Jersey develops closer links with China
Jersey’s business relationship with China has been strengthened during the past few months, by the recent approval for Jersey companies for listing to float on the Hong Kong Stock Exchange (‘HKSE’), the opening of a representative office of Jersey Finance in Hong Kong, and the first visit to the Island of the Chinese Ambassador to the UK.
In an important development for Jersey’s finance industry, Jersey companies have been approved for listing their shares on the Hong Kong Stock Exchange (‘HKSE’). Jersey joins a select group of jurisdictions that are approved by the HKSE, ahead of its nearest competitor jurisdictions, Guernsey and the Isle of Man.
The approval is the result of more than a year’s negotiation, research and document preparation involving government officials in Jersey, representatives from Jersey Finance Limited and the finance industry. Jersey’s finance industry can now compete on an equal footing with competitor jurisdictions that have been established longer in Asia.
This recognition presents an excellent opportunity for investors wishing to take advantage of the benefits of using a Jersey company, and also gives a great opportunity to raise capital in the Asian markets.
In considering whether Jersey should be an approved jurisdiction, the HKSE had to be satisfied that a Jersey incorporated company offers at least an equivalent standard of shareholder protection to a Hong Kong incorporated company. Jersey shareholders' rights and corporate governance in general are substantially similar to those for a UK incorporated company and the Takeover Code applies to Jersey incorporated companies and now applies on a statutory basis following the introduction of the Companies (Takeover and Mergers Panel) (Jersey) Law 2008.
Jersey is already recognised as an accepted jurisdiction for both a primary London Stock Exchange ("LSE") listing and a listing on the AIM market of the LSE as well as other stock exchanges including New York and Euronext in Amsterdam. This further recognition should also work to promote dual listings.
The addition of Jersey to the HKSE’s approved jurisdiction list is regarded as enormously significant for the Island, as Jersey has been seeking to increase business flows from the Asia Pacific region for some years. Jersey’s finance industry already provides comprehensive corporate finance and debt issuance services in the region. To date, more than 25% of the 60 Chinese companies listed on AIM are incorporated in Jersey. 86 businesses use Jersey companies for listing purposes on worldwide stock exchanges from London to New York, with a combined market capitalisation of over £16 billion. Jersey charges no corporation tax or withholding tax on dividends, interest and royalties.
Jersey’s Chief Minister, Senator Terry Le Sueur, said, “The inclusion of Jersey firms in the Hong Kong exchange confirms the growing recognition that Jersey has robust company law and is viewed internationally as a well-regulated jurisdiction. Getting access to a major capital market like Hong Kong is a significant step forward and consolidates the work already being done by the Island’s representatives in Asia.”
Robert Kirkby, Technical Director of Jersey Finance, commented: “Gaining access to a major capital market such as Hong Kong is further excellent news for Jersey. The move by the Exchange authorities adds weight to Jersey’s reputation as a rigorously supervised, highly regarded jurisdiction and also demonstrates how the market in Asia views the quality and robustness of Jersey company law. Moreover it gives further impetus to the formal opening of our second overseas office in Hong Kong later this month and is very welcome news. Especially with China anticipated to become the world’s most powerful economy and as Hong Kong is already such an important financial centre, the listing approval for the Hong Kong Exchange is timely and will support our efforts to develop commercial links with the region.”
The opening of Jersey Finance’s Hong Kong office on 22 October 2009 provides a permanent base for Jersey’s finance industry in Hong Kong. The office aims to develop its contacts with leading financial intermediaries, regulators and Government officials both in Hong Kong and mainland China, and across the Asia Pacific region.
Geoff Cook, Chief Executive of Jersey Finance, said that there is an "active pipeline" of Jersey-domiciled and AIM-listed companies looking to list in Hong Kong. With a physical presence in Hong Kong, Jersey Finance is now better placed to support the many business opportunities available in China and the region. He commented, “Hong Kong is regarded as a key global finance location and we are delighted that we now have a permanent presence to help spearhead our increasing participation in financial services in the region. Jersey Finance has visited the area since 2005 with delegations from Jersey and the opening of a formal office is a natural extension of those growing commercial links with the region.”
As a further boost to the growing relationship between Jersey and China, the Chinese Ambassador to the UK, Her Excellency Madam Fu Ying, made her first official visit to the Island on 5 November 2009.
The Ambassador told Jersey’s dignitaries that China appreciates the expertise of centres such as Jersey and is open to exploring the many advantages that offshore finance could offer: “At the G20 summit in London tax havens were an issue debated and that is precisely why I wanted to come here and understand whether Jersey is a tax haven or not, and whether it is a good place for Chinese companies to work with. From what I have learned today in discussions that I have had, I think Jersey has a very high rating in terms of financial management. The control, monitoring and the fact that the Island has good surveillance over the banks shows it is a place where there is solid ground. Like Hong Kong, Jersey is not a tax haven, but a low-tax place. It abides by all international rules and regulations. Jersey’s financial experts and government have an important role to play in the international debate about how the financial sectors are regulated.”
It is hoped that these events represent the start of a burgeoning and potentially lucrative relationship between the world’s fastest-growing economy and Jersey.
For further information on using Jersey companies for international finance, please contact Volaw’s Managing Director Robert Christensen (rchristensen@volaw.com).
