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Jersey's New PCC Laws Used For First Time To Merge Funds

by Phillip Morton, Investors

06 March 2007

Jersey's new Protected Cell Company (PCC) legislation has been used for the first time to merge funds by investment managers, Ashburton.

The innovative use of the legislation has enabled Ashburton, working in consultation with its lawyers, Ogier, to make a number of its high performing funds available to UK investors for the first time.

Ashburton converted two of its umbrella funds – Global Funds Limited and Ashburton International Management Limited - to PCCs and then applied the new legislation to merge them to create Global Funds PCC.

According to Jersey Finance, the island's finance industry promotion agency, the key difference to using a traditional corporate merger process was that shareholders effectively continued to hold the same shares throughout, they just changed their nature. This minimised the impact of the change for Ashburton’s clients as there was no new paperwork to issue and the funds continue to be reported as before, albeit with slightly different names. This method also avoided a potential tax liability in certain jurisdictions where gaps or defects in their fiscal legislation would have had unintended consequences for investors.

In order to minimise disruption to investors, the steps in the process were condensed into three days in which the Royal Court oversaw a series of shareholder and creditor meetings and the Jersey Financial Services Commission issued a sequence of registration and authorisation documents.

Stephen Kearns, Product Development Director at Ashburton commented: "The co-operation and collaboration by the Royal Court and the Jersey Financial Services Commission was excellent and our lawyers, Ogier, coordinated the whole thing seamlessly. This exercise is a perfect example of just how business friendly Jersey can be compared to certain other popular jurisdictions."

Richard Thomas, Head of Ogier’s investment funds team in Jersey, added: “This trailblazing project made use of several elements of Jersey’s reformed company legislation in order to implement a conversion, a reorganisation and a merger, with the challenge of achieving this within a timetable which provided continuity for investors as well as recognition by the UK FSA.”

The decision to make this move was to allow Ashburton to strengthen its commitment to the UK market by making its top performing regional equity funds – Americas Equity, Asia Pacific Equity and European Equity – available to UK investors under the PCC as well as the six funds which were already available and the recently launched Chindia Fund, the first retail fund to focus on both the Chinese and Indian markets.

Each of the Equity Funds is available in sterling denomination as well as their specific regional currency. Although these funds are now available to UK investors, Ashburton has been running them for ten years for their international clients, with all funds achieving top quartile performance over the past three years due to their unconstrained, actively managed approach which, put simply, means that the Funds’ investment managers are not tied to a benchmark and take a more flexible approach to investing.

Beverley Le Cuirot, Director of Marketing at Jersey Finance Limited, observed: "Jersey prides itself on having firms that can deliver innovative solutions for their clients and on the ability for finance houses to be able to work closely with the authorities to ensure the successful completion of such initiatives. The industry anticipated that the introduction of PCC legislation would bring a range of benefits for practitioners and this is a fitting example."

A comprehensive report in our Intelligence Report series examining offshore investment, offshore stock exchanges, trusts and hedge funds is available in the Lowtax Library at and a description of the report can be seen at

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