Insights / 24 June 2020
Financial impact of Covid-19 heightens appeal of Jersey cash box structures
The current climate is certain to prove highly challenging for businesses as they look to respond to sudden reductions in consumption of goods and services, and consequently look to adapt to new models of operating, new supply chains and new revenue streams.
In such circumstances it is highly likely that a rising number of listed companies in the UK will need to seek urgent capital raises over the coming months, in order to tackle the financial impact of Covid-19 and resolve any liquidity issues.
Jersey ‘cash box’ structures are a tried and tested solution for UK companies listed on the LSE Main Market or AIM to raise funds, by drawing on the flexibility of Jersey company law as part of a rights issue or placing of shares.
Using a Jersey cash box structure, which is incorporated in Jersey and often managed, controlled and tax resident in the UK, offers a number of benefits, including navigation of statutory preemption rights under the UK’s Companies Act, providing tax neutrality, quick timescales, cost-efficiency, flexibility under Jersey law, and a corporate legal environment comparable and familiar to the UK.
Commenting on the anticipated heightened appeal of cash box structures over the coming months, Ana Kekovska, Group Head of Corporate Services at Crestbridge, said:
“We’ve seen just how appealing Jersey cash box structures have been over the past decade or so in the aftermath of the global financial crisis, as UK listed companies have needed to urgently raise capital and improve their liquidity. The structure’s flexibility and speed with which it can be established have made it an attractive option, and we absolutely anticipate a rise in interest in such structures again in light of Covid-19.
“Of course, establishing such a structure requires an in-depth knowledge of the corporate structuring, governance and compliance environment in which they exist, and experience of dealing with UK listed companies – experience that we have built up over many years across the team at Crestbridge. We see a real opportunity for Jersey cash box structures to once again play a vital role in supporting the viability of companies over the coming months.”