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- ISLE
OF MAN PRIVATE COMPANY LIMITED BY SHARES
- ISLE OF MAN COMPANY LIMITED
BY GUARANTEE
- ISLE OF MAN EXEMPT PRIVATE
COMPANY
- ISLE OF MAN PUBLIC COMPANY
LIMITED BY SHARES
- ISLE OF MAN LIMITED LIABILITY
COMPANY
- ISLE OF MAN INTERNATIONAL
COMPANY
- ISLE OF MAN BRANCH OF OVERSEAS
COMPANY
- ISLE OF MAN NON RESIDENT
COMPANY
- ISLE OF MAN GENERAL PARTNERSHIP
- ISLE OF MAN LIMITED PARTNERSHIP
- ISLE OF MAN INTERNATIONAL
LIMITED PARTNERSHIP
- ISLE OF MAN SOLE PROPRIETORSHIP
- ISLE OF MAN TRUSTS
Responsibility for the
Companies Registry was transferred to the Financial
Services Commission in 2000 as part of a package
to reform corporate conduct. However, as a result
of the recently reported re-organisation of
Government Departments and associated functions,
responsibility for the Companies Registry moved
from the Financial Supervision Commission to
the newly created Department of Economic development
on the 1st April 2010.
With
the change over still at a transitional stage
at the time of writing, the new department was
directing queries relating to the companies
registry to the FSC.
In
September 2001 The Manx Financial Supervision
Commission issued a Consultative Paper on a
new Companies (Amendment) Bill designed to make
some urgently needed changes to the Companies
Acts 1931 – 1993 and other related legislation.
Many of the proposals had been included at the
request of representatives of the finance and
commercial sectors, whilst others were aimed
at adopting internationally accepted standards
of best practice and corporate governance.
The
Consultative Paper also included revised proposals
in relation to the dissolution of companies,
changes to the requirements for an overseas
company to register as a foreign or "F"
company in the Isle of Man to remove the confusion
surrounding the definition of "place of
business"; simplification of the system
for registration of charges and the abolition
of the requirement for all directors names to
be shown on letterheads.
Proposals
were also included to facilitate the introduction
of a fully on-line company incorporation, filing
and searching service at the Companies Registry
by making necessary amendments to the legislation
relating to company forms.
The
Companies, etc. (Amendment) Act 2003 came into
partial effect in December, 2003, meaning that
unlisted companies are now permitted to re-domicile
in and out of the Isle of Man. Whilst companies
conducting licensable business, e.g. banking,
investment, insurance or corporate service provider
business, will be subject to additional regulatory
approvals, they will also be able to re-domicile
should they so wish, the Financial Services
Commission said.
In
addition, the Amendment ushered in a number
of other provisions contained in the Act including:
registration of prospectuses; the obligation
to display a company’s name outside its
premises; and procedures relating to a company’s
ability to dispense with compliance with certain
provisions of the Companies Acts.
A
right of appeal against a decision of the Commission
to refuse to register documents under the Business
Names, Industrial and Building Societies and
Limited Liability Companies Acts is also introduced.
Other
provisions facilitated the electronic filing
of documents after March 1, 2004 following the
introduction of the FSC’s Online Search
Facility.
Furthermore,
from March 1, 2004, holders of corporate service
providers licenses and their key staff automatically
qualified to act as secretaries of exempt companies
and international companies. Other provisions
corrected anomalies and made minor amendments
to the Companies Acts 1931 – 1993 and related
legislation.
Also,
with effect from April 1, 2004, no new bearer
shares could be issued by Isle of Man companies
and the rights relating to existing bearer shares
may not be exercised until the shares are registered.
A
further, and more comprehensive reform of Manx
Company Law was put to consultation in May 2004.
In addition to setting out the case for reform,
the consultation document laid out a number
of options for the scope of reform, ranging
from the consolidation of all of the Companies
Acts into a single Act, to the retention of
the existing corporate law framework, coupled
with the creation of a new 'international company'
corporate entity.
In
August, 2005, the government published draft
legislation for the creation of a new type of
business-friendly company. The new Manx corporate
vehicle, or ‘NMV’, is designed to be simple
and inexpensive to administer and to meet the
Island’s obligations in terms of the commonly
adopted benchmarks of international standards.
