Isle of Man Companies

For more information on Isle of Man Companies... 

The types of companies available on the Isle of Man are established under two key acts as follows:

2006 Companies Act | 1931 Companies Act

2006 Companies Act (New Manx Vehicle)

The New Manx Vehicle launched on 1st November 2006 has been established after a detailed review of similar companies in use in other jurisdictions.

It is considered that NMVs are legally robust, yet flexible and easy to administer. Combined with the Island’s zero rate corporate tax regime for substantially all resident companies, the Isle of Man should prove increasingly attractive to international businesses and their advisers. The following are some of the key attributes of the NMV: 

 Types of Companies

The Act specifically allows for five different types of corporate vehicles:

• companies limited by shares; 
• companies limited by guarantee; 
• companies limited by share and by guarantee; 
• unlimited companies authorised to issue shares; and 
• unlimited companies without shares. A company limited by shares may be formed as or converted into a protected cell company. 

Share Capital 

Under the Act, there is no longer the concept of authorised share capital. Therefore, shares may be issued with or without par value.                                                                                                              

Dividends, Redemptions and Buy-backs of Shares

Subject to compliance with its memorandum and articles of association, the Act allows an NMV to declare and pay a dividend and to purchase, redeem or otherwise acquire its own shares subject only to meeting a statutory solvency test. The ability to provide for the acquisition of shares in this way may be of benefit to open-ended investment companies in particular.                  

Capacity and Powers 

A company incorporated under the Act has separate legal personality and perpetual existence. In addition, an NMV has unlimited capacity to carry on or undertake any business or activity; this is so notwithstanding the matter of corporate benefit. The Act specifically states that no corporate act is beyond an NMV’s capacity by reason only of the fact that the relevant NMV has purported to restrict its capacity in any way in its memorandum or articles or otherwise. A person who deals in good faith with an NMV is entitled to assume that the directors of the NMV are acting without limitation. 

It is possible for the memorandum of an NMV to contain a statement specifying the purposes for which it is established or the business, activities or transactions for which it is established. However, any such restrictions are subject to the provisions explained in the foregoing paragraph. 

Charges

The Act provides that charges may be registered at the Companies Registry of the Isle of Man Financial Supervision Commission (the “Companies Registry”) within one month of the date of the creation of the charge. However, it is not mandatory to register charges with the Companies Registry but failure to do so may affect the priority of the charges created by the NMV and in addition, failure to register shall render the charge void against the liquidator and any creditor of the NMV. If a charge is not registered at Companies Registry within one month of the date of the creation of the charge, an application to register the charge may be made to Companies Registry at any time prior to the commencement of the winding up of the NMV.                                                                                                                                                                                                                        

Other Points 

In addition to the foregoing, the following other points should be noted in relation to NMV’s: 

• Incorporation can be effected within three days of receipt of the instructions.
• A company may be incorporated with a single shareholder. This shareholder need only apply for a single share whose par value can be as low as one pence. There are no thin capitalisation rules.
• Companies can be incorporated with only one shareholder. Shareholders need to be recorded at the registered office of the company and at the Companies Registry.
• Nominee shareholders are permitted and can be provided by HL Fiduciaries Limited.
• The minimum number of directors is two. HL Fiduciaries Limited can provide professional director services
• A company secretary is required. HL Fiduciaries Limited is licensed to provide secretarial administration services.
• The registered office must be situated in the Isle of Man at a licensed agent.
• There is a requirement to file an annual return.
• Accounts must be prepared and filed. These do not need to be filed with the Companies Registry.
• All Isle of Man companies are now treated as resident companies. Resident companies are taxed at a rate of 0% on their trading and investment income. Income derived from land and property situated in the Isle of Man is taxed at a rate of 10% and banks are taxed on their banking business at a rate of 10%.
• The Isle of Man has a Customs and Excise agreement with the UK. This means that for VAT, Customs, and most Excise duties, the two territories are treated as one.

 Over the past few years, there has been an unprecedented growth in Isle of Man companies listing on AIM and other key capital markets (including the Main Market of the London Stock Exchange). 

