The Advantages of Incorporation in the Isle of Man

Every country and every jurisdiction has its distinctive forms of business. The Isle of Man is no exception. It is one of the most highly regarded offshore and international finance centres because of the exemplary record of cooperation it holds, because of the superior investor protection schemes it keeps in place and because the calibre of the international and offshore institutions allowed to operate from the Isle of Man is exceptionally high.

The Isle of Man’s zero rate of corporate tax came into force on 6 April 2006. The island’s progressive and commercially minded government has taken this bold initiative partly to satisfy the OECD’s harmful tax competition initiative. Of course, to fall into the zero tax category companies have to be correctly structured. To complement the Isle of Man’s zero tax policy and present an unbeatable corporate package to attract international business the new ‘Manx corporate vehicle’ has been proposed. Following these intentions, on 1 November 2006 the Isle of Man Companies Act 2006 came into force and has promoted significant and far reaching changes to company law. As of this date the island has become the most competitive jurisdiction in Europe for the formation and operation of international business companies.

The Isle of Man Companies Act 2006 is also known in the industry as the New Manx Vehicle or NMV. The new act has been designed to sit alongside the Island’s existing company law rather than replace it, but it allows to make it easier to set up and run a businesses in the Isle of Man. In particular, the significant simplifications mean:

• companies can be incorporated far more quickly;
• there is far greater flexibility of use by moving many obligations from statute into the articles of a company;
• corporate directors are allowed;
• both single member and protected cell companies are permitted;
• registered agents can take the place of company secretaries;
• no authorised or issued share capital requirements;
• no par value shares are permitted;
• no public filing of accounts;
• no audit requirements;
• no requirements for annual general meetings;
• reporting requirements and merger of consolidation procedures are simplified;
• reduced compulsory filings with the Companies Registry;
• companies can easily redomicile to or from the Island.

Each 2006 Act company is 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. Most companies already in place in the Isle of Man which were incorporated under the previously operational Isle of Man Company Legislation can now convert to become IBCs governed by the rules of the New Manx Vehicle. As predicted, 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.

It is no accident that in modern times business organisations established in the Isle of Man have become so widely used internationally. It is arguable that the Isle of Man has the most sophisticated law relating to forms of business organisation of any centre for offshore work, and is among the leading jurisdictions of the world in this respect. The part of the success of the Isle of Man is its professional services industry with all the major international firms. Furthermore, the Isle of Man has adopted all internationally agreed measures and plays an active part in combating money-laundering and other criminal activities. Its financial services industry is long established and well regulated. Finally, the jurisdiction has worked hard to support this industry initiative and to launch the new vehicle. For all that, it makes absolute sense that national structures will do all they can to hone island’s internationally positive reputation and to enhance the benefits of doing business, banking and investing in the Isle of Man.