International Structures
Almaty, Kazakhstan
Presented by Elena Baranova – Ogier Jersey
May 2011
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International Structures Questions
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What structure and where?
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Onshore or offshore?
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What does it cost?
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What is the tax treatment?
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What is the best?
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Structures
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Holding Companies
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Joint Ventures
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Merges and Acquisitions
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Listing
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Other Tools
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Onshore or Offshore
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Company will be subject to laws of incorporation
Taxation
Stock exchange requirements-what entity can be listed?
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Similarities and differences
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Reputation and status
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Legal system
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Infrastructure and size
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Location
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Holding Companies
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For real estate, ports, airports, intellectual property, mining and natural
resources and all other
Types of asset use Channel Islands holding companies
Examples of assets held through Channel Island structures:
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Rio Tinto/Alcan – used Jersey company to hold European and Global food,
pharmaceutical and tobacco packing business which was sold to Amcor, an
Australian company
Four Seasons Hotel, London
Ports in UK and Australia
London City and Gatwick airports
Consolidated Minerals – mines in Australia, Venezuela and elsewhere
Gas pipelines in Chile
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Joint Ventures
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Use of Channel Islands company as JV platform
Driven by stamp duty savings – provides a tax neutral, flexible platform for all investors
Investor comfort – based on English principles and respected and robust court system
Case Studies:
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UC Rusal Plc was originally the joint venture between EN+ (Deripaska), SUAL, Glencore,
and then subsequently Onexim
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Cazenove/JP Morgan
Cazenove used a Jersey holding structure to hold its 50% share in JP Morgan Cazenove
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Although the directors of the Jersey company were resident in England the stock transfer
form was executed in Jersey and so the transfer was free of stamp duty saving the
Cazenove partners millions of pounds
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The cost of running the structure was minimal compared to the savings
When JP Morgan exercised its option to buy the Cazenove 50% share it do so by
purchasing the shares of the Cazenove partners in the Jersey company
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Typical JV Structure
Individual
shareholder
JV1
(x jurisdiction)
Individual
shareholders
Agreement
JV2
International
holdco
M&As
International
holdco
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Mergers and Acquisitions
• Setting up new companies to acquire a target
• Can be a business or share acquisition
• Important consideration is ability to exit
• Channel Islands companies can be sold or listed easily
• Quick to set up structures without difficulties
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Mergers and Acquisitions continued
Case studies:
Challenger/LBC Terminals
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LBC Terminals is a European wide business owning terminals at ports in various EU
countries
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Challenger Financial Services Group in Australia and 4 other non UK investors invested
through a Jersey company to acquire the business
Investors
Jersey
Company
Malta
Company
Malta
Company
LBC
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Mergers and Acquisitions continued
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Malta was used because of the double tax treaty network but the client did not
want to structure the deal directly through Malta
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Why? Difficulties in doing business, language issues, not English law based,
uncertainty with courts/judicial interpretation if anything went wrong, quality of
advisers in Malta
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Structure is a mix of on and offshore to make it tax efficient but still flexible
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Mergers and Acquisitions continued
• Rio Tinto
• Rio Tinto Alcan on the sale of its European Food, Global Pharmaceutical and Global
Tobacco segments of its Packaging Division to the Australian based Amcor Limited in a deal
value of at slightly more than US$2 billion
• Rio Tinto Alcan transferred its European Food, Global Pharmaceutical and Global Tobacco
segments of its Packaging Division to a newly incorporated Jersey Company
• The sale of the division from Rio Tinto Alcan Inc to Amcor Limited
Rio Tinto Alcan
transfer
Jersey New Co
sale
Amcor
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Listing
• Questions which the Company should ask itself –
• Investors will!
• Equivalence to onshore jurisdiction?
• Will our structure be recognised without question by third parties?
• What are corporate governance standards in theory and in practice?
• What shareholder protections are in place?
• Protection against dilution
• Take overs
• What information is available to investors and other third parties from public sources?
• Can you settle share deals through the share settlement system?
• Can you get a share certificate if you want one?
• Is jurisdiction an OECD Issuer territory?
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Listing continued
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Channel Islands companies usually inserted on to the top of an existing structure
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Cash shells with no assets can also be listed which will then make an acquisition
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Companies have been listed in London, New York, Toronto, Hong Kong, Frankfurt,
Amsterdam, Paris and Moscow (Rusal linked depository receipts)
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Many FTSE 100 or 250 companies are Channel Islands Companies (all FTSE 100
companies which are incorporated offshore are Jersey companies)
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No need to issue depositary receipts when listing in London (unlike BVI and Cayman)
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Typical Holding Structure
Holding company
(Jersey)
Tax Resident in Holland
Sub-holding
Company
(Holland)
Pre-IPO Debt
Funding
Pre-IPO Strategic
Investors
IPO
Sub-holding
Company
(Kazakhstan)
Kazakhstan
companies
Foreign
companies
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Listing continued
UC Rusal Plc
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Aluminium manufacturer and alumina producer in Russia and elsewhere
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Controlled by Oleg Deripaska
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Listed in Hong Kong, Paris and Moscow
PetroKamchatka
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Company migrated from Alberta, Canada to Cyprus
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Owns oil exploration rights in Kamchatka, Russia
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Share exchange through a takeover offer to swap shares in Cyprus company for shares
in Jersey company
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Jersey company listed via a reverse takeover in Toronto
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Case Studies:
Randgold Resources
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Gold mining in Africa
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Listed in London and FTSE 100
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Jersey Company with Jersey and African subsidiaries
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Moving from private to public company - issues
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Corporate governance
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Audit to standards of the relevant exchange
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Anti-money laundering, bribery and corruption
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Other Tools
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Migration of companies
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Merger of companies
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Advantages of Jersey Holding Company
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Tax neutrality - no income tax, capital gains tax, corporation tax, stamp duty or
VAT
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Flexibility of legal structures and legislation
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OECD white listed
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countries around the world, there is a level playing field with no bank secrecy
advantages.
Access to justice - respected judicial systems and availability of court time
Corporate model – similar to England
Stable jurisdictions – politically and economically
Significant expertise in the Islands
Convenient time zone
Banks (including Sberbank and VNB in Russia) are familiar with and
comfortable lending to Channel Island companies
Service providers properly regulated
In addition, now that Switzerland has agreed to information exchanges just like
all other
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Making mistakes early on can lead to
longer term problems…
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Questions & Answers?
Jersey
Elena Baranova
elena.baranova@ogier.com
+44 1534 753662
www.ogier.com
The information contained in this presentation comprises general observations only and not specific legal advice that may be relied on. In particular, to the extent
that any observations are included in relation to matters other than questions of Jersey law, such observations are drawn from general experience on matters of this
nature on which we have provided Jersey law advice. Such observations have not been separately researched, verified or updated by us. This presentation does not
constitute legal advice on these points.
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