Isle of Man: The London Stock Exchange’s Specialist Fund Market

Last Updated: 11 January 2008
Article by Tristan Head

The Specialist Fund Market (the "SFM"), which was recently launched by the London Stock Exchange (the "LSE"), is an exciting development for structures such as single strategy hedge funds, feeder funds and private equity vehicles seeking a flexible and liquid market. As both UK and non-UK domiciled investment entities are eligible to seek admission to the SFM, sponsors and managers have the option to locate their investment entities in tax neutral, well-regulated off-shore jurisdictions, such as the Isle of Man.

Isle of Man companies have built up an impressive track record for successfully raising funds via London's capital markets with a majority of such companies targeting institutional investors (rather than the general public).

Recent research has shown that 15 of the top 100 companies listed on AIM are incorporated in the Isle of Man, more than twice as many as Bermuda (5) and Canada (5) and that the combined market capitalisation of the top 100 AIM listed companies incorporated in the Isle of Man amounts to £6240.04 million1 (which is more than twice the equivalent figure for Canada (£2268.19 million) and the British Virgin Islands (£1926.04 million)).

Isle of Man companies are also regularly used to access the LSE's main market. For example, Kazakhstan Kagazy plc, a major industrial group responsible for Central Asia's largest paper and packaging producer and one of the leading commercial real estate development companies in Kazakhstan, was admitted to the LSE's Official List in July 2007 and effected an offer of shares in the form of global depository receipts.

The Benefits

The benefits of using an Isle of Man company to access the SFM include:

  • the Island's first-class reputation as a well regulated international financial centre (reinforced by Moody's and Standard & Poor's "AAA" accreditation);
  • the Island's favourable tax regime: a zero per cent tax rate for companies and no capital gains tax, inheritance tax, stamp duty or SDRT;
  • the ability to list an Isle of Man company without the need for prior regulatory approval (on the basis that the Isle of Man company is a closed-ended investment company);
  • the Island being within the same time zone as, and within an hour's flying time from, London;
  • the similarity of the Island's company law with English company law: as such, investment banks, institutional investors and their advisers are comfortable dealing with Isle of Man companies (in the instances where the Island's company law does differ from English company law, it is usually possible to tailor a company's articles of association to give the company a more "English" feel and, thus, meet