The
concept, developed following a study of company
law around the world, was originally scheduled
for introduction early in 2006, to coincide
with the Isle of Man’s move to a zero rate of
corporate tax, but came into force on November
1. The first New Manx Vehicles, or '2006 Act
companies' as they will now be known, were incorporated
on the same day. Each 2006 Act company will
be allocated a number followed by the suffix
“V” to distinguish the new-style
companies from the more traditional companies,
which may still be incorporated under the Companies
Acts 1931-2004.
"This
new NMV corporate vehicle is designed to be
both competitive and reputable," observed Treasury
Minister Allan Bell. "Combined with the zero
rate corporate tax regime the aim is to give
the Isle of Man an unbeatable package to attract
international business," he added.
In
November, 2005, the Association of Chartered
and Certified Accountants (ACCA) expressed serious
reservations over the proposals for a simplified
company vehicle, citing a lack of accountability
and shareholder protection in the new company
rules.
Keith Woods, president of ACCA Isle of Man,
expressed concern that under the proposal, there
would be no requirements for audit, or any independent
verification of accounts submitted to it for
tax purposes. This, he says will place an unnecessary
burden on the Income Tax Division, and on information
supplied by local trading companies.
"Consequently
ACCA anticipates that significant reassessments
will be carried out in light of the zero tax
policy, that is available to limited companies
in the 2006/07 tax year for those companies
incorporated under the new legislation," Mr
Woods noted.
The
ACCA IoM president also pointed out that with
a lack of onus on directors to convert accounting
records into financial statements, shareholders
will also be disadvantaged.
"The
purpose of the new vehicle is to make incorporation
and administration of a company more cost effective
than out offshore competitors, but this will
undoubtedly mean more expense being incurred
in legal fees drafting complex agreements,"
Mr Woods stated.
"This
could drive business away from the Island, when
the intended purpose of the proposed bill is
to create new business," he warned.
In
August, 2004, the Financial Supervision Commission
launched an online company search facility of
the Island’s Companies Registry allowing easier
access for the public to search and view information
about registered firms.
According to the FSC, the service provides details
of all Isle of Man Companies, Overseas Companies
registered in the Isle of Man, LLCs and Business
Names. Users can also purchase company documents,
check the availability of company names and
submit an application to reserve a company name.
The launch of the system forms part of an ongoing
programme to enhance the services provided by
Companies Registry for both local and international
users of the Isle of Man as a business centre.
Welcoming the new system, FSC Chief Executive,
John Aspden observed: “Companies Registry has
benefited from a significant investment in technology
over the last 3 years enabling it to manage
more efficiently the large volume of documents
it receives each year. We are delighted to now
offer access to company information and documents
via the internet and believe the service will
be more convenient and cost effective for users".
In
May 2007 the Isle of Man Financial Supervision
Commission (FSC) published a revised version
of its General Licensing Policy for those seeking
a banking, investment business or fiduciary
services licence.
The
revisions affect licencees in three areas: 2006
Act companies, sole traders and partnerships,
and custodians of collective investment schemes.
The
FSC said that companies registered under the
Companies Act 2006 may be licensed as investment
businesses or fiduciaries, subject to specified
requirements to ensure an appropriate level
of transparency and corporate governance, which
would be applied through binding licence conditions.
2006
Act companies may not hold banking licences
however, because such companies can reduce their
share capital without the need to apply to the
Courts.
The
Insurance and Pensions Authority is also examining
the possible uses of 2006 Act companies for
businesses authorised or registered by the Authority
with a view to permitting their use in certain
circumstances and with appropriate safeguards
in place to ensure comparable levels of transparency
and corporate governance. The Authority said
that it will be issuing further details in this
regard shortly.
These
restrictions on 2006 Act companies will apply
only to licence applicants and licence holders,
and not to other 2006 Act companies.
Existing
sole trader and partnership licence holders
may continue to operate. However, the Commission
has decided to cease to license new sole traders
or partnerships (except for a restricted category
of fiduciary licence that is designed for natural
persons only).
Custodians
of certain types of collective investment scheme
may now operate under a category 3 group (b)
or a category 5 investment business licence.
The
Commission has consulted the fund management
industry in relation to the use of 2006 Act
companies as vehicles for the operation of collective
investment schemes.
