Jersey adopted the Financial Services (Disclosure and Provision of Information) (Jersey) Law 2020 (Disclosure Law) on 14 July 2020 and registered it in the Royal Court of Jersey on 23 October 2020. Originally, it was anticipated that the Disclosure Law would come into force on 1 December 2020. However, following feedback from industry, the Jersey Financial Services Commission decided to push back the launch date of its new registry from 1 December 2020 to 6 January 2021 to give industry more time to prepare. Consequently, the Government of Jersey has moved the date on which the Disclosure Law will come into effect to 6 January 2021.
As noted in our previous article, Jersey already has a central register of beneficial owners and controllers of legal entities (i.e. companies) and, therefore, the impact of the Disclosure Law will be largely minimal on Jersey's industry. However, there will be an impact upon foundations incorporated under the Foundations (Jersey) Law 2009 (as amended) (Foundations Law).
The Impact on Jersey Foundations – Abridged Regulations
Currently only the charter of a foundation's constitution is made public whilst its regulations remain a private document not available for public inspection. The Disclosure Law amends the Foundations Law to require the filing of "abridged regulations" which will be publicly available. This obligation applies to existing foundations and to newly incorporated foundations.
Most importantly, the abridged regulations are not required to contain any information from which a person can or may be identified.
Information within and the format of the Abridged Regulations
The "abridged regulations" must comprise of the information contained in articles 12 and 14 of the Foundations Law. Article 12 of the Foundations Law relates to a foundation's council and specifies that regulations must:
- establish a council to administer the foundation's assets and to carry out its objects;
- provide for the appointment, removal and remuneration of council members;
- set out how decisions are to be made by the council and specify any decisions requiring the approval of another person and the identity of that person;
- set out the functions of the council, and, if they must or may be delegated or exercised in conjunction with any other person, the extent to which this must or may be done;
- set out a procedure that ensures that a qualified person (i.e. a person regulated by the Jersey Financial Services Commission) is appointed to be the qualified member of the council (a council must include a qualified person at all times) as soon as reasonably practicable if the qualified member dies, retires or otherwise ceases to act or to be able to act.
Article 14 of the Foundations Law relates to a foundation's guardian (who must "take such steps as are reasonable in all the circumstances to ensure that the council of the foundation carries out its functions") and specifies that regulations must provide for the appointment of the foundation's guardian and provide for the retirement, appointment and remuneration of guardians.
The Jersey Financial Services Commission may publish guidance as to what information should be included or excluded from the abridged regulations. It is hoped that such guidance will be available at the time the Disclosure Law comes into force.
The format of the abridged regulations is yet to be determined and may consist of a registry form or a redacted version of the regulations. The Isle of Man already requires the filing of a redrafted version of a foundation's regulations and so we suspect the same will be true for Jersey. To avoid the preparation of both regulations and abridged regulations, for new foundations, it may be worth considering that regulations are drafted to avoid private information being disclosed and, for existing foundations, if necessary or desired, it may be possible to amend the regulations so private information is not contained in the regulations.
Why the impact on Foundations?
The change comes about because the Financial Action Task Force (FATF)'s Recommendations require a consistent regime for corporate entities. It is clear foundations should be treated similarly to companies and that governing documents of such entities are publically available. However, that does not mean the private information (i.e. names of beneficiaries, council members, guardians) contained in foundations' regulations is required to be made public; just like the names of company officers and shareholders are not publically available pursuant to articles of association. Hence the "abridged regulations" seeks to resolve the issue of private information for foundations.
Filing Times and Next Steps for Qualified Members
In line with the relevant filing period for the new annual confirmation statement, which replaces the annual return in 2021, qualified members of foundations should have until the end of February 2021 to file abridged regulations for existing foundations.
However, on 10th November 2020 the Jersey Financial Services Commission announced that the due date for filing the annual confirmation statement in 2021 has been extended to 30 April 2021 to give companies more time to adapt to the new process. Therefore, it would be reasonable to assume the same filing deadline of 30 April 2021 applies to the filing of abridged regulations for existing foundations; albeit this has not been confirmed and best practice would be to file abridged regulations as soon as reasonably possible in 2021.
Therefore, qualified members should consider possible amendments to existing regulations and/or otherwise notify their clients of the requirement to file abridged regulations in due course.
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.