1. Setting up a Charitable Company
Jersey Community Partnership Charity Conference 2018
Setting up a Charitable Company
Christopher Scholefield
Friday 23rd November 2018

2. Once upon a time someone had a kind thought…

3. …and then the lawyers got involved
Charities (Jersey) Law 2014
NPO (Jersey) Law 2008
ARGH!
The law governing the sort of the organisation you are…

4. Crash Course in The Charities (Jersey) Law 2014
A statutory test for what is a charitable body.
All of its purposes are charitable or purposes that are purely ancillary or incidental to any of its charitable purposes.
In giving effect to those purposes, it provides a public benefit to a reasonable degree.
A Charity Commissioner.
A Charity Tribunal.
A “voluntary” Register of charities.
The regulation of governors.
From 1 January 2019, only those registered under the Law may lawfully call themselves a charity and receive tax relief in Jersey by virtue of their charitable status.

5. Crash Course in The NPO (Jersey) Law 2014
An organisation shall register as an non-profit organisation under Non-Profit organisation (Jersey) Law 2008 by applying to the commission if:
It is established solely or primarily for charitable, religious, cultural, educational, social, or fraternal purposes with the intention of benefitting the public or a section of the public; and
It raises or disburses funds in pursuance of those purposes.

6. So which of the 8 possible structures do you use – should you use?
A members’ club
A trust under the Law of 1984
A fidéicommis under the Law of 1862
An incorporation by Royal Charter
An incorporation by Act of the States
An incorporated association under the law of 1991
A Foundation under the law of 2009
A guarantee company under the law of 1991

7. The view from Edinburgh

8. What makes a guarantee company different?
Historically the charitable trust was the legal structure of choice but this has changed in recent years, mainly because of the advantages of the charitable company.
Guarantor members
Contribute a nominal amount if company wound-up
Guarantor members have no right to a share in any profits, but none are expected
Key legislations: Companies (Jersey) 1991
Management duties; Directors under Companies Law

9. What makes a guarantee company attractive?
Legal Personality – can undertake transactions in its own name
Liability of guarantor members is limited
Can’t die
Changes to ID of directors and members don’t cause problems
Land can be held and inherited in name of the Company
Dissolution – removal from Charity Register does not lead to dissolution – body can continue to exist without charitable status but cannot claim to be a “charity”
Company admin is well understood in Jersey
Whilst meeting Ch(J) Law ART 18 (2) you can meet Co (J) Law ART 14

10. What documents will you need?
Memorandum of association = what are we for?
Article of association = how do we do it?
Annual return = remind the JFSC we exist
Agendas and minutes of board meetings = what we are doing and why
Agendas and minutes of members’ meetings = a periodic review of the management’s activities

11. Taxes and Fees If you are registered as a charity tax is not due
Annual filing fees are waived us if:
Charities or NPOs are exempt from meeting the prescribed fee due under the Companies Law (Jersey) 1991 if either provisions of Article 115(a) of the Income Tax (Jersey) Law 1961 are satisfied:
“The income of a corporation, association or trust established in Jersey is applied for any of the following reasons:
the advancement of education,
the relief of poverty,
the furtherance of religion,
a purpose beneficial to the whole community,
the service of any church or chapel or any building used solely for the purpose of divine worship.”
“Or the income of the property of a non-profit organisation within the meaning of the Non-Profit Organisations (Jersey) Law 2008 where that organisation –
is established solely or primarily for cultural purposes, and
receives funds wholly or mainly from the States of Jersey in pursuance of those  purposes.”

12. Transitioning to a guarantee company part I
The constitution of the existing organisation will set out how it many be terminated.
Incorporated association:
In most cases it will state that it must resolve by simple majority that it be dissolved;
Every member of the association must be given at least 8 weeks’ notice of the meeting at which the resolution relating to termination will be considered;
Application to the Royal Court to approve the proposed termination in accordance with Article 10 of the Loi (1862 et 1963) sur la teneure en fidéicommis et l’incorporation d’associations.
Unincorporated Association:
The process will be similar to the Incorporate Association but without the need to apply to the Royal Court to seek approval
Trusts:
Terminated in accordance with the relevant trust instrument or on application to the Court pursuant to Trusts (Jersey) Law 1984

13. Transitioning to a guarantee company part II
Steps to move from existing structure to guarantee company:
Management of existing structure needs to consider the following
“to do” list:
Set up guarantee company;
Decide who members will be;
Decide who directors will be;
Transfer assets out to guarantee company;
Transfer of liabilities / agreements, e.g. leases, employment contracts, bank accounts; and
Terminate existing structure.
Members of the existing structure will then need to convened to agree upon;
Winding up of existing association;
Forming guarantee company and appointment directors and agreeing the new members and;
Assign/ Novate agreements to the new guarantee company;
Once agreed, take steps to create guarantee company and wind up existing association.

14. Christopher Scholefield, Partner christopher.scholefield@viberts.com
How we can help
Christopher Scholefield, Partner

15. Any Questions?