Redomiciliation is the domicile decision taken again, in front of everybody who relied on the first one.

The centres permit a company or a fund formed elsewhere to continue into them, and a company or fund formed in them to continue out, keeping its legal personality, its assets, its liabilities and its contracts. The mechanism is clean: an application in the receiving jurisdiction, a deregistration in the departing one, and the same person on the other side with a new seat. What the mechanism does not carry is the reliance. The lender lent to a company in the first jurisdiction under its law, with security governed by it, and its consent is a term of the facility. The holders subscribed to a fund in the first jurisdiction under its regulator, and their consent is a term of the constitution or a vote. The counterparties contracted with a company whose law of incorporation was the first's, and their contracts say what a change of seat does. The tax positions of the vehicle and of its holders were built on the first residence, and a change of seat is a change of residence with an exit charge in some jurisdictions and a new treaty position in all. Redomiciliation is the domicile decision taken again, with everybody who relied on the first decision entitled to a say or a price.

This note sets out why a vehicle moves, the mechanism and its conditions, the reliance and who holds it, the lender's consent, the holders' consent, the counterparties' contracts, the tax position on exit and on entry, the regulatory position, the onshore chain beneath the vehicle, the alternatives to moving, the lender's reading, a comparison, a worked move as a type, cases, what each party holds, the sequence, questions, terms and what to read.

Why a vehicle moves

A vehicle moves because the first jurisdiction's rules changed, because the second's are better for what the vehicle now does, because a holder or a lender requires a seat it recognises, because a treaty the first jurisdiction does not have is needed for a new position, because the manager moved, or because the first jurisdiction's standing fell. Each reason is a reason to redo the domicile decision, and the decision is redone with the same inputs as the first: the tier of holder, the strategy, the onshore interfaces, the lenders, the tax, the regulator, the cost. A move for one reason that ignores the others is a move that repeats the first decision's work with a new error.

The mechanism and its conditions

Continuation into a centre requires that the departing jurisdiction permit departure, that the vehicle is solvent, that its constitution is amended to comply with the receiving jurisdiction's law, that its holders or members approved the move by the majority the departing law requires, that creditors were notified or consented as that law requires, and that the receiving regulator, where the vehicle is a fund, registers or authorises it under its own tier. Continuation out requires the receiving jurisdiction's acceptance, the departing registrar's deregistration, the departing regulator's consent where the vehicle was a fund, and the same solvency, approval and creditor conditions. The mechanism is a pair of applications with a gap between them, and the gap is where the vehicle is in transit.

Why the mechanism's cleanness misleads

The continuation statutes were written to make moving possible, and they describe the move as the same person with a new seat. The description is true of the person and false of the relationships, because the statutes govern the vehicle and not its contracts, its lenders, its holders' regimes or its tax residence. A manager that reads the statute reads a procedure with a form and a filing charge, and plans the move as a filing. The filing is the last step of a move whose earlier steps are consents and costs the statute does not mention, and a manager that begins with the filing discovers the earlier steps as defaults.

The first decision's inputs, revisited

The domicile decision was taken on inputs: the holders' tiers and regimes, the strategy's assets and the onshore interfaces they need, the lenders' recognised jurisdictions, the tax treaties the onshore positions rely on, the regulator's tiers and the manager's licence, the cost of the seat. A move is the decision retaken with the inputs as they now are, and the manager lists them again. A holder admitted since the first decision whose regime recognises only the first centre; an onshore position acquired since whose treaty is the first centre's; a lender that came in since on the first centre's law. The move's columns are the inputs' current state, and a move that is right on the reason for it may be wrong on an input the reason did not mention.

The transit

Between the receiving jurisdiction's registration and the departing jurisdiction's deregistration the vehicle exists in both or, under some statutes, in the receiving one with the departing one's record pending. The contracts say what the vehicle's law is during the gap, the lender's security says which law governs it, and the onshore regimes read the shareholder's particulars as they stand on the day they look. The gap is days in a well-run move and the sequence fixes the two dates as close as the statutes allow, with the contracts' representations suspended or restated for the gap.

The reliance and who holds it

Every party that contracted with the vehicle, lent to it, subscribed to it, licensed it or taxed it did so on the first seat. Some of them wrote the seat into their documents as a condition: the lender's facility, the holders' constitution, the joint venture agreement's governing law and change of control provisions, the onshore licence's shareholder requirements. Others relied without writing: the tax authority that treated the vehicle as resident, the counterparty that assumed the vehicle's law. The first group has consents to give; the second has consequences to impose. The move's sequence lists both.

