Important Legislation and Agreements

Other Important Legislation and Agreements

Corporate and Trust Services

The providers of certain services in relation to companies and trusts must be licensed by the Financial Supervision Commission. The services to which this requirement relates includes the incorporation of companies, the provision of directors (including corporate director for NMVs), secretary, registered agent, registered office and carrying out any administration activities acting as a trustee. Grant Thornton (Isle of Man) Limited is licensed to provide these services.

Anti-Money Laundering

The Isle of Man recently passed the Criminal Justice (Money Laundering) Code 2007 which updates the Anti-Money Laundering Code and amendments of 1998. The Code has also brought updates to the Anti-Money Laundering Guidance Notes which impact on the administrative requirements on businesses such as banks, investments, collective investment schemes and fiduciary services amongst others.

Insider Dealing

Legislation has been enacted prohibiting dealing, whilst holding unpublished price sensitive information, in securities listed on a recognised stock exchange including shares, debt securities, warrants, depositary receipts, options, futures and contacts for differences.

Criminal Activity and Proceeds of Crime

There are various offences in connection with involvement in criminal activity and dealing with the proceeds of such activity.

Consolidation and Review of Regulatory Legislation (“CAROL”)

The Isle of Man Financial Supervision Commission is currently undertaking a review of all the financial services regulatory legislation under which it operates with the aim of consolidating this into one Act and one “rule-book” that will apply to all the activities and financial products it is responsible for regulating. The review and consultation programme is ongoing with expected action due in 2008.

New Manx Vehicle

The Isle of Man Companies Act 2006 which came into force on 1 November 2006 has introduced a simplified corporate structure based on the International Business Company model adopted in other international centres such as Bahamas, Barbados and the British Virgin Islands. The ‘New Manx Vehicle’ exists alongside companies incorporated under the existing Companies Acts 1931-2004 and although the 2006 Act maintains established concepts, it does offer different approaches to traditional company law formalities.

Some of the key features of an NMV are:

Minimal registry filings;
Unlimited capacity, but restricted objects permissible;
No capital maintenance requirements (subject to solvency);
No authorised capital;
Shares of no par value possible;
Redemptions and purchases of shares and distribution of income and capital possible (subject to solvency);
No financial assistance prohibitions;
In general, no annual return requirements;
Requirement for a registered agent;
Corporate directors permitted (subject to holding the appropriate licence issued by Isle of Man Financial Supervision Commission);
Single director permitted;
No prescriptive accounting requirements;
No distinction between public and private companies;
Simplified offering document requirements.

Online Gambling

Online Gambling is an increasingly significant sector of activity.

Businesses (which must be Isle of Man-incorporated companies limited by shares) need to be licensed by the Department of Home Affairs. As part of the application process, the directors and the beneficial owners of more than 5% of the applicant or its ultimate parent company need to provide information to the Department – in order to enable the Department to carry out its inquiries to satisfy itself that the company is controlled by persons of integrity and managed by persons of competence and integrity.

A licenceholder must have a “Designated Official” who must be a director and reside permanently on the Island.

The profits of an online gambling business can, if structured appropriately, be taxed in the Isle of Man at 0%.

Online Gambling Duty is payable on gross gaming yield (which is defined in detail, but is, broadly, bets less winnings and prizes) as follows:

1.5% on yield not exceeding £20 million per annum;
0.5% on yield of more than £20 million but not exceeding £40 million per annum;
0.1% on yield exceeding £40 million per annum.

A separate regime, from the above, applies for internet and telephone sports betting. The profits can, again, be taxed at 0% and betting duty is payable, the rate depending on the place where the persons placing the bets are located.

In the case of both regimes, licence fees are payable.