Types of Isle of Man Companies
The form and structure of Isle of Man companies are very flexible as the Isle of Man, in order to retain its reputation as a pre-eminent jurisdiction, has endeavoured to provide innovative financial and corporate legislation, the most recent evolution being the introduction of the 2006 Companies Act to complement the existing Company Law.
1931 Act Companies
1931 Act companies are governed by the Companies Acts 1931 - 2004 and are subject to many rigid operational and filing requirements. The basic corporate framework is recognisable to those familiar with English law (or Irish legislation, which has the same roots) on which the original 1931 Act was based. A 1931 Act company can be established as a public or private company.
2006 Act Companies
The "2006 Company" which is also known as the "New Manx Vehicle" is based on the International Business Company (IBC) model that is in use in other jurisdictions such as the BVI.
The streamlined legislation has been designed for a range of corporate transactions, in particular open and closed-ended investment funds which benefit from the removal of restrictions on companies buying back their own shares. 2006 Companies which do not distinguish between private and public companies are also useful for public offerings together with asset and project finance.
Under both the 1931 and 2006 Companies Acts there are a variety of companies available:
Company Limited by Shares
This is probably the most commonly used company where the liability of its members is limited to the amount unpaid on shares they hold.
Company Limited by Guarantee
In a guarantee company there is no predetermined capital and thus no shares; the members' liability is limited to the amount they have agreed to contribute if the company is wound up.
A hybrid company combines the features of a guarantee company and a company limited by shares and membership may be by way of shares or guarantee. Hybrid companies can be used as an alternative to a trust and can be established with many of the characteristics of a foundation.
Protected Cell Company
The protected cell company is a form of company limited by shares that is a single legal entity in form but has the ability to segregate and protect its assets in separate cells.
An unlimited company has a share capital but there is no limit to the liability of the members.
Limited Liability Company (LLC)
A limited liability company is a company established with a corporate structure and enjoying limited liability but taxed as if it was a partnership, i.e. each member of the LLC is liable for tax on their share of the profits rather than the company as an entity being taxable itself.