The principal Corporate Legislation includes the following Acts:
- The Companies Acts 1931 to 1993.
- The International Business Act 1994.
- Limited Liability Companies Act 1996
English is the language of Legislation and Corporate documentation.
The Isle of Man companies have all the powers of a natural person.
The following types of company are used for international trade and investments:
- The Non-Resident Company: By law, central management and control of Non-resident Companies must be exercised away from the Isle of Man. This would normally be in a low or tax-free area to avoid corporate taxation.
- The Exempt Company must by law have at least one Isle of Man resident director and must appoint an Isle of Man resident company secretary who must be a natural person and hold a professional qualification. The Exempt Company is normally used for personal or corporate investment holdings and for trading with European Union countries.
- The Isle of Man companies are used for all types of domestic business, but may also be used for foreign property ownership. If no income derives from such investment the company is not subject to taxation in the Isle of Man.
- The Limited Liability Company is based on US LLC legislation. Manx LLCs must have two members and appoint a local registered agent.
Other Isle of Man entities used for international tax planning are:
Trading and business operations are subject to the following restrictions:
- A Company must not trade within the Isle of Man.
- Isle of Man companies must not engage in the business of banking or insurance.
- A Company must not engage in the business of investment, other than investment of the company’s own assets.
- A Company must not solicit funds from the public nor offer its shares to the public.
Incorporation procedure depends on the type of company:
- Exempt Isle of Man companies must submit the Memorandum and Articles of Association, together with “Form I” nominating the first directors and secretary, advise the location of its Registered Office and submit the form applying for approval of the company’s name. Immediately after incorporation the company must elect Resident, Non-resident or Exempt status.
- LLCs must file the Articles of Organization with the Registry.
Manx Exempt companies must maintain a registered office in the Isle of Man. The off-the-shelf companies are available.
Company names are subject to the following requirements and restrictions:
- Names may be expressed in any language that uses the Latin alphabet, if the Registrar of Isle of Man Companies is in receipt of an English language translation and the name is not considered undesirable.
- A name similar or identical to that of an existing company is not acceptable.
- A name known to exist elsewhere is not acceptable.
- A name that implies illegal activity is not permitted.
- A name that implies royal or government patronage is unacceptable.
- For Exempt Companies, many names such as “International”, “European”, “Trust”, “Trustees” or “Fiduciary”, “Holdings”, etc. require justification or high capitalization for their use to be permitted.
- The following Isle of Man companies names or their derivatives require consent or a license: bank, building society, savings, loans, insurance, assurance, reinsurance, co-operative, council, Chamber of Commerce, trust, municipal, finance or their foreign-language equivalents.
- Exempt companies must utilize the suffix Limited or Ltd; LLCs must utilize the suffix Limited Liability Company or LLC.
The number of directors required depends on the type of company:
- For Exempt Companies the minimum number of directors is two. Exempt companies are required to appoint at least one resident director. A corporate body may not be appointed director.
- LLCs must have one manager, either a natural person or a corporate body of any nationality.
A company secretary is required for all Isle of Man companies. This may be a natural person or corporate body. The company secretary of an Exempt Company must be a natural person resident in the Isle of Man and must hold a professional qualification. The minimum number of shareholders is one for an Exempt Company, two for an LLC.
The normal authorized share capital for Exempt Isle of Man Companies is GBP 2,000 or its equivalent, this being the maximum to qualify for the minimum capital duty payable on incorporation. The minimum issued share capital is one share with par value. Exempt companies may have the following classes of shares: registered, bearer, preference shares, redeemable shares and shares with or without voting rights. Exempt companies may have bearer shares, but these cannot be allotted directly to the bearer. They must be allotted in registered form and then transferred. It is a requirement of Isle of Man legislation that the Register of Members must state the name and residential address of holders of bearer warrants.
Annual Taxation and Fees
Exempt Isle of Man Companies and International LLCs do not pay income tax but pay a fixed annual fee to the Government:
- An Isle of Man Exempt Company pays GBP 400 per year, due on 6th April (due on April the 6th).
- An Isle of Man International LLC pays GBP 400 per year, which must be paid within 30 days of applying for International LLC status and annually thereafter.
Apart from a limited agreement with the United Kingdom, Isle of Man companies are not party to any double tax agreements.
Although there is no requirement to file audited accounts with the authorities, a company is required to keep financial records reflecting the financial state of the company. The Assessor of Income Tax has the right to call in the accounts.
The Companies Act 2006 (“2006 Act”), which came into operation on 1st November 2006, introduced a new type of company in addition to Isle of Man companies incorporated under the Companies Acts 1931 – 2004 (1931 Act).
The new act has been designed to sit alongside the Island’s existing company law rather than replace it, but it aims to make it easier to set up businesses in the Island.
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.
Under the NMV the changes mean:
- There is no requirement for local directors
- Less prescriptive accounting requirements
- No requirements for annual general meetings
- No public filing of accounts
- Reduced compulsory filings with the Companies Registry
There must be a registered agent for the company in the Isle of Man, who will maintain certain documents such as accounting records, although there will no longer be the need for a company secretary.
The new rules will also allow both single member and protected cell Isle of Man companies.
Single corporate directors are allowed to run a company provided they are licensed by the Isle of Man Financial Service Commission or a subsidiary of a license holder and there is no requirement for authorized share capital or any capital maintenance, depending on the solvency of the business.
Exempt companies ceased to be formed as from 2006, although existing companies were permitted to continue in existence until 1st January, 2007.
With effect from 1 April 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.
Most companies already in place in the Isle of Man which were incorporated under the previously operational Isle of Man Companies Legislation or the Companies Acts 1931-2004 can now convert to become IBCs governed by the rules of the New Manx Vehicle – and according to experts within the financial services industry more and more companies will be seeking to change because the new legislation is just so conducive to the smooth and simplified running of an IBC.
Under the new act companies can be incorporated far more quickly, there is far greater flexibility of use and protected cell companies are permitted, reporting requirements and merger or consolidation procedures are simplified and registered agents can take the place of company secretaries. Furthermore, The Isle of Man Companies Act 2006 has been specifically designed to be effective and flexible when it comes to companies listing for public offerings or seeking asset or project finance for example.
Finally, not only does the NMV allow for the simplification and smooth running of IBCs but the new act maintains the Isle of Man’s strict policies of adhering fully to international standards and guidelines relating to disclosure and corporate governance making the New Manx Vehicle an exciting and well structured (well-structured) development in the world of offshore company incorporation.
Economy and Infrastructure
There are daily airline services from Ronaldsway Airport in the south of the island some eight miles from Douglas to London, Manchester, Birmingham, Cardiff, Dublin, Belfast, Blackpool, Liverpool and Glasgow. There are also services to other cities in the UK and the Channel Islands. However, there are no direct international flights. Isle of Man companies have excellent telecommunication facilities. The island is part of Great Britain’s telecommunications network, with direct dialing to 160 countries around the world including the leading financial centrals. The island has 800 km of roads, mostly maintained to a high standard, and main roads connect all the major towns. Rail services are seasonal and largely provided for the benefit of tourists. The Isle of Man, confronted with a decline in its two principal sources of income, agriculture and tourism, now places greater reliance upon industrial investment and financial activities.
The currency is the Manx Pound, which is on a par with the UK Pound. There is no exchange control on Isle of Man companies have also the advantage being from jurisdiction where there is no exchange control).