Company Formation Survey 2008


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		1. Company law	The Companies Act 2006 (“2006 Act”) and protected cell company. Companies Act 1931–2004, which include the Protected Cell Companies Act 2004 (“1931 Act”) and Limited Liability Companies Act 1996 (“LLC Act”).
		2. Types of company:	1931 Act and 2006 Act companies: Public: limited by shares or limited by guarantee and having a share capital. Private: unlimited having a share capital, limited by shares or limited by guarantee and having shares, limited by guarantee. Limited Liability Companies formed under the LLC Act. Protected Cell Companies (“PCCs”) except for those formed under the 2006 Act, may only be used for proposes specified by Regulations (currently insurance and certain collective investment schemes). The use of 2006 Act PCCs is unrestricted.


		(a) type of company preferred for international transactions:	Private or public 1931 Act companies limited by shares, limited by guarantee, limited by guarantee and having a share capital; LLCs. It is anticipated that 2006 Act companies will increasingly be used due to their flexibility, particularly as the 2006 Act does not require compliance with the capital maintenance concept.
		(b) shareless companies:	LLCs; and companies limited by guarantee ( 1931 Act or 2006 Act).
		3. Capital requirements:	1931 Act companies – limited by shares: minimum paid up capital is one share, normally incorporated with an authorised share capital of GBP2,000; limited by guarantee: none; limited by guarantee and having shares: as with companies limited by shares. The capital can be expressed in any currency. 2006 Act companies – no authorised or issued share capital requirements; no par value shares are permitted.
		4. Costs to incorporate, excluding government fees:	Vary from GBP250 - 1000.
		5. Fees paid to authorities to incorporate:	Fees paid to authorities to incorporate from 6 April 2008: 1931 Act companies GBP190 for authorised capital of GBP2,000; in excess of GBP2,000 attracts a capital duty of 1.5%. Maximum capital duty capped at GBP5,000. 2006 Act companies – GBP190, no capital duty. LLC fee GBP135.
		6. Annual fees paid to authorities:	An annual fee of GBP320 is payable by all companies except charities, dormant and property management companies.
		7. Taxation rates applied to companies generally: (a) the taxation of companies in 2 (a)	With effect from 6 April 2006, the Isle of Man standard rate of income tax for companies was reduced to 0%, with a rate of 10% applying to income derived from banking business or from land and property within the Isle of Man. Companies with profits subject to income tax at 0% with Manx resident shareholders are encouraged to distribute those profits by way of dividends as soon as possible, and a Distributable Profits Charge (DPC) applies in cases where profits are not distributed. Companies that are wholly owned by non-residents will not be required to pay a DPC, regardless of how much profit is distributed. Special rules apply for companies with mixed resident ownership. The DPC will be replaced by the Attribution Regime for Individuals (ARI) with effect from 6 April 2008. A charging provision will be introduced that will, in certain circumstances, attribute the profit of a company to its Isle of Man resident owners. This attributed profit will be taxed as if it was the normal income of the owners.

