Companies
Companies incorporated in the Isle of Man are governed by the Companies Acts and/or various other
related legislation. These also regulate non-Isle of Man companies and corporations with a place of
business in the Island. Companies are the usual form of business entity either in the Island or for
conducting local and international business from the Island.
A zero per cent general corporate tax rate is applied to all Isle of Man resident companies.
The liability of members of a company may be limited or unlimited but it is extremely unusual for
an unlimited company to be used in offshore business. The company may be limited by shares; limited by
guarantee; limited by guarantee with a share capital; unlimited with shares; or unlimited without
shares.
A limited liability company, which has some of the characteristics of a company and some of the
characteristics of a partnership, may be established; it may have a limited permitted life. Such a
company may be used (inter alia) to secure tax benefits in certain jurisdictions.
A company may be private (the most common form for offshore business, except for collective
investment schemes) or public, in which case it may offer shares to the public.
Non Isle of Man Companies
Non Isle of Man companies with a place of business in the Isle of Man must register with the
Registrar of Companies.
Statutory Requirements
The statutory requirements for all companies formed under existing legislation include:
- Maintaining registers of members, directors, secretaries or registered agent and charges;
- Maintaining accounting records and minutes of meetings;
- Maintaining a registered office or place of business in the Island;
- Filing an annual return and paying the statutory fee; and
- Filing notices of changes in various matters, including directors, secretary, registered agent and
registered office.
The ‘New Manx Vehicle’ (NMVs) introduced in 2006 has less onerous filing requirements.
All companies limited by share or guarantee are required to make a return of the appointment of
directors and company secretary (except NMVs), and any changes, within a month. The initial subscribing
shareholders are shown on the memorandum and articles of association. Changes of members (other than for
limited liability companies) are not filed except as disclosed in the annual return.
A company must hold an annual meeting of members (not applicable for NMVs).
The register of members, which must be kept in the Isle of Man, is open to inspection by the members of
the company and the general public (on payment of a reasonable fee) but the register of charges is open to
inspection, free of charge, by all creditors and members of the Company. All records held by the Registrar
of Companies are open to inspection by members of the public on payment of the appropriate fee.
The annual return includes details of shareholders and directors. Confidentiality as to membership can
be secured by the use of nominee shareholders. All companies are required to prepare annual accounts. There
is no provision for the accounts of a private company to be filed; however, the annual return of a company
must be accompanied by a declaration as to whether or not the company has complied with various legislative
provisions relating to accounts. The accounts of a public company must be filed at the Companies Registry.
Formation Procedures
One or more persons subscribe their names to the Memorandum and Articles of Association as the first
members. The Memorandum sets out the name of the company, the jurisdiction of situation of the registered
office, the authorised share capital (in the case of a company limited by shares) or the liability of the
guarantee members (in the case of a company limited by guarantee) or both (in the case of a hybrid company)
and the fact that the liability of the members is limited. The Articles of Association set out the
procedure for the day to day running of the company. The proposed name is usually first cleared as
available and acceptable with the Registrar of Companies and usually reserved. The Memorandum and Articles
and the statement of first directors, secretary (or registered agent) and registered office, together with
the appropriate fees are then submitted to the Registrar, who registers the Company. A certificate of
incorporation is issued after which the company is legally in existence. The required documents and
procedures are slightly different for a limited liability company.
Audits
Certain companies, other than a public company, a corporate service provider, a banking or insurance
company and a company authorised to carry on Investment Business, may, if permitted by their articles,
resolve not to appoint an auditor if the companies comply with the requirements of regulations. A company
may be exempt from audit if it meets 2 of the following 3 criteria:
- Its turnover in a financial year does not exceed £5.6 million;
- The balance sheet does not exceed £2.8m at any time during that year;
- It employs no more than 50 persons at any time during the year.
Minority Protection
In spite of the fact that the activities of a company are governed by the majority principle (unless
the constitutional documents provide otherwise) the Companies Acts contain compulsory provisions to protect
minority shareholders.
Winding Up
Winding up may be either:
- by the court, in a variety of circumstances, including company insolvency; or
- voluntarily, principally by a resolution of the members.
There is a statutory framework of responsibilities and a timetable in relation to both methods of
winding up.