Comparison between those incorporated under 1931 to 2004 Companies Acts to those under Companies Act 2006

The rules for setting up companies in the Isle of Man changed a lot from the old Companies Acts of 1931 to 2004 to the newer Companies Act 2006. This comparison looks at the main differences and what they mean for businesses.

Companies Acts 1931 to 2004Companies Act 2006
Confidentiality of Corporate Information Corporate documents partially available for public inspection including the certificate of incorporation, memorandum and articles of association, the address of the registered office, register of directors, register of charges and annual return

Details of shareholders included on annual return and company’s register of members open to public inspection

Corporate documents partially available for public inspection including the certificate of incorporation, memorandum and articles of association, the address of the registered office, registered agent, register of charges and annual return

Filing of registers of members and of directors is optional, registers are public if filed

Details of directors included on annual return

Directors and Officers Minimum of 2 directors

Corporate director not permitted

Company secretary required

Alternate directors permitted

Minimum of 1 directors

Corporate director permitted (although a licensable activity)

No company secretary required

Alternate directors permitted

ShareholdersMinimum of 2; however private companies limited by shares or guarantee can be single member companies

Nominee shareholders permitted

Details of shareholders appear on annual return

Ultimate individual beneficial owner must be disclosed to service provider

Minimum of 1
Nominee shareholders permitted

Filing of copy of register of members with Companies Registry optional

Ultimate individual beneficial owner must be disclosed to service provider

Share CapitalNo minimum stated capital

Shares must have nominal or par value

Bearer shares not permitted

Redeemable preference shares permitted

Shares may be denominated in more than one currency

No minimum stated capital

Shares may be with or without a nominal or par value

Bearer shares not permitted

Shares may be denominated in more than one currency

Registered OfficeLocal registered [legal] office required

Documents required to be kept at the registered office include: register of directors and secretaries, register of members, register of charges, minute books, Annual Return, accounting records (unless directors have determined that they be kept elsewhere), memorandum and articles

Local registered [legal] office required

Documents required to be kept at the office of registered agent include: register of directors (or a copy thereof), register of members (or a copy thereof), register of charges (or a copy thereof), copies of all notices and documents filed in previous 6 years, accounting records (or copies of records if directors have determined that they be kept elsewhere), memorandum and articles signed by each subscriber, originals of any financial statements prepared

Minutes of meetings and resolutions of both members and directors to be kept at office of registered agent or other such place as directors may determine

Residency RequirementsResident directors/secretary not required. Whilst there is no requirement to engage the services of a local corporate service provider that holds an appropriate licence issued by the FSC, any company that has not engaged such services or is not otherwise exempt, is required to appoint a ‘nominated officer’, being an individual who is resident in the Isle of Man. There is a statutory obligation on the members of a company to provide the nominated officer with details of the beneficial owners of the shares if it is not them Local registered agent required, registered agent must hold appropriate licence issued by the Isle of Man’s Financial Supervision Authority

Alteration of Capital of Companies Company may, by ordinary resolution, increase, consolidate and divide, convert or subdivide share capital or cancel unissued shares

Notice of amendment to share capital must be filed with Companies Registry within one month of passing of resolution

No concept of authorised capital and no provisions for increase thereof

Directors may, by resolution, alter share capital in any way and, in particular, may consolidate and divide, redenominate or subdivide all or any such shares

Reduction of Share CapitalSpecial resolution to reduce share capital requires Court sanction

The special resolution for the reduction of share capital is effective only upon the registration of the Court order with Companies Registry

Resolution of the Directors to reduce its share capital in any way, provided that the Company will, immediately after the reduction, satisfy the statutory Solvency Test

Issue/Transfer of Shares No governmental consent is required for the issuance, transfer, conversion or redemption of shares

Within one month of allotment of company shares, return of allotments to be filed with Companies Registry

Transfer effected by registration of transfer on production of proper instrument of transfer to the company

No governmental consent is required for the issuance, transfer, conversion or redemption of shares

Transfer effected by registration of transfer on production of proper instrument

Accounting RequirementsEvery company required to keep records of accounts sufficient to show and explain company’s transactions

Yearly requirement to lay accounts before company in general meeting subject to, in the case of private companies, members electing, by way of unanimous resolution, to dispense with this requirement

Accounting records kept at registered office or at other such place as directors think fit. (If outside the Isle of Man, accounts and returns relating thereto are required to be kept at a place in the Isle of Man)

All companies required to have accounts audited unless private company which satisfies audit exemption requirements

Every company required to keep reliable records of accounts

Accounting records to be kept at office of registered agent or such other place as directors think fit (if elsewhere, copies of the records are required to be kept at the office of registered agent)

Originals of any financial statements prepared must be kept at office of registered agent

Any director or member has right to demand that financial statements be prepared

No audit requirement unless a company’s securities are listed or admitted to trade on a securities market or exchange

Amendment of Memorandum of Association Amendment of memorandum or articles of association requires shareholder approval by special resolution

Where memorandum or articles of association amended, notice of amendment to be filed with Companies Registry within one month of resolution

Amendment of memorandum or articles of association requires shareholder approval by resolution

Subject to the memorandum, certain amendments to memorandum or articles of association may be effected by resolution of the Board

Where memorandum or articles of association amended, notice of amended and restated memorandum or articles incorporating amendments to be filed with Companies Registry within one month of resolution

Quasi PartnershipSection 60(4) provides that at least one of the members of an Unlimited 2006 Company shall be an unlimited member. This is a hybrid provision allowing for a quasi-partnership with a general partner and a limited partner
Annual Government Fees

£380 annual return fee £380 annual return fee

Disclaimer

The information and/or opinions contained in this article is necessarily brief and general in nature and does not constitute legal or taxation advice. Appropriate legal or other professional advice should be sought for any specific matter.  Any reliance on such information and/or opinions is therefore solely at the user’s own risk and Odin Fiduciaries Limited (and its associates and subsidiaries) is not responsible for and does not accept any responsibility or liability in connection with any action taken or reliance placed upon such content.

To find out more contact Nigel Rotheroe

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Nigel Rotheroe - business professional, expertise in trust services and corporate services, Isle of Man fiduciaries expert.