Businesses in the Isle of Man which accept cash
payments worth EUR15,000 or more will now have
to comply with new anti-money laundering legislation
in place in the jurisdiction. The
Criminal Justice (Money Laundering) Code 2007
(the ML Code) came into effect on September
1, 2007. The ML Code replaced the previous Anti-Money
Laundering Code 1998, and brought in changes
to anti-money laundering and counter terrorist
financing requirements. In addition, where previous
legislation had focused on the financial services
sector, the ML Code brought additional businesses
within its remit, ensuring that the Isle of
Man complies with international standards.
Further
amendments to companies legislation entered
into force on September 1, 2009, with the Companies
(Amendment) Act 2009.
This
law ushdered in the following changes:
- Company
prospectuses - The information contained
in a prospectus (for a company incorporated
under the Companies Act 1931) must include
all matters that intended recipients could
reasonably expect to find, instead of the
previous specific list of information required
under Schedule 4 to the Companies Act 1931
(which has now been repealed). A signed copy
of the prospectus must be delivered to the
Companies Registry for registration prior
to its issue. Where the Companies Registry
becomes aware of false or misleading claims
in the prospectus, it has the power to make
a direction to amend the prospectus. This
direction will be placed on the company’s
public file.
- Registration
of charges - Companies will be permitted
to file a certified copy of the charge instrument
or the original document. This will remove
conflicts that existed between the Companies
Registry and Land Registry requirements.
- Changes
to accounting provisions - The requirements
under the Companies Act 1931 are clarified
to require (for newly-incorporated companies)
that the first financial statements must be
prepared for a period of no longer than 18
months from the date of incorporation. The
financial statements of a company must be
laid at least once in every calendar year
before the members in general meeting within
6 months of the financial year-end for a public
company, and 9 months for a private company.
This represents a reduction in the current
time limit. Accounting provisions under the
Companies Act 2006 permit accounting records
to be held at a place other than the Registered
Agent’s office, provided the Registered
Agent is kept informed of where the records
are held and further, that copies are remitted
to the Registered Agent on demand but at least
annually. The latest act, in addition to the
aforesaid, empowers any member or director
of the company to require financial statements
to be prepared. Where the company fails to
accede to the request, a member will have
the right to have sight of the underlying
accounting records. Also, the definition of
who may audit an Isle of Man company has been
expanded.
- Limited
Liability Companies Act 1996 - Changes
to the Limited Liability Companies Act 1996
remove the provision that provides for the
automatic winding up of the company within
60 days for failing to file a notice in the
prescribed form on the death, dissolution,
resignation etc of a member.
- Treasury
shares - The Act has added a new
section 25A of the Companies Act 1992 and
section 58A of the Companies Act 2006. These
sections give the Commission powers to make
regulations that could allow a company to
create treasury shares. While the Commission
has underlined that it currently has no intention
to introduce treasury share regulations, it
has asked that interested parties present
their views on the matter. Should there be
sufficient interest shown in this area, informed
the Commission, consideration will be given
to consulting further on whether to make treasury
share regulations.
The
Isle of Man government's Februry 2010 budget
included a number of changes to company registration
rules.
The
changes affect every Isle of Man incorporated
and registered company, business name and limited
partnership. They also affect those who conduct
searches or request information from the Companies
Registry.
Company
registry fees were increased in the budget,
as part of the Isle of Man’s biennial
review. The government increased the fees to
ensure they maintain their value against changes
in the annual rate of inflation, and also to
provide the Isle of Man government with much
needed revenues.
The
change took effect on April 6, 2010 and included:
-
The incorporation fee for a company incorporated
under the 1931 or the 2006 Companies Act will
increased from GBP190 to GBP195.
-
The annual return fee for companies other
than an excepted company, a qualifying members’
club or a dormant company increased from GBP320
to GBP360.
-
The annual return fee for a dormant company
or a qualifying members’ club from April
6, 2008, increased from GBP75 to GBP85. Late
filing fees will apply if the annual return
form is not delivered within the prescribed
filing period.
-
There is no annual return fee for a charity
or a property management company but they
will be subject to late filing fees if they
do not deliver their annual return within
the prescribed filing period.
-
From January 1, 2009, every business that
has registered a business name is required
to file an annual declaration in the Companies
Registry confirming they continue to trade
and that there have been no changes to the
particulars required to be delivered to the
Companies Registry. The declaration should
be filed each year on the anniversary of the
name being registered. There is no registration
fee.
In
February 2010, the FSC consulted on plans to
allow companies whose shares are traded on a
market to hold up to 10% of shares in treasury,
to help companies manage their share capital
more efficiently.
