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24 January 2013
The States of Jersey recently gave a boost to the Law Officers' Department. A new approval process for legislation is under consideration, whereby a significant amount of the work to review legislation that was previously undertaken by the Ministry of Justice in the United Kingdom will now be dealt with by the department.
It is therefore hoped that the approval time for legislation submitted to the UK Privy Council via the Ministry of Justice will decrease from a waiting time of six months or more to a period of six to 12 weeks, depending on the complexity of the legislation.
This is good news for Jersey and it is anticipated the new procedure will start soon, now that the Ministry of Justice has cleared the backlog of Jersey legislation detailed below.
The following legislation came into force recently or is imminent.
Collective Investment Funds (Certified Funds - Prospectuses) (Jersey) Order
Existing statutory prospectus content requirements for Jersey investment funds which fall within the definition of certified funds have been replaced by the new Collective Investment Funds (Certified Funds - Prospectuses) (Jersey) Order 2012 (for further details please see "New certified funds prospectuses order announced").
The order was adopted by the States on May 17 2012 and came into force on November 17 2012.
Companies (Amendment 6) (Jersey) Regulations
The Companies (Amendment 6) (Jersey) Regulations 2011 amend the Companies (Jersey) Law 1991 in light of the entry into force of the new laws on separate limited partnerships and incorporated limited partnerships (for further details please see "Innovations in limited partnerships").
The new regulations, which came into force on July 20 2011, include restrictions on incorporated limited partnerships and separate limited partnerships acting as directors or auditors of Jersey companies.
Control of Housing and Work (Jersey) Law
The Control of Housing and Work (Jersey) Law 2012 (previously referred to as the Migration (Jersey) Law) received UK Privy Council approval on October 17 2012 and was registered by the Royal Court of Jersey on October 26 2012. It is expected to enter into force shortly.
The law constitutes an overhaul of the current housing and regulation of undertakings laws. It will repeal and replace the Housing (Jersey) Law 1949, the Regulation of Undertakings and Development (Jersey) Law 1973 and the Hawkers and Non-Resident Traders (Jersey) Law 1965, as well as regulations and orders made under that legislation.
Gambling (Jersey) Law
The new Gambling (Jersey) Law 2012 is the final stage of a three-year modernisation programme for Jersey's gambling regulatory system. Other initiatives forming part of the programme include:
The new law will replace the Gambling (Jersey) Law 1964, which the government believes no longer reflects modern society or the public interest. It builds on the system of regulation through licensing conditions and codes of practice already approved by the States. It is designed to ensure that the system of regulation available to the commission can evolve and change at the same pace as modern business practices. It also brings the checks and balances available to the commission up to date, with licensees subject to administrative fines for non-compliance and increased criminal penalties for non-licensed activities.
The new law received UK Privy Council approval on May 30 2012, was debated by the States on November 20 2012 and entered into force on January 1 2013.
Income Tax (Amendment 38) (Jersey) Law
The recent assessment of Jersey's corporate tax regime by the EU Code of Conduct on Business Taxation Group focused on concerns surrounding the interaction of the deemed distribution and attribution provisions with the 0% general rate of tax that applies to Jersey-resident companies. This was further supported by the findings of a review by the European Council's High-Level Working Party on Tax Matters into the scope of the EU Code of Conduct on Business Taxation in January 2011.
To address EU concerns, the new law amended the Income Tax (Jersey) Law 1961 by removing the full attribution provisions with effect from January 1 2012 and the deemed distribution provisions with effect from January 1 2013. As a result, the Council of Ministers of the European Union approved Jersey's corporate tax regime on December 19 2011. The council also approved the report of the EU group, which accepted that following these legislative changes, Jersey's corporate tax regime would no longer have harmful effects within the meaning of the code. This has ensured that Jersey can maintain its general rate of tax of 0% for companies, thus preserving its competitive position and the continued success of its economy.
Intellectual Property (Unregistered Rights) (Jersey) Law
Previously, copyright law in Jersey was provided by two UK acts of Parliament - the Musical Copyright Act 1906 and the Copyright Act 1911. The new law updates the law for use in today's digital age, where globalised e-business plays a significant role.
The new law focuses on copyright and other unregistered IP rights (eg, database, publication and design rights), and is based largely on the equivalent provisions in the UK Copyright, Designs and Patents Act 1988, as amended. The law also provides for a licensing authority, the equivalent of the Copyright Tribunal under UK law.
The new law is the first stage in the modernisation of Jersey's IP law, although Jersey's laws relating to registered rights (ie, patents, trademarks and registered designs) are already much more modern than its copyright law.
The new law received UK Privy Council approval on November 16 2011 and came into force on December 11 2012.
Residential Tenancy (Amendment) (Jersey) Law
The Residential Tenancy (Jersey) Law 2011 was approved by the UK Privy Council on November 16 2011, but was awaiting further amendments to ensure full compatibility with the European Convention on Human Rights. The amending law was adopted by the States on September 11 2012 and entered into force on November 30 2012.
The Residential Tenancy (Amendment) (Jersey) Law 2012 makes some important changes to the law governing residential tenancies and residential lease precedents, and must be reviewed and modified in order to comply with the new provisions.
