Recently, businesses have been challenged by some unprecedented and exceptional circumstances which have further perpetuated financial market uncertainty and volatility.
These events have, in many cases, placed significant stresses on companies’ cash flows, even public limited companies (PLCs), and they may need an alternative, fast, flexible and cost-effective way of raising capital to safeguard the future of their businesses and staff.
How can a cash box help raise cash quickly?
A Jersey cash box offers PLCs, listed on the Main Market of the London Stock Exchange (LSE) or Alternative Investment Market (AIM), an alternative financing tool to expedite and raise cash by issuing shares without the restrictions of the pre-emption rights regime under the Companies Act 2006.
The share issue can therefore take place without the timing and expense restrictions of more common methods such as a rights issue as there is no requirement to obtain shareholder approval or produce a prospectus. Under the Companies Act 2006, a share issue of up to 20% is permitted - a figure that increased from 5% with a deadline of 30 September 2020, which provides a compelling reason to consider this cash-raising option now.
How does a cash box work?
A cashbox transaction involves the incorporation of a new company, which can ordinarily be offshore in the jurisdiction of Jersey. This video explains how a cash box transaction works:
Jersey: the jurisdiction of choice for incorporating cash box vehicles
Speed, flexibility and convenience
- Upon completion of our AML/CDD requirements, we can incorporate the JerseyCo on the same day, subject to no high risk factors being involved.
- Jersey Companies Law makes redemption of preference shares a quick and simple process. The funds can also be extracted in alternative ways if preferred, depending on the tax advice received by the PLC i.e. by dividend or on liquidation of the JerseyCo.
- A JerseyCo, managed and controlled in the UK, is out of the scope of the Jersey economic substance legislation and does not require any Jersey resident directors to be appointed – this means that the PLC’s UK resident directors can be appointed to the board of the JerseyCo.
Jersey’s legal and regulatory framework
- A JerseyCo can redeem shares from any source including share capital, on the passing of a 12-month look forward solvency statement.
- A JerseyCo can be disolved quickly, easily and with minimal cost without the need to appoint a liquidator.
- Jersey Companies’ Law is based on English law principles meaning that there is a consistent approach across jurisdictions whilst offering more flexibility in relation to share redemption, distributions and the contents of a company’s memorandum and articles of association.
- Robust trustee and corporate services with strong governance, financial and legal infrastructure, backed by technical expertise subject to prudential regulation and excellent working relations with UK advisers.
- Proximity in time and distance to London.
- JerseyCo will have tax neutral status if it is managed and controlled in UK
- No capital gains tax, corporation tax, stamp duty, VAT or withholding tax is payable in Jersey in respect of the issue, transfer or redemption of the shares in the JerseyCo.
- No UK stamp duty liability should arise on the transfer of the JerseyCo shares as the register of its members is kept in Jersey at all times and share transfers are affected by executing the stock transfer forms in Jersey.
VG does not provide tax or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax or legal advice. You should consult your own tax and legal advisors before engaging in any transaction.
We can provide an integrated and competitively priced solution of company incorporation, administration and governance services which you may require under Jersey law for a cash box transaction working with onshore and offshore legal and tax advisors.
We will partner with the PLC’s preferred legal and tax advisors, or we can provide the required support through our established legal and tax network. Our team has considerable experience partnering with PLCs, and their advisors, in delivering a highly responsive service, helping you to transact and ultimately, raise capital quickly.