Section
25A of the Companies (Amendment) Act 2009, gave
the Commission the power to make regulations
to introduce treasury shares under the Companies
Acts 1992.
The
Commission started consulting on whether to
allow treasury shares in July 2009. Interested
parties were asked to give details of the motivation
and rationale for introducing treasury shares.
Respondents
indicated that treasury shares are vital in
ensuring that the Isle of Man remains able to
compete as a premier offshore financial centre.
The responses also suggested a need for prompt
action. In acknowledging this commercial need
the Commission released draft legislation early
in 2010, which is needed to introduce treasury
shares, for a limited period.
Isle of Man
Private Company Limited by Shares
Isle
of Man Private Limited Companies are incorporated
under the Companies Acts 1931 to 2004 and 2006.
A private company limited by shares is required
to have at least one member, who can be an individual
or a company, and it must be stated in the Memorandum
of Association that the company is private.
Annual returns must be made to the Registrar,
and details of the shareholders are held on
the public files; but nominee shareholders can
be used. A minimum of two directors are required,
and they cannot be companies. An Isle of Man
company can be incorporated within 7 working
days and ready made companies are available
for immediate use.
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Isle of Man Company Limited
by Guarantee
The Company Limited by Guarantee, and its sibling,
the Company Limited by Guarantee and having
Shares, have existed since the earliest days
of Company Law over 135 years ago. They are
essentially mutual companies, and as such have
historically been used essentially for charitable
and non-profit purposes.
In
the last thirty years, they have been increasingly
used for private family foundations instead
of discretionary trusts, since they are readily
intelligible to persons from a non-equitable
legal background, and avoid most of the problems
associated with trusts. In addition, they have
been used for proprietary and members' clubs
in the international leisure and timeshare resort
industry, where they meet all the requirements
of modern EU (and Spanish) law, as well as for
other social organisations. They have also been
used for tax planning, making use of the extraordinary
flexibility in relation to ownership and capital
that such companies can provide. The Isle of
Man is one of the leading jurisdictions for
this form of company, not because it is unique
to the Isle of Man, but because it was in the
Isle of Man that all the development work has
been done in the last three decades.
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Isle of Man Exempt Private Company
NB Exempt companies ceased to be formed as from
2006, although existing companies were permitted
to continue in existence until 1st January,
2007.
The
Income Tax (Exempt Companies) Act 1984 (as amended)
provided exemption from Income Tax to a private
company owned by non-residents, did not engage
in any activity on the island (with minor exceptions),
and had no source of income in the Isle of Man
other than income from money invested with the
Isle of Man Government or from banks licensed
by the Treasury.
One
of the company directors had to be resident
in the Isle of Man. Additionally, the secretary
of the company had to be a Manx resident and
hold a qualification as required by the Act.
The exemption required annual renewal (not available
after 2006). The granting of exemption did not
affect the liability of a company to deduct
and account for income tax under the Income
Tax (Instalment Payments) Act 1974.
To
make a first-time application for exemption
a company was required to complete forms TEC1
(signed by a director of the company) and TEC1(u),
signed by a Manx-resident director of the company.
The completed forms were to be submitted to
the Income Tax Division together with the appropriate
fee: GBP475 if the application was received
not later than 30th June in the year of assessment;
GBP1,260 if the application was received after
30th June but not later than 30th September.
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Isle of Man Public Company Limited
by Shares
A
public company is defined by the Companies Acts
as one which is not a private company and which
has at the end of its name the words 'Public
Limited Company' or 'P.L.C.'. A public company
must have a minimum of two members.
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Isle of Man Limited Liability
Company
Limited
Liability Companies were introduced by the Limited
Liability Companies Act 1996. A Limited Liability
Company (LLC) must have at least two members
whose liability is limited to the extent of
the capital they contribute to the company.
Profits are divided among the members and are
taxed in their hands, as for a partnership.
An LLC does not have directors or a secretary,
but it must have a registered agent on the island.
The life of an LLC is limited to thirty years.
LLCs are governed by articles of organisation
and not memorandum and articles of association.
