The Channel Island of Jersey has become the latest financial services jurisdiction to introduce so-called Limited Liability Companies (LLCs) legislation, in a bid to boost its appeal to such U.S. financial services entities as fund managers and financial institutions.
The legislation means that limited liability companies may now be established in Jersey for the first time.
The news was unveiled by Jersey Finance, the island's financial services promotional and marketing organisation, after the legislation was approved on 11 September by Jersey lawmakers.
In introducing the new LLC legislation, Jersey joins the Cayman Islands and Bermuda, both of which recently added LLC laws to their statute books. In August, Jersey also saw new limited liability partnerships legislation (LLPs) coming into force, following the introduction of legislation last year that Jersey Finance describes as having been "a major overhaul of Jersey’s existing LLP legislation", which had originally been introduced in 1997.
The introduction of the LLC legislation also comes in the wake of an earlier announcement by Jersey Finance that it intends to open an office in a thus-far-undisclosed U.S. city, as it looks to increase its support for U.S. financial services businesses that might be interested in establishing operations in the jurisdiction, which is a U.K. Crown Dependency.
Combination of 'flexibility, privacy' and 'protection'
According to Jersey Finance, the attraction to the LLC structure is that it "combines the flexibility and privacy of a partnership with the protective limited liability of a company", and that this has helped to drive the LLC vehicle's global popularity for "a wide variety of uses, from SMEs and holding companies to fund structuring." In the U.S., it says, they currently account for more than two-thirds of all new transparent business structures formed in the country each year.
In a statement, Jersey Finance chief executive Geoff Cook noted that LLCs are "a structure of choice for alternative investment funds" in the U.S., where advisers and managers are "familiar with LLC structures, and aware of the benefits they can provide in terms of tax transparency."
"With that in mind, we are confident that the Jersey LLC can provide an attractive proposition for U.S.-based hedge fund managers, particularly in operating master-feeder structures," Cook added.
"We anticipate strong growth in this area, [while] we also believe the LLC can be a really positive addition to our suite of vehicles more widely, to enable better international structuring.”
To read an interview with Jersey Finance technical manager David Postlethwaite on the Jersey Finance website, in which he explains why and how the LLC legislation came to be proposed in Jersey and what it is expected to achieve, click here.