The lender's consent

The facility was made to a borrower in a jurisdiction whose law governs its existence, its capacity and its insolvency, and whose courts enforce the lender's security. A change of seat changes all three, and the facility makes it an event requiring consent or a default. The lender consents on conditions: the security retaken under the receiving jurisdiction's law, the opinions refreshed, the enforcement route confirmed, the costs paid. A lender that does not consent is repaid or the move does not happen. The consent is the first in the sequence because the lender's refusal ends the move.

The holders' consent

The holders subscribed to a fund under a regulator and a tier in the first jurisdiction, and the constitution says whether the manager may move the fund and by what approval. A constitution silent on the point needs the amendment majority for the constitution's change, which the move requires in any case. A holder that may not hold a fund in the receiving jurisdiction, under its own regime, has an excuse or an exit the move must provide, and a holder whose tax position depends on the first jurisdiction has a cost the move must disclose. The vote is on the move and on the amended constitution together, and the memorandum for the vote discloses every consequence the manager knows.

The constitution's move provision

A constitution drafted with a move in view carries a provision: the manager may propose a continuation to a named class of jurisdictions, the holders approve by a stated majority on a memorandum with stated disclosures, holders that cannot follow have a stated way out, and the costs are borne as stated. The provision does not remove the lender's consent, the counterparties' consents or the tax consequences; it fixes the holders' part of the sequence in advance, so that the vote is on a known procedure rather than a negotiation about one. A constitution without the provision runs the move on the amendment majority and the manager's memorandum, which is the same vote with less certainty about its terms.

The counterparties' contracts

Each contract the vehicle is party to says, or does not say, what a change of seat does: a change of control definition that reaches a change of law of incorporation, a governing law clause that assumed the vehicle's law, a termination right on a change in the vehicle's status, a representation that the vehicle is incorporated in the first jurisdiction repeated at each drawdown or each period. The joint venture partner, the developer, the property manager, the onshore bank and the onshore licensing authority are each read for the clause, and each consent or notice is in the sequence.

The tax position

The departing jurisdiction may treat the move as a cessation of residence with an exit charge on the vehicle's unrealised gains, or may not; the receiving jurisdiction treats the vehicle as resident from its arrival, with a new base for its assets or the old one, as its rules say. The treaties the vehicle relied on for its onshore positions are the first jurisdiction's and the receiving jurisdiction's are different; an onshore withholding that the first treaty reduced may not be reduced by the second. The holders' own tax positions, built on the fund's first residence, change, and a holder whose treatment worsens has a claim the memorandum for the vote must disclose. Tax counsel in three places, the departing, the receiving and each onshore jurisdiction, writes the column.

The regulatory position

The fund was registered or authorised in the first jurisdiction under a tier, managed by a manager licensed there. In the receiving jurisdiction the fund is registered or authorised again, under that jurisdiction's tiers, and the manager is licensed there or an eligible manager there is appointed. The first jurisdiction's regulator consents to the departure and deregisters; the receiving jurisdiction's regulator accepts the fund's constitution as amended and the manager's standing. A fund whose tier in the first jurisdiction has no equivalent in the second is a fund that moves into a different tier, with different holder eligibility and different rules, and the holders' vote is on that too.

The onshore chain beneath

The vehicle's onshore holding companies and joint ventures are untouched by the move in form and touched in substance: their foreign shareholder has changed its law of incorporation, and the onshore licence, the investment authority's approval and the land registry's record each carry the shareholder's particulars. Some onshore regimes require notice; some require a fresh approval of the foreign shareholder; some treat the change as a transfer. Onshore counsel in each state lists what the move requires there, and the sequence carries it after the move's completion.

The holder that cannot follow

A holder whose regime permits it to hold funds in the first centre and not the second cannot follow the move, and the constitution or the memorandum gives it a way out: an excuse from future drawdowns with its units retained, a transfer of its units to another holder or to the manager's affiliate at the net asset value, or a redemption the fund funds from reserves or a facility. Each costs the fund something: the excuse reduces the lender's base, the transfer needs a buyer, the redemption needs cash. The memorandum names the way out and its cost, and a move with several such holders is a move whose register shrinks, which the remaining holders read in the memorandum before they vote.

The onshore chain's particulars

The onshore holding company's registry entry, its licence, its investment authority approval and its bank mandate each carry the foreign shareholder's name, jurisdiction of incorporation and registration number. The move changes the second and usually the third, and the onshore regime's rule on changes to a foreign shareholder's particulars says what follows: a notice within a period, an amended licence, a fresh approval, or, in the strictest regimes, a treatment of the change as a transfer of the shares with transfer tax and a new foreign ownership review. Onshore counsel's list is per state and per entry, and the sequence carries each with its period.

The alternatives

A move is not the only way to change seat. A new vehicle in the receiving jurisdiction may acquire the old vehicle's assets, which is a sale with its own transfer costs and approvals and no continuation of the old vehicle's contracts. The old vehicle may become a subsidiary of a new parent in the receiving jurisdiction, which changes the ultimate seat without moving the old vehicle. A parallel vehicle in the receiving jurisdiction may take new positions while the old holds the existing ones. Each alternative avoids some consents and costs and incurs others, and the decision among them is the domicile decision's method applied to the change.

The lender's reading

Beyond the consent, the lender reads the move for its own consequences: the security's re-perfection in the receiving jurisdiction, the insolvency regime's treatment of its priority there, the opinions it needs from counsel in the receiving jurisdiction, and the cost it will charge. A lender that consents on the condition of a fresh security package has priced the move at the package's cost plus its own.

By reliance · by holder of it	What was relied on	What the move does	The consent or the cost
The lender	The borrower's law, capacity, insolvency and courts	Changes all four	Consent on conditions, or repayment
The holders	The regulator, the tier and the tax residence	Changes all three	A vote on the move and the constitution, with disclosure
The counterparties	The vehicle's law and status	Changes both	Consents or notices under each contract
The departing tax authority	Residence	Ends it	Exit charge where the rules impose one
The receiving tax authority	Nothing yet	Begins residence	A new base and new treaties
The onshore regimes	The foreign shareholder's particulars	Changes them	Notices, approvals or re-registration
The departing regulator	The fund's registration	Ends it	Consent to departure
The receiving regulator	Nothing yet	Registers under its tier	Registration and the manager's licence

A move, as a type

A fund registered in one centre, with a lender, twenty holders, three onshore holding companies in two states and a joint venture with a developer, moves to another centre because its anchor's regime recognises the second and not the first. The manager writes the columns: the lender's facility with its change of seat event; the constitution's amendment majority and the holders' consents and excuses; the joint venture agreement's change of control definition; the onshore regimes' shareholder-change requirements; the tax positions in the departing centre, the receiving centre, the two states and the holders' jurisdictions; the regulatory tiers in both centres. The sequence: the lender consents on a fresh security package; the holders vote on a memorandum disclosing every consequence, with an excuse for the one holder whose regime does not permit the second centre; the joint venture partner consents; the receiving regulator registers the fund under its equivalent tier with the manager's affiliate licensed there; the departing regulator consents; the applications run and the fund is continued; the onshore notices and approvals follow; the security is retaken; the tax filings close the departing residence and open the receiving one. The move takes nine months and costs what the columns said.

The structure paper's page

The structure paper carries a page on the move: the reason and the inputs revisited, the alternatives and their prices, the columns, the sequence with the lender first, the memorandum's disclosures, the transit's handling, the onshore steps and the tax filings. The page is written before the lender is approached because the lender's conditions are priced against the alternatives, and it is the page the committee reads with the memorandum.

The manager that moves with the fund

A move is often the manager's move too: the manager relocates, licenses an affiliate in the receiving centre, and moves the fund to follow. The manager's own licensing in the receiving centre precedes the fund's registration there, because the receiving regulator registers a fund with a licensed manager, and the manager's licence application is the sequence's first regulatory step. The departing centre's regulator reads the manager's departure as a change in the supervised firm, and the manager's licence there is surrendered or retained for the funds that stay. A manager with funds in both centres has two licences and two regulators, and the allocation policy names the vehicles in each.

The second fund's reading

A manager that moved its first fund has a record the second fund's anchor reads: whether the move was run on the columns or discovered as defaults, what the memorandum disclosed, how the excused holders were treated, and what the move cost. A manager whose first move was clean is a manager whose second fund's holders accept a constitution with a move provision; one whose first move left a lender in default and a holder with an omission is a manager whose second fund's holders strike the provision. The move's record is the manager's cross-border competence made visible, and the second fund's domicile decision reads it.

Four cases, as types

A manager continues a fund into a second centre on the mechanism's conditions alone. The lender declares a default on the change of seat event, the joint venture partner exercises its termination right on the change of control, and the onshore investment authority treats the shareholder's change as a transfer requiring fresh approval of foreign ownership.

A manager obtains the lender's and the holders' consents and moves. The departing jurisdiction imposes an exit charge on the fund's unrealised gains, which the memorandum for the vote did not disclose, and the holders whose tax position worsened read the omission.

A manager moves a fund into a tier in the receiving centre that does not permit two of its holders. The holders are excused, the fund's register is smaller, and the lender's base falls by their commitments.

A manager writes the columns, runs the sequence, discloses every consequence, and moves. Everybody who relied on the first seat was asked or paid, and the second seat is as clean as the first was.

What each party holds

The manager holds the reason for the move, the columns and the sequence.

Counsel in the departing and receiving jurisdictions holds the mechanism's conditions and the regulatory tiers.

Tax counsel in each place holds the exit and entry positions and the holders' consequences.

The lender holds its consent and its conditions.

The holders hold their vote, their excuses and their disclosed consequences.

Onshore counsel holds each state's shareholder-change requirements.

Where it surfaces

It surfaces at the facility, when the change of seat event is read for the first time. It surfaces at the constitution, when the amendment majority is found to be higher than the manager's support. It surfaces at the holder whose regime does not recognise the second centre. It surfaces at the joint venture partner's termination right. It surfaces at the departing tax authority's exit charge. It surfaces at the onshore investment authority's fresh approval. It surfaces at the receiving regulator's tier, which does not match. And it surfaces in the memorandum for the vote, where every one of these is disclosed or is not.

The cost of getting it wrong

A move run as a filing costs the lender's default, the partner's termination, the onshore re-approval, the exit charge undisclosed, and the holders' claim for the omission. A move run on the columns costs the consents' conditions, the fresh security package, the exit charge known and priced, the excused holders' commitments, and nine months. The second cost is the price of the second seat; the first is the price of not knowing it.

The memorandum for the vote

The holders vote on a memorandum the manager writes, and the memorandum is the move's disclosure document: the reason, the receiving jurisdiction and its regulator and tier, the amended constitution, the lender's conditions, the tax consequences in the departing and receiving jurisdictions and, in general terms, for holders by category, the onshore consequences, the excuses available, the costs and who bears them, and the timetable. A memorandum that omits a consequence the manager knew is the holders' claim, and one that discloses a consequence the manager would rather not is the vote's honesty. The committee reads the memorandum before it goes out.

A timeline, as a type

Month one: the reason is tested against the inputs and the alternatives are priced; the columns are written. Month two: the lender is approached and its conditions are agreed. Month three: the memorandum for the vote is drafted, read by the committee, and circulated; the counterparties are approached. Month four: the holders vote; the one holder whose regime does not permit the second centre is excused; the joint venture partner consents. Month five: the receiving regulator's application is filed with the amended constitution and the manager's affiliate's licence. Month seven: the receiving regulator registers; the departing regulator consents; the continuation applications run with a three-day gap. Month eight: the security is retaken, the onshore notices and approvals are filed, the departing tax residence is closed. Month nine: the receiving tax residence is opened, the onshore approvals issue, and the fund is in its second seat with every reliance addressed.

The sequence

1. The reason for the move is tested against the domicile decision's inputs, and the alternatives are priced.
2. The columns are written: lender, holders, counterparties, tax in each place, regulators in both, onshore regimes.
3. The lender's consent is obtained first, on its conditions.
4. The holders vote on a memorandum disclosing every consequence, with excuses for those who cannot follow.
5. The counterparties' consents and the regulators' registrations run, and the applications continue the vehicle.
6. The onshore notices, the security's retaking and the tax filings close the move.

Questions a manager asks

Is the mechanism available between the two centres. Each centre's law says whether it permits continuation in and out and from where; some pairs are open and some are not.

How long is the vehicle in transit. Days, between the receiving registration and the departing deregistration, and the contracts say what the vehicle is during them.

Can the holders be asked to consent without a vote. If the constitution gives the manager the power and the holders' consents are individual; most constitutions require the amendment majority.

What if one lender of several refuses. It is repaid or the move stops; an intercreditor may let the majority consent bind.

Does the move reset the fund's term. No; the fund is the same person with the same constitution as amended, and the term runs on.

Is a new vehicle cheaper. Sometimes; it has transfer costs and approvals and loses the contracts, and the comparison is the alternatives' column.

Terms used

Redomiciliation or continuation: the transfer of a vehicle's seat from one jurisdiction to another with its legal personality preserved.

Departing and receiving jurisdiction: the seat the vehicle leaves and the seat it takes.

Reliance: the positions built by lenders, holders, counterparties and tax authorities on the first seat.

Change of seat event: the facility's or contract's provision treating the move as requiring consent or as a default.

Exit charge: the departing jurisdiction's tax on a vehicle ceasing residence.

Equivalent tier: the receiving regulator's category that matches the fund's first registration.

What to read

Both centres' continuation laws and regulators' rules; the facility's change of seat provisions; the constitution's amendment majority; each contract's change of control and governing law clauses; tax counsel's columns in each place; onshore counsel's shareholder-change lists. On this site, the worked redomiciliation, the jurisdictions room and the vehicles room under Structures.