New Exemptions Align Jersey’s Prospectus Rules With Familiar UK/EU Exemptions – Corporate/Commercial Law

On 19 October 2021, changes to the definition of
“prospectus” in the Jersey Companies Law will come into
force. These changes will exclude certain categories of debt and
equity invitations from being a prospectus for Jersey law purposes
with the effect that such invitations will no longer require
approval from the Jersey Registrar of Companies and will not give
rise to a public prospectus “filing” obligation for
Takeover Code purposes. The changes are welcomed in many areas,
including restructuring and high yield, and further enhance
Jersey’s standing as a leading jurisdiction for use in capital
markets transactions.

The current prospectus rules

The current Jersey definition of “prospectus” has
often meant that a securities offer by a Jersey company is a
prospectus for Jersey law purposes, even where an exemption from
the obligation to produce an approved prospectus is available in
other jurisdictions in which the offer will be circulated. This is
because the only safe harbour within the definition has been a
“restricted circle of persons” exemption that applies if,
amongst other things, the number of persons (whether in Jersey or
elsewhere) to whom the invitation is communicated does not exceed
50.

What is changing?

The Companies (Amendment of Law) (No. 2) (Jersey) Order 2021
(the “Amending Order“), made on 12
October 2021, comes into force on 19 October 2021. The Amending
Order introduces new safe harbours which align Jersey’s
prospectus exemptions much more closely with those in the UK and
the EU. In particular, there are new exemptions for offers: (a) to
qualified investors/professional investors (where “qualified
investors” takes its meaning from the EU Prospectus
Regulation); and (b) relating to securities with a minimum
denomination of at least EUR 100,000 (or an equivalent amount in
another currency), and the number of persons (other than qualified
investors and professional investors) who will constitute a
‘restricted circle of persons’ has been increased to 50 in
Jersey and 150 elsewhere.

The definition of “prospectus” to be amended by the
Amending Order only relates to securities of a Jersey company. The
prospectus regime that applies to foreign companies is separate and
is not covered by this briefing note.

Conclusion

The changes are an important step in modernising Jersey’s
prospectus regime while still maintaining its integrity and its
fundamental role in protecting investors. The new exemptions
balance the imperative to protect retail investors with the need to
remove disproportionate burden where an offer of securities is made
to sophisticated investors.

The Jersey exemptions are based on similar exemptions under UK
and EU prospectus rules. They will, therefore, be familiar to
capital markets participants and their advisers and will allow for
transaction efficiencies in cross border capital markets
transactions.

Carey Olsen worked closely with the Government of Jersey in the
development of the new definition of “prospectus” and is
well placed to provide advice on its scope. If you have any queries
in relation to the application of the new exemptions, please do not
hesitate to contact us.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.