Security Interests (Jersey) Law: part I - security over intangible movables
The new law was adopted by the States on July 19 2011 and received UK Privy Council approval on July 10 2012. However, it is unlikely to be implemented much before April 2013.
The creation of security over intangible movables under Jersey law is currently governed by the Security Interests (Jersey) Law 1983. The new Security Interests (Jersey) Law will add certainty and flexibility at a time when economic conditions have led to a greater focus on protection of collateral (for further details please see "New Security Interests (Jersey) Law: changes to market practice").
The main changes include:
The second stage of the new law will be to extend its provisions to cover tangible movable property (eg, inventory, equipment and consumer goods), although the draft legislation for this is subject to ongoing consultation. It has been agreed that the first stage of the new law will be implemented without the second stage to avoid any further delay.
Trusts (Amendment 5) (Jersey) Law
The new Trusts (Amendment 5) (Jersey) Law 2012 received UK Privy Council approval on October 17 2012 and was registered before the Royal Court on October 26 2012. It came into force on November 2 2012.
Although not as significant as the Trusts (Amendment 4) (Jersey) Law 2006, the changes introduced to the Trusts (Jersey) Law 1984 by Amendment 5 should make Jersey more attractive as a destination for private client business (for further details please see "Trusts (Amendment 5) (Jersey) Law 2012 enters into force"). Key changes include:
Various new or proposed tax agreements
Jersey signed its first tax information exchange agreement (TIEA) with the United States in 2002 and has gone on to enter into similar agreements with a number of other countries. Between the start of 2011 and the end of October 2012, the government signed a further 10 TIEAs, with another 12 at either the pre-signing or advanced negotiation stage.
Jersey is also making progress on new double tax agreements, with three agreements signed in 2012, one agreed ready for signing and two at the negotiation and/or exchange of draft agreement stage.(1) These are generally based on the Organisation of Economic Cooperation and Development model.
Following the adoption by the Global Forum on Transparency and Exchange of Information for Tax Purposes of its Phase 1 and Phase 2 peer review report for Jersey in October 2011, the Taxation (Miscellaneous Provisions) (Jersey) Regulations 2012 came into force on October 2 2012. Of the nine elements subject to review, the forum's assessors considered that six were in place and a further three were "in place, but certain aspects of the legal implementation of the element need improvement". The regulations seek to address the areas for improvement in respect of these three elements by amending the following existing regulations:
The following legislation is expected to be enacted shortly.
Proposed draft Companies (Amendment 11) (Jersey) Law
An Economic Development Department green paper(3) on further changes to the Companies (Jersey) Law 1991 was published on November 25 2011. The closing date for comments was February 17 2012. The response to the consultation is still awaiting publication by the department and the draft legislation cannot be progressed until this happens.
The proposed changes include provisions both to clarify and to improve the law. Among the suggested amendments is a proposal to limit the scope of the definition of a 'distribution' in Article 114(1) by excluding any distribution for which the net assets of the company are not reduced immediately after the distribution has been made. This proposal aims to align the legal and accounting tests for, notably, upstream guarantees and certain other (unspecified) types of commercial transaction.
The green paper also contains a proposal to introduce a mechanism allowing retrospective shareholder ratification of a distribution if the appropriate directors make a statement in prescribed terms, similar to those set out in Article 115(4) of the law.
Under the proposal, some changes will be implemented by regulation and others under the new law. However, it is unclear whether all matters covered in the consultation will become law. A further update of the green paper will therefore be issued when the States publishes its draft implementing legislation.
Proposed financial services ombudsman scheme
The proposed ombudsman scheme for financial services offered in Jersey aims to provide an independent dispute resolution service to settle complaints between consumers and businesses providing financial services in Jersey. A consultation(4) on the proposals closed in April 2011 and an industry working group has been established to consider funding and other issues. The States of Guernsey is also consulting on introducing an ombudsman scheme and it is proposed that a joint ombudsman service be set up to cover both islands. Draft Jersey legislation was expected to be lodged with the States in the fourth quarter of 2012, but this has been delayed. If it is decided that introduction of the Jersey legislation must coincide with introduction of the equivalent Guernsey legislation, this may affect the Jersey legislative timetable, as Guernsey is at an earlier stage in the process.
Proposed draft Limited Liability Partnerships (Jersey) Law
The latest drafts of a new Limited Liability Partnerships (Jersey) Law and related Limited Liability Partnerships (Dissolution and Winding Up, etc) (Jersey) Regulations were returned for amendment in late January 2012 and further drafts have been produced and reviewed. Final form draft legislation was lodged before the States on December 4 2012 and the new law may be in force by the second quarter of 2013.
(1) For further information on double tax agreements and TIEAs, please see www.gov.je/SiteCollectionDocuments/Tax%20and%20your%20money/ID%20TIEAsSignedToDate.pdf.
(2) Further details can be found in the Report and Explanatory Note to the draft Taxation Regulations at www.statesassembly.gov.je/AssemblyPropositions/2012/P.074-2012.pdf.
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