A passage to India

Friday, 01 January 2010
How Jersey has been making progress in building wealth management business with India.

Representatives from Jersey have visited India frequently in recent years to explore the opportunities to develop business there. Jersey is in a favourable position for establishing links with India, having both a strong relationship with the City of London and a legal and regulatory framework designed to facilitate global wealth management.

During these visits, it has proved important to build relationships with representatives from India’s leading lawyers and accountants, trade bodies and associations, such as the Indian Angels Network, Confederation of Indian Industry, Federation of Indian Chamber of Commerce and Industry and the UK India Business Council. These visits are followed up with regular technical and regulatory updates via email to the contacts established on the visits, as Jersey hopes to raise awareness amongst the emerging markets.

This ongoing programme of visits and networking has helped visitors to India understand how advisors can assist Indian firms with their international expansion plans and wealth creation, as well as supporting the regulators’ efforts to develop relationships with the Indian finance industry regulators, the Reserve Bank of India and Securities Exchange Board of India. At present Jersey is working on legislation to permit repatriation of profits back to India in a merger of Jersey and India businesses, by amending Jersey’s Company Law. Jersey Finance has also begun to explore the possibility of a double tax agreement between the Island and India, alongside the government in Jersey and the Indian authorities. A number of seminars have been arranged in Jersey to encourage Indian business leaders and specialists on the Indian marketplace to travel to Jersey and engage with its business community.

Sound regulation

Jersey’s finance industry applies high standards of corporate governance, transparency and regulation. Earlier this year Jersey was included on the Organisation for Economic Co-operation and Development (OECD) ‘white list’ for meeting the internationally agreed standard on tax. This was followed by the successful International Monetary Fund (IMF) Assessment of Jersey’s finance industry. A similar endorsement was forthcoming last month from the conclusions of the Foot Review into the British Offshore Financial Centres, commissioned by HM Treasury. Asian nations value the quality of the regulatory environment in which they do business, so developments such as this will help build relationships with Asia.

Foundation

Most recently Jersey introduced the foundation vehicle on the statute, a legal entity that is hoped will prove attractive to wealthy Indians seeking to plan their finances effectively for future generations. As well as featuring some of the attractions of a trust vehicle, foundations also have some of the benefits of a company structure, including separate legal status. This will enhance their appeal to private clients and their advisors, who may not previously have considered Jersey as a location to place assets.

Foundations offer increased flexibility to financial intermediaries advising high-net-worth clients and wealthy families worldwide. Their introduction retains an emphasis on offering greater choice. Jersey has been able to announce a number of changes to its legislative and regulatory regime in recent times, which will appeal to financial and legal advisors in India. For example, during 2008, developments included the introduction of treasury shares, the abolition of financial assistance provision, increased flexibility to the format of cell companies incorporated in Jersey and a change in the law so that regulated financial services businesses could act as a corporate director of another Jersey company. These changes brought further flexibility and a far wider range of options for legal and finance professionals setting up companies on the Island. Some of the measures were particularly advantageous for those establishing special purpose companies, group holding companies or joint venture vehicles.

It is the author’s opinion that Jersey’s experience as a wealth management location means that it is well placed to service the growing family office market in India, either through professional service providers or through bespoke set-ups.

Funds sector

Alongside private client work, Jersey is experiencing increasing interest from Indian corporates wanting to list on European exchanges, such as AIM and Euronext, and thus develop a foothold in Europe. Jersey has a track record in supporting corporate listings business through the formation of a Jersey holding company, particularly in the emerging markets of the world.

In total there are currently 86 Jersey-domiciled companies listed on worldwide exchanges, with a combined market capitalisation of more than GBP16 billion. The industry is keen to develop this work on behalf of Indian clients. For example, a number of funds for inbound investment in India have been established and domiciled in Jersey with the assistance of Jersey’s law firms and there are signs of more growth in this sector.

Market share

It is the author’s experience that when business develops in one sector of the industry, it feeds and nurtures other aspects of the industry and so Jersey anticipates a growing market share for its wealth management industry.

However, the industry is well aware that it must constantly modify and adapt its private wealth and trust service offering if it is to remain competitive and Jersey Finance intends to work with the Jersey authorities to do so. At the same time, we will be returning on a regular basis to Mumbai and New Delhi (at the time of writing our most recent visit took place in November 2009) so that we can more closely understand the needs of Indian entrepreneurs and their advisors, and so that we can help deliver a commercial environment that suits their wealth management strategies and objectives.

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Geoff Cook

Geoff Cook TEP is Chief Executive of Jersey Finance Limited.

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