Isle of Man: Use Of Isle of Man Vehicles For AIM Listings

Last Updated: 5 June 2007
Article by Simon Harding

Introduction

AIM is becoming an increasingly popular option for companies looking to raise capital. A growing number of new floats have been Isle of Man companies and this suggests that international businesses are realising the advantages of using an Isle of Man vehicle to access the AIM Market.

Why Choose the Isle of Man?

There are a number of specific factors which have contributed to the success of the Isle of Man as a jurisdiction for AIM listings:

  • The Island has a high quality and stable political, legal, fiscal and regulatory environment and has received an AAA credit rating from both Standard and Poor’s and Moody’s credit rating agencies.
  • Closed-ended investment companies are not classed as funds under Isle of Man law and are not therefore subject to the Isle of Man funds regulatory regime, which results in a time and costs saving. No regulatory approval is required to form a public company.
  • The quality of the Island’s professional infrastructure. There are many lawyers, accountants, administrators and banks on the Island who have the expertise and experience to deal with AIM listings.
  • 2006 has also seen the implementation of the Isle of Man tax strategy which has been the subject of much planning, fine tuning and consultation over the past 5 years. As a result, the general rate of corporate income tax in the Isle of Man is now 0%, so Isle of Man companies are tax neutral yet do not have to comply with any tax exempt regime.
  • The provision of company administration services is a regulated activity in the Isle of Man. All persons providing such services are required to be licensed by the Isle of Man Financial Supervision Commission (the "FSC"). As a result the Island has developed a professional and mature corporate service provider sector.
  • The Isle of Man has a common law legal system and the Island’s laws in most areas are very similar to those of England. In particular, credit and security concepts are the same and London based banks and their lawyers are therefore comfortable dealing with the Isle of Man.
  • The Isle of Man is only an hour’s flight time from London and within the same time zone, making board meetings easy to arrange and attend.

New Companies Legislation

Background

The benefits of using an Isle of Man vehicle for AIM listings has been further enhanced by the introduction of the new Isle of Man Companies Act 2006 which came into force on the 1st November. Traditionally, Isle of Man company legislation has been based on English company law statutes and the existing Isle of Man Companies Act 1931 closely follows the English Companies Act 1929, subject to certain amendments unique to the Isle of Man.

The new Isle of Man Companies Act 2006 (the "Act") has introduced a new simplified corporate vehicle into Isle of Man law. The new corporate vehicle follows the international business company model which is available in a number of offshore jurisdictions.

The Act is largely a stand alone piece of legislation and companies incorporated under the Act co-exist with present and future companies incorporated under the existing Companies Acts 1931-2004 ("1931 Act Companies").

Principle Features of the New Companies Legislation—An Overview

Companies incorporated under the new Act have far more flexibility (in terms of capital restructuring and returning capital to its members) and are easier to administer than 1931 Act Companies. Some key features of the new Act are set out below:

  • The Act does not distinguish between public and private companies and (subject to any restrictions in a company’s memorandum or articles of association) any type of company under the Act can offer its securities to the public.

    If a company does issue an offering document the criteria with which the offering document must comply are far less prescriptive than the traditional prospectus requirements which apply to 1931 Act Companies. The Act simply requires the directors to ensure that any offering document issued in relation to a company contains all material information that the intended recipients would reasonably expect to enable them make an informed investment decision and of which the directors were aware or would have been aware had they made reasonable enquiries. An offering document may be filed at the Isle of Man companies registry if the company chooses to do so.

  • The Act sweeps away the traditional concept of capital maintenance. A company incorporated under the new Act does not need to classify its assets as income or capital. Instead the Act allows a company to distribute its assets to its members (whether by way of dividend, buy back or redemption of shares or otherwise), provided that the directors of the company are satisfied that the company will, immediately after the distribution, satisfy the solvency test. A company will satisfy the solvency test if it is able to pay its debts as they become due in the normal course of its business and the value of its assets exceeds the value of its liabilities.
  • Similarly a company can reduce its share capital in any way, without the need for the sanction of the Court, provided that the directors are satisfied, on reasonable grounds, that the company will immediately after such reduction, satisfy the solvency test.
  • There are reduced compulsory filings under the new Act. In particular, there is no requirement for a company to file details of its members with the Registrar of Companies or to notify the Registrar of any changes in its directors (although details of a company’s directors will need to be included on its annual return).
  • The Act contains very few prescriptive rules relating to members meetings. Companies are not required to hold annual general meetings and the Act allows members meetings to be held at such time and in such places, within or outside the Isle of Man, as the convener of the meeting considers appropriate. Listed companies will of course provide for annual members’ meetings in their articles of association.
  • The Act also introduces an amount of flexibility in relation to the constitution and conduct of board meetings, however, most of these provisions will not be of relevance to listed companies.
  • The Act provides an extensive range of member protection provisions. Under the new legislation, members have the right to apply to Court for a restraining compliance order, the right to bring derivative actions, remedies for oppressive or unfairly prejudicial conduct, the right to bring personal actions and the right to apply to Court for an order that an investigation be made of the company and any of its associated companies.

Every company incorporated under the new Act has to have a registered agent in the Isle of Man. Only corporate service providers who hold the appropriate licence issued by the FSC can act as registered agents. This requirement ensures that there is a licensed professional on the Isle of Man overseeing the administration of the company.

The Result

The introduction of the zero rate of corporate income tax in the Isle of Man and the implementation of new company legislation, when added to the existing benefits which the Isle of Man has to offer in terms of its professional expertise, means that the use of an Isle of Man vehicle to access the AIM market will continue to be an extremely attractive proposition for businesses wishing to benefit from the advantages of floating on AIM

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions