in the sum stated in the Additional ChargeRegulation must accompany the £35 fee. As at the date of publication, the additional amount payableto the Commission is £115 and the total sum payable to the Commission as the Annual Return Fee istherefore £150.MERGER REGISTRATION AND PROCESS FEES 11 of 14

ItemArticle(s) ofthe LawFunction of RegistrarFee(b) more than 9 months after the end of the financialperiod to which they relate.£2009 201For each certificate provided by the registrar pursuant to anapplication under Article 202 of the Law.£15For making the register available for inspection:Postal search. £1010 201For each copy of a document or other record provided bythe registrar pursuant to an application under Article 202 ofthe Law and printed by the Companies Registry.For each copy of a document or other record provided bythe registrar pursuant to an application under Article 202 ofthe Law and viewed without printing from a terminalwithin the Companies Registry.For each copy of a document or other record provided bythe registrar pursuant to an application under Article 202 ofthe Law via the Companies Registry online search facility.£5No Fee£2PART 2FEES TO BE PAID TO COMMISSIONItemArticle ofthe LawFunction of CommissionFeeApplication fee for mergers involving bodies other thancompanies:1 127FG(1)(a) up to and including 5 merging bodies; or £750(b) more than 5 merging bodies. £1,2502 127K3 127T4 135In addition to (a) and (b) above, where structures areconsidered by the Commission to be of a more complexnature, an additional fee will be charged.Application fee for continuance as a company incorporatedunder the Law.Application fee or authorization to seek continuance inanother jurisdiction.Fee payable for copy of report made by inspectors underArticle 128 of the Law.£2,500£500£50025p perpage12 of 14 ISSUED 9 MARCH 2011

SCHEDULE 2MAXIMUM SUMS THAT MAY BE CHARGED BY COMPANYItemArticle ofthe Law1 12DetailSupplying copy of memorandum and articles ofassociation.Maximumfeechargeable50p per page(A4 size)2 45(1) Allowing inspection of register of members. £53 45(2) Supplying copy of register of members.4 83(2)Charge by public company for allowing inspection ofregister of directors and secretary.5 99(2) Supplying copy of minutes of meeting.6 100(2) Supplying copy of resolution or agreement.50p per page(A4 size)£550p per page(A4 size)50p per page(A4 size)MERGER REGISTRATION AND PROCESS FEES 13 of 14

End of Consultation Paper14 of 14 ISSUED 9 MARCH 2011