B usinesses setting up in the Isle of Man enjoy a choice of two Companies Acts under which to set up their company.
The table below sets out the principal differences between the two Acts.
|Property||1931 Act||2006 Act|
|Incorporation documents||Complex – Form 1, Memorandum of Association, Articles of Association.||Simple – Memorandum of Association.|
|Capital||Old fashioned and inflexible: Authorised share capital, non distributable reserves, limitations on share repurchases, nil par value shares prohibited.||
Simple and flexible.
No concept of authorised share capital, reorganisations based on solvency test, nil par value shares permitted.
|Registry filings||Complex; Directors / Secretary, Charges are required to be filed. Returns of allotments are required, Annual returns are complex.||
Limited. Registered Agent retains all registers. Annual return is straightward.
Limited public disclosure.
|Annual General Meetings.||Requirements are complex. Requirement to hold AGMs can be exempted by special resolution.||Not required.|
|Registered Agent||Not required||Class 4 licence holder must be appointed Registered Agent.|
|Officers||2 Directors and Company Secretary required.||Single director permitted.|
|Financial Statements.||Financial Statements (UK GAAP / US GAAP or IFRS) are required to be prepared and circulated to Members||Financial statements not required unless Members demand it under s80a.|
|Accounting records.||Company can keep its own.||Copies of accounting records must be provided to or kept by the Registered Agent.|
The 2006 Act appears to trump the 1931 Act in many ways. It is generally more flexible, it has less onerous filing requirements, it requires only a single director and there is no obligation to hold AGMs.
Most International clients opt for this Act and it is generally favoured by the corporate service providers who act as the professional Registered Agent.
However, most truly local businesses opt for the 1931 Act company. This is because, despite the complexity it does not require a licence-holder to act as the Registered Agent and this makes it substantially less expensive than its 2006 Act counterpart.