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Isle of Man introduces modern, flexible Companies' Act
The long awaited new company law has now been enacted and came into force in the Isle of Man on 1st November 2006. Together with the zero rate tax system already in place the Companies' Act 2006 enables the Island to meet its international obligations and comply with currently accepted international standards.
Some of the key features of the new Act are set out below.
- Fewer documents need be registered at the Companies' Registry
- A company incorporated under the Act has unrestricted capacity but restricted objects are permitted
- No requirement for an authorised capital
- No capital maintenance requirements, subject to solvency
- No par value shares permitted
- Bearer shares prohibited
- The company may acquire or redeem its own shares
- No financial assistance prohibitions
- There must be a Registered Agent on the Isle of Man
- Only one director required
- Corporate directors permitted within certain limits
- Accounting records to be kept but no requirement to produce Accounts
- No audit requirement
- Companies incorporated under the old law may re-register under the new Act at nominal cost
- Protected cell companies permissible
- Companies incorporated elsewhere may be re-domiciled into the Isle of Man
- Isle of Man companies may be re-domiciled to other jurisdictions
- No differentiation between private and public companies
- Relatively simple merger and consolidation procedures
One effect of the abolition of the concept of authorised capital is that the stamp duty on authorised capital is no longer applicable, leading to a considerable saving on formation costs where a large capital is required.
The old law, the Companies' Acts 1931-2004, remains in force and it will be possible to register a company under either. It is not expected that the 1931 Act will normally be used for international business in future. One matter to bear in mind, where a company was originally incorporated as an exempt company, and is not to be re registered, is however, that the qualification for audit exemption has changed and in certain circumstances a company incorporated under the 1931 Act may now require an audit.
November 2006
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