Family investment companies - The benefits and Jersey considerations

The tightening of the UK tax treatment of trusts and rising UK corporation tax rates, combined with other socio-economic influences, have led to an increased interest in family investment companies (FICs), a more flexible tax-efficient corporate offering which allows family members to tailor voting rights, dividend rights, and veto powers, as a means to carefully structure and hold family assets.

What is a FIC? 

A FIC is most commonly a private limited company where family members are shareholders (and commonly directors, too), and the company itself owns and manages the family's broader investment assets. 

Why families and advisers use FICs 

A FIC is highly customisable in nature and allows families to pool their financial assets into the company and make strategic investments, whilst the ownership structure can be designed with specific share classes to separate the income and capital value of the company with varying rights for different family members. In a typical FIC structure for example, parents can hold income and voting right share classes, with the younger generation often holding non-voting shares tied to the future growth of the FIC.

Key benefits to using a Jersey FIC structure

A Jersey-incorporated FIC can offer a number of advantages for families seeking a flexible and tax-efficient structure to hold and manage wealth:

Tax efficiency 

Jersey operates a broadly tax-neutral regime, with most companies subject to a 0% rate of corporate income tax. A correctly structured FIC can enable a wide suite of tax advantages, including efficiencies in inheritance tax outside of Jersey, relief on corporation tax and mitigation of capital gains tax. This enables investments to accumulate within the structure with minimal tax leakage. 

Flexible profit extraction 

Distributions can typically be made to shareholders without withholding tax, providing flexibility in how and when value is extracted, subject to the tax position of the recipient in their home jurisdiction. In addition, Jersey companies law enables distributions to be made in a flexible manner, without having to accumulate distributable reserves (subject to the FIC directors making a standard solvency statement).

 Succession and estate planning 

A Jersey FIC can facilitate orderly succession planning by allowing shares to be transferred progressively to the next generation. This can support estate planning objectives while enabling the founder to retain control during their lifetime. A FIC also provides a single vehicle through which family assets can be consolidated and managed, enabling a coordinated investment strategy, improved oversight, and clear reporting across generations.

Structural flexibility 

Jersey companies law allows for bespoke structuring, including: 

• multiple share classes with differing rights;
• use of growth or “freezer” shares to manage value shifts between generations;
• customised dividend and voting arrangements; and
• flexible capital return mechanisms. 

This flexibility makes a FIC established in Jersey well-suited to complex family circumstances.

Control and governance 

A FIC structure allows senior family members to maintain control over investment decisions through tailored share rights and governance arrangements. Different classes of shares can be created to separate economic entitlement from voting power, ensuring appropriate oversight while passing on value. 

Asset protection 

Holding assets within a corporate structure can provide a degree of protection from external risks, such as creditor claims or the impact of family disputes, while also promoting disciplined management of family wealth.

Stable and reputable jurisdiction 

Jersey is a well-regulated international finance centre with a strong legal system and a longstanding reputation for stability. It is recognised as a cooperative jurisdiction by international bodies, which can be important from both a regulatory and reputational perspective.

Walkers and FICs

Walkers has extensive experience and expertise on the establishment and tailoring of offshore FICs, including assisting with bespoke corporate documents, family group restructurings and general Jersey law advice.