 The Benefits of Using an Isle of Man Corporate Vehicle

The reasons why the Isle of Man has become one of the favourite offshore jurisdictions from which to list on the world’s major capital markets include: 

• The Island’s first-class reputation as a well regulated international finance centre (reinforced by Moody's and Standard & Poor's "AAA" rating).
• The ability to list an Isle of Man company without the need for prior regulatory approval. (This is in sharp contrast to some other offshore jurisdictions). 
• The Island’s company law is derived from English company law; as such, investment banks, institutional investors and their advisers are comfortable dealing with Isle of Man companies. 
• In the few instances where the Island’s company law differs from English company law, it is usually possible to tailor a company’s Articles of Association to give the company a more “English” feel and, thus, meet the expectations of institutional investors. 
• An Isle of Man company can be formed within 5 working days and there is no requirement to specify a company’s objects in its Memorandum of Association. 
• Most Isle of Man companies are able to take advantage of prospectus exemptions which facilitate the preparation and despatch of the admission document or listing particulars. 
• Shares in Isle of Man companies are capable of being held in dematerialised form through CREST without the need to put in place complex depositary arrangements. 
• An Isle of Man company can have shares denominated, and can prepare accounts, in any currency. 

 HL Fiduciaries works Limited works with the leading law firms and tax advisors on the Isle of Man and can assist in facilitating introductions and coordinating solutions for clients in this specialist area.

1931 Companies Act

This is the original form of Isle of Man Company with companies incorporated subject to the Isle of Man Companies Act of 1931 (as amended)

 The main features of companies formed under the Isle of Man Companies Act 1931 (as amended) are detailed below: 

• Incorporation can be effected within three days of receipt of the instructions.
• A company may be incorporated with a single shareholder. This shareholder need only apply for a single share whose par value can be as low as one pence. There are no thin capitalisation rules.
• Companies can be incorporated with only one shareholder. Shareholders need to be recorded at the registered office of the company and at the Companies Registry.
• Nominee shareholders are permitted and can be provided by HL Fiduciaries Limited.
• The minimum number of directors is two. HL Fiduciaries Limited can provide professional director services
• A company secretary is required. HL Fiduciaries Limited is licensed to provide secretarial administration services.
• The registered office must be situated in the Isle of Man at a licensed agent.
• There is a requirement to file an annual return.
• Accounts must be prepared and filed. These do not need to be filed with the Companies Registry.
• All Isle of Man companies are now treated as resident companies. Resident companies are taxed at a rate of 0% on their trading and investment income. Income derived from land and property situated in the Isle of Man is taxed at a rate of 10% and banks are taxed on their banking business at a rate of 10%.
• The Isle of Man has a Customs and Excise agreement with the UK. This means that for VAT, Customs, and most Excise duties, the two territories are treated as one.

There are four types of company available.

• Limited by Shares
  A Company limited by shares is probably the most popular type of trading company formed today with the liability of its members limited to the amount unpaid on shares they hold. The standard authorised capital on formation is usually £2,000 divided into 2,000 shares of £1 each. This attracts the minimum amount of Capital Duty payable on formation. 
• Limited by Guarantee
  Companies limited by guarantee have no predetermined capital and thus no shares. Members' liability is limited to the amount they have agreed to contribute to the company's assets if it is wound up. Essentially used as a mutual company for charitable, quasi-charitable, non profit or social purposes, this form of company can be utilised to great effect for tax planning purposes by means of pledged payment to the collateral of the company
• Limited by Guarantee and having a Share Capital
  This type of company is commonly known as a "Hybrid company", combining the features of both companies limited by shares and companies limited by guarantee. Members consist of those whose liability is limited to the amount unpaid on shares which they hold, and those whose liability is limited to the amount they have agreed to contribute to the company's assets if it is wound up. The flexibility provided by this form of company structure has led to its increasing use as a ‘Foundation’, a popular alternative to the discretionary trust and for proprietary purposes.
• Having a Share Capital with Unlimited Liability
  This form of company has a share capital in exactly the same way as a company limited by shares, but there is no limit to the liability of members. Such companies are not dissimilar to civil law partnerships and their use is now usually limited to complex situations where extreme flexibility of capital structuring is required or where corporate personality only is needed.

 Public and Private Companies

All companies incorporated under the Companies Act 1931 are designated as either public companies or private companies. A public limited company (PLC) may offer its shares or debentures for sale to the general public and must, on an annual basis, deliver audited accounts to the Companies Registry. A private company may not offer shares or debentures to the public and, unless it is a subsidiary of a public company incorporated in the Isle of Man, it is not required to deliver audited accounts to the Companies Registry on an annual basis.