TYPE OF COMPANY FOR INTERNATIONAL TRADE AND INVESTMENT
Two types of company are generally used for trade and investment: the Exempt Company and the Limited Liability Company.
The Exempt Company, by law, must 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 holding and for trading activities with European Union countries.
The Limited Liability Company legislation is based on US LLC legislation. Manx LLCs must have two members and appoint a local registered agent.
PROCEDURE TO INCORPORATE
Exempt: Submission of Memorandum and Articles of Association, together with "Form I" nominating the first directors and secretary, and advise of the situation of the Registered Office and the form giving name approval. Immediately after incorporation the company must select Exempt status.
LLC: Filing of Articles of Organisation with the Registry.
RESTRICTIONS ON TRADING
Cannot trade within the Isle of Man. Cannot undertake banking or insurance activities. Cannot undertake investment business other than the investment of the company's own assets. Cannot solicit funds from the public nor offer its shares to the public.
POWERS OF COMPANY
An Isle of Man company has all the powers of a natural person.
LANGUAGE OF LEGISLATION AND CORPORATE DOCUMENTS
REGISTERED OFFICE REQUIRED
Manx Exempt Companies must maintain a registered office in the Isle of Man.
SHELF COMPANIES AVAILABLE
TIME SCALE TO INCORPORATE
One day, subject to name approval.
Exempt and LLC: A name that is similar to or identical to an existing company. A name that is known to exist elsewhere. A name that implies illegal activities. A name that implies royal or government patronage.
Exempt Companies: Many names require justification or high capitalisation to allow use. Words such as "International", "European" or other words indicating an international presence will only be approved if the Company is incorporated with an authorised capital of
£ 100,000, which must be paid up.
Use of the words "Trust", "Trustees" or "Fiduciary" will only be approved if the company is incorporated with an authorised capital of
£ 250,000, which must be paid up.
Use of the word "Holdings" will only be approved if the Company can provide documentary evidence that it holds 51% or more of an underlying company.
Use of the word "Group" will only be approved if the company can provide documentary evidence that the company owns a group of companies.
LANGUAGE OF NAME
Names can be expressed in any language using the Latin alphabet, if the Registrar of Companies is in receipt of an English translation and the name is not considered undesirable.
NAMES REQUIRING CONSENT OR A LICENCE
The following names or their derivatives: bank, building society, savings, loans, insurance, assurance, reinsurance, co-operative, council, Chamber of Commerce, trust, municipal and finance or their foreign-language equivalents.
SUFFIXES TO DENOTE LIMITED LIABILITY
Exempt companies must utilise Limited or Ltd as a suffix whilst LLCs must utilise Limited Liability Company or LLC.
DISCLOSURE OF BENEFICIAL OWNERSHIP TO AUTHORITIES
AUTHORISED AND ISSUED SHARE CAPITAL
Exempt companies have a normal authorised share capital is £ 2,000 or its currency equivalent, this being the maximum for the minimum capital duty payable upon incorporation. The minimum issued capital is one share of par value.
CLASSES OF SHARES PERMITTED
Exempt companies may have registered shares, bearer, preference shares, redeemable shares and shares with or without voting rights.
BEARER SHARES PERMITTED
Exempt companies may have bearer shares, but they cannot be allotted directly to bearer. They have to 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 the holder of bearer warrants.
Exempt and International LLCs pay no income tax, but pay a fixed annual fee to the Government.
DOUBLE TAXATION AGREEMENTS
Apart from a limited treaty with the United Kingdom, the Isle of Man is not party to any double tax treaties.
An Isle of Man Exempt Company pays £ 400 per year, which is due on 6th April.
An Isle of Man international LLC pays £ 400 a year which must be paid over within 30 days of applying for International LLC status and thereafter annually.
FINANCIAL STATEMENT REQUIREMENTS
Whilst there is no requirement to file audited accounts with the authorities, it is important to note that a company is required to keep financial records which reflect the financial position of a company. The Assessor of Income Tax reserves the right to call in the accounts.
Exempt: The minimum number of directors is two. Exempt companies are required to appoint at least one resident director. Bodies corporate may not be appointed as directors.
LLC: One manager either a natural person or a body corporate of any nationality.
A company secretary is required for all Isle of Man companies. They may be natural persons or bodies corporate.
The company secretary of an Exempt Company must be a natural person, resident in the Isle of Man and must hold a professional qualification.
Exempt: The minimum number of shareholders is one.
LLC: The minimum number of members is two.
OTHER TAX PLANNING ENTITIES
Other Isle of Man entities used for international tax planning include:
Further information on these alternative structures is available on request.