		8. Method of incorporation:	1931 Act companies - Registration of Memorandum and Articles of Association at Companies Registry with the prescribed fee together with a form giving details of the first shareholders/guarantee members (as applicable), situation of the registered office, directors and secretary. 2006 Act companies - Registration of Memorandum and Articles of Association with the prescribed fee. The articles must include the name of the first registered agent, address of registered office and may include a statement specifying the purposes for which the company is established or the business, activities or transactions which the company is permitted to undertake or the restrictions (if any) on such purposes or business. LLC - A set of Articles of Organisation that comply with the Act, a statement of first registered agent and intended situation of registered office and the prescribed fee.
		9. Who may incorporate - specify what, if any, local representatives/ professionals required?	Only those licensed as corporate service providers (“CSPs”) by the Financial Supervision Commission are permitted to undertake, by way of business, a range of regulated activities, including incorporating companies. In respect of the incorporation of a 1931 Act company, the person presenting the statement of first directors and secretaries must be resident in the Isle of Man. An application for the incorporation of a 2006 Act company must be made by the person named in the Memorandum as the first registered agent of the company.
		(a) are ready made companies available?	Yes. Individuals can incorporate companies for their own use.
		10. Length of time to incorporate:	Provided the name has been previously approved, incorporation can be done the same day.
		11. Minimum members:	1931 Act companies – private companies limited by shares require one member. Public and unlimited companies require a minimum of two members and LLCs must have two members. 2006 Act companies of any type must have at least one member.
		12. Registered office:
		(a) Can the registered office be a bank/ lawyer/ accountant's office (brass plate)?	No, the registered office cannot be a brass plate.
		13. Directors and secretary:	Every 1931 Act company must have a minimum of two directors (corporate directors are not permitted) and a secretary, who if acting for a public company, must be professionally qualified or demonstrate experience. 2006 Act companies require one director and corporate directors are permitted. However, only licensed CSPs or their subsidiaries can act as corporate directors. There is no requirement for a 2006 Act company to have a secretary but it must have a registered agent.
		(a) Must a director/ secretary be resident?	• An exempt company is required to have one resident director and a resident secretary (but these categories of company will cease to exist from 6th April 2007 - see (6 ) above). There are no residence requirements for the officers of other types of company.
		(b) Are Corporate Directors allowed?	• Not for 1931 Act companies but are permitted for 2006 Act companies (but only CSP licenceholders may act as corporate directors).
		14. Appointee directors/ secretary possible?	No. There is no such thing as a nominee director in the Isle of Man and a director or secretary has full responsibility and remains liable for their own acts. Anyone instructing a director may be considered to be a shadow director with the same liability as a formally appointed director.
		15. Amount of fees payable to appointee directors/ secretary:	Average CSP fees charged for these services are - Directors: GBP250 - 1,000 (for directors of licensed entities) Secretary: GBP250 - 500 (for other companies).
		16. Meetings:	1931 Act companies are required to hold an annual general meeting but there is no similar requirement for 2006 Act companies.
		17. Annual return:	An annual return must be submitted annually on the anniversary of incorporation (or anniversary of last return).
		(a) Must financial statements of a company be audited?	1931 Act company – yes, but a private company may elect to be audit exempt if it meets two of the following conditions – (i) its turnover does not exceed GBP5.6 million at any tinetime during that year ,(ii) its balance sheet total does not exceed GBP2.8 million at any time during that year; (iii) it employs no more than 50 persons. A 1931 Act company all the members of which are directors, may also elect to be audit exempt if its sole purpose is holding shares, securities, other investments or land, and it is not the holder of a banking, investment business or insurance licence or is not authorised to conduct such activities. • 2006 Act company - no audit requirement.
		18. Is disclosure of profits required by filing balance sheets with annual returns?	This only applies to 1931 Act public companies which must file audited accounts with their annual return.
		19. Are there any exchange control or other financial restraints imposed upon a company?	No.
		20. Companies formed in the last year:	2,830 – 1931 Act; 1852 – 2006 Act..
		21. Number of companies on the company register altogether:	30,380 – 1931 Act; 2098 – 2006 Act.
		22. How, if any, is migration into and out of the jurisdiction achieved?	Insurance Amendment Act 1995 permits redomiciliation of captive insurance companies. Companies (Transfer of Domicile) Act 1998 allows any type of company to apply for redomicilation and Companies Act 2006 contains the relevant provisions for 2006 Act companies.
S I T E M A P BACK TO TOP		23. Is migration out of your country provided for?	Yes, 1931 Act and 2006 Act companies may apply to migrate out of the Isle of Man. The procedure for 2006 Act companies is simpler than for 1931 Act companies.
		24. Any amendments to company law over the last 12 months:	Companies (Audit Exemption) Regulations 2007.
		25. Anticipated amendments to company law over the next 12 months:	Some amendment to existing company law including auditor oversight in respect of auditors of companies listed on stock exchanges in EU Member States in line with EU 8th Directive on Statutory Audits