Changes to streamline the Jersey prospectus rules so that they more closely reflect the regimes in the UK and across Europe will take effect from Tuesday 19 October 2021.

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The rules have been brought into effect following consultation and engagement between the government, regulator and the wider financial services industry – the current rules require a prospectus to be produced whenever more than 50 people are invited to become a member of a Jersey company.

That threshold is lower than those in the onshore prospectus regimes in the UK and EU, which prompted a consultation exercise to reform the rules.

The result is a new regime that creates six exemptions to the general requirement to produce a formal prospectus document where investment into a Jersey company is being invited.

The change has been effected by way of an amendment to the definition of “prospectus” in the Companies (Jersey) Law 1991 (as amended). Under the amended law, an invitation to become a member of a Jersey company or to acquire or apply for securities in a Jersey company will not be deemed to be a “prospectus” for Jersey law purposes, provided one or more of the following exemptions apply:

• Sophisticated investors exemption: where the invitation is addressed to qualified investors (as defined in Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017) or professional investors (as defined in the Financial Services (Investment Business (Special Purpose Investment Business – Exemption))(Jersey) Order 2001, or both.
• Restricted circle of persons exemption: the number of persons to whom the invitation is addressed does not exceed 50 in Jersey and 150 elsewhere.
• Minimum subscription exemption: the minimum consideration to be paid for securities is at least EUR100,000 (or equivalent amount in another currency).
• Minimum denominations exemption: the securities are denominated in amounts of at least EUR100,000 (or equivalent amount in another currency).
• Scrip dividend exemption: the invitation related to the issue of shares or other securities to its members in satisfaction of a dividend.
• Employee share scheme exemption: the invitation related to an employee share scheme.

Where invitations to invest are issued by Jersey companies outside the Island – as is the case in the overwhelming majority of cases – the companies will still be required to comply with the legal requirements in the jurisdiction where the invitation is circulated.