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Isle of Man: Types of Company

Introduction

This page was last updated on 24 January 2020.

The Isle of Man’s Companies Registry was established in 1865. Since April 2010, responsibility for Companies Registry has been with the Department of Economic Development. The registry maintains the register and records of all companies and other business types incorporated in the Isle of Man; there are facilities that enable the public to view filed documents.

Companies Registry contains of seven distinct registries, each with their own legislation, fees and statutory filing obligations. The registry is currently responsible for registering and incorporating all the following:

  • Industrial societies under the Industrial & Building Societies Acts 1892 to 1979
  • Limited partnerships under the Partnership Act 1909
  • Business names under the Registration of Business Names Acts 1918 & 1954
  • Companies in terms of the Companies Acts 1931 to 2004
  • Foreign companies in terms of Part XI of the Companies Acts 1931
  • LLCs in terms of the Limited Liability Companies Act 1996
  • Companies under the Companies Act 2006.

Companies, etc. (Amendment) Act 2003

The Companies, etc. (Amendment) Act 2003 partly came into effect in December 2003. It permitted unlisted companies to re-domicile in and out of the Isle of Man. Companies conducting licensable business, e.g. banking, investment, insurance or corporate service provider business, are subject to additional regulatory approvals.

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.

Also, with effect from 1 March 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.

2006 Company Law Reform

In August 2005, the government published draft legislation for the creation of a new type of business-friendly company. The new Manx vehicle, or NMV, is designed to be simple and inexpensive to administer and meet the island's obligations in terms of commonly adopted international standards.

The law came into force on 1 November 2006. The first new Manx vehicles, or '2006 Act companies' as they became known, were incorporated on the same day. Each 2006 Act company is allocated a number followed by the suffix V to distinguish the new-style companies from more traditional ones, which may still be incorporated under the Companies Acts 1931-2004.

Revised General Licensing Policy

In May 2007 the Isle of Man Financial Supervision Commission (IOMFSC) published a revised version of its general licensing policy for those seeking a banking, investment business or fiduciary licence. The revisions affect licensees in three areas: 2006 Act companies, sole traders and partnerships, and custodians of collective investment schemes.

The FSC said that 2006 Act companies 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. These restrictions on 2006 Act companies will only apply to licence applicants and licence holders, and not to other 2006 Act companies.

ustodians of certain types of collective investment scheme may now operate under a category 3 group (b) or a category 5 investment business licence.

Tightening of Anti-Money Laundering Rules

Businesses in the Isle of Man which accept cash payments worth £15,000 or more have to comply with the jurisdiction’s anti-money laundering legislation. The Criminal Justice (Money Laundering) Code 2007 (‘ML Code’) came into effect on 1 September 2007. The ML Code, which replaced the previous Anti-Money Laundering Code 1998, increased counter terrorist financing requirements in addition to tightening anti-money laundering law. In addition, the ML Code brought in businesses outside the financial services sector within its remit, ensuring that the Isle of Man complies with international standards.

The ML Code was subsequently replaced by the Criminal Justice (Money Laundering) Code 2008 (‘2008 Code’) which came into effect on 18 December 2008. On 1 September 2011 this was superseded by the Proceeds of Crime (Money Laundering) Code 2010, supplemented by the Prevention of Terrorist Financing Code 2011. This was then amended by the Money Laundering and Terrorist Financing Code 2013.

Further law changes followed. The Anti-Money Laundering and Countering the Financing of Terrorism Code 2015 came into effect in April 2015. It brought in changes that took the revised 2012 Financial Action Task Force recommendations into account. In September 2018 an amendment was made to the 2015 code, taking into account the 2015 amendment to the Proceeds of Crime Act 2008.

On 1 June 2019, another revised code, the Anti-Money Laundering and Countering the Financing of Terrorism Code 2019 came into effect. This latest revision included changes made to address MONEYVAL’s recommended actions from its 2016 evaluation of the island and the removal of provisions regarding gambling and specified non-profit organisations. These were moved to their own codes.

Companies (Amendment) Act 2009

Further amendments to company legislation entered into force on 1 September 2009, with the Companies (Amendment) Act 2009. This law brought 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 underlined at this time that it had no intention to introduce treasury share regulations, it has asked that interested parties present their views on the matter. Indeed, a consultation on whether treasury shares should be permitted was launched in 2009 (see below).

Treasury Shares

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.

On 1 May 2010, the Companies Act 1931 to 2004 (Treasury Share) Regulations 2010 went into effect. This meant that companies incorporated under the above act are permitted to buy and hold their own shares, to a maximum of 10%. The regulations apply where a market-traded company purchases its own shares in accordance with the provisions of the Companies Act 1992, wherethe purchase is made out of distributable profits and the shares are qualifying shares (i.e. shares of a market-traded company.)

Company Law Modified

In October 2010, the Isle of Man parliament approved two separate sets of regulations modernizing the island’s company law. First, company law was amended to change the obligation on private companies to hold annual general meetings and to change the types of business that can be conducted by protected cell companies (PCCs).

The first regulations adopted, the Companies Act 1931 (Dispensation for Private Companies) (Annual General Meeting) Regulations 2010, allow the members of private companies to choose not to hold annual general meetings, which may not always be necessary in the case of small companies. This provision does not apply to charities.

The Protected Cell Companies (Eligibility) Regulations 2010 allow PCCs incorporated under the Companies Act 1931 to 1993 to conduct any class of business, the same as PCCs incorporated under the Companies Act 2006. The former category of PCC was previously restricted to insurance and collective investment business. Both regulations came into force on 1 November 2010.

 

 

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