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Isle of Man International
Company
The
International Company (IC) was introduced by
the International Business Act 1994. In effect
this form broadened the concept of the exempt
company. IC status could be acquired by a Manx-registered
company (including public companies and limited
liability companies) or by a foreign company
registered on the island. International Companies
were excluded from the same activities on the
island as exempt companies (see above). The
income and receipts of an IC (other than local
bank deposit or approved investment income)
had to be derived from outside the island, or
from dealings with other ICs. An IC had to have
a resident director and secretary (or agent
in the case of a Limited Liability Company).
The
International Company legislation was particularly
aimed at helping finance sector companies. The
rates of tax payable were negotiated between
the company and the Manx authorities, but were
not less than the annual duty of GBP1,260 (more
if the application was filed late). As with
exempt companies, the status of International
Company had to be applied for each year.
International
Companies were abolished along with Exempt Companies
(see above) as from 2006.
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Isle of Man Branch of Overseas
Company
If a foreign company intends to establish a
branch or a permanent place of business in the
Isle of Man, it is subject to Part XI of the
Companies Act 1931, which provides for registration
on the island. Within one month it must deposit
with the Registrar a certified copy of its Memorandum
and Articles of Association, a list and particulars
of its directors and company secretary, and
details of one or more resident individuals
authorised to receive notices and communications.
Once registered, the foreign company will be
treated in the same way as a Manx company.
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Isle of Man Non-Resident
Company
A
Manx-registered company could apply to be non-resident
if its central management and control was exercised
from a foreign base. It was only liable to income
tax if there was any income from the Isle of
Man apart from bank interest. To obtain Non-Resident
status a Declaration of Non-Residency had to
be filed with the Registrar of Companies.
NB.
In June 1999 the Manx Government imposed a moratorium
on the formation of non-resident companies as
part of its response to the Edwards
Report. Non-resident companies were formally
abolished as from 2006.
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Isle
of Man General Partnership
Partnerships are governed by the Partnership
Act 1909, which is based on the UK Partnership
Act 1890 and the UK Limited Partnership Act
1907. Partners may be individuals or companies.
In a general partnership, a partner's liability
is unlimited. Under the Registration of Business
Names Acts 1918 and 1954, partnership names
must be registered if they differ from the surnames
of the partners. Partnership agreements and
financial accounts do not have to be filed at
the general registry.
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Isle
of Man Limited Partnership
Limited partnerships are also governed by the
Partnership Act 1909. They must be registered
as such, or they may be deemed to be general
partnerships. Partners may be individuals or
companies. A limited partnership consists of
one or more general partners with unlimited
liability, and one or more limited partners,
who are liable only to the extent of their capital
contributions. A limited partner does not take
part in the management of the partnership and
is not entitled to dissolve the partnership
by notice. Limited partnerships may have up
to twenty partners; but in banking only up to
ten partners.
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Isle of Man International
Limited Partnership
An International Limited Partnership (ILP) is
similar in structure to a Limited Partnership
and was introduced by the International Business
Act 1994. The general partner must be a Manx-resident
company and must comply with the requirements
for a company to be an International Company
(see above); the limited partners must either
be non-resident or must be themselves International
Companies. The status of International Limited
Partnership has to be applied for each year,
alonng with the payment of an annual fee, and
the Assessor issues a certificate. On demand,
an ILP must produce its accounting records to
the Assessor. There is no limitation on the
number of partners in an ILP, and this format
is suitable for collective investment vehicles,
among others.
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Isle of Man Sole Proprietorship
The
business name of a sole trader, who has unlimited
responsibility for his liabilities, must be
registered at the General Registry if it is
other than the name of the sole trader.
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Isle of Man Trusts
The law of trusts is based on the English law
and is governed by the following acts: the Trustee
Act 1961 as amended; the Variation of Trusts
Act 1961; the Perpetuities and Accumulations
Act 1961; the Trusts Act 1995; and the Purpose
Trusts Act 1996. The Trusts Act 1995 establishes
that both for Manx trusts and for foreign trusts
migrating to the island, Manx law is conclusive
and will overcome any forced heirship provisions
emanating from civil law jurisdictions. The
Isle of Man adopted the Hague Convention in
the Recognition of Trusts Act 1988, albeit with
some modifications.
Trust
documents are in English, and there are no requirements
for registration; there is no stamp duty. The
normal perpetuity period of a Manx trust is
80 years. There are no restrictions on the accumulation
of income during the perpetuity period.
Trusts
used for Investment Funds (Unit Trusts) are
governed by the Prevention of Fraud (Investments)
Act 1968, which contains prudential rules among
others.
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