New guidance on schemes of arrangement: What it means for Jersey companies

A new Practice Statement from the Chancellor of the High Court in England will take effect from 1 January 2026, introducing changes to how Schemes of Arrangement are handled under Part 26 and 26A of the UK Companies Act 2006. While this guidance applies to England and Wales, it’s expected to influence how similar schemes are managed in Jersey, where courts often look to English law for guidance.

Background

In Jersey, members’ schemes of arrangement are governed by the Companies (Jersey) Law 1991, which is based on the older UK Companies Act 1985. Although English court decisions aren’t binding in Jersey, they are often persuasive.

What’s changing?

The new Practice Statement aims to make court processes for schemes and restructuring plans more efficient, transparent and fair. Here are the key updates that could impact Jersey schemes:

1. Greater cooperation required
   All parties involved must now work together to avoid delays and help the court manage the process effectively.
   
   
2. No more secret hearings
   Applicants can no longer skip notifying affected parties about the convening hearing, even if they believe there’s a good reason.
   
   
3. Clearer notifications
   Notices sent to company members must now include a short summary of the proposal upfront and avoid unnecessary detail.
   
   
4. Earlier disclosure of key documents
   The final version of the explanatory statement must be shared with members at least 14 days before the convening hearing.
   
   
5. Material changes after the hearing must be approved
   If any material changes are introduced to the documents after the convening hearing, members must be informed in time to consider the impact on their vote. The court must also approve these changes.
   
   
6. Improved explanatory statements
   These must now start with a summary of the key terms. Any important documents attached or referenced must also be summarised and members must be told how to access them.
   
   
7. Court’s role at the convening hearing
   The court will now focus only on the form of the explanatory statement, not its content.
   
   
8. Objections must be timely and clear
   Anyone objecting to the scheme must submit their objections at least 7 days before the hearing, with as much detail as possible.
   
   
9. Court’s additional case management powers
   The court can now give directions on:
   - What issues need to be resolved
   - The order of resolving them
   - What information must be shared
   - Whether expert evidence is needed
   
   
10. Notice for shareholders holding via intermediaries
    Applicants must explain how they’ll notify shareholders who hold shares through intermediaries - common in public companies.

What’s missing?

The Practice Statement doesn’t address the 'headcount test', which remains a challenge. This test requires a majority in number of voting members (not just in value) to approve a scheme. In public companies, where shares are often held by a few nominee holders on behalf of many investors, this can be problematic.

The Government of Jersey is currently consulting on changes to the Companies Law, including a proposal to abolish the headcount test. If adopted, this would bring clarity and strengthen Jersey’s position as a hub for complex cross-border deals.

Final thoughts

Although this new Practice Statement is not binding in Jersey, it’s likely to influence how schemes are handled there. In fact, some of its principles are already being followed in recent take-private transactions involving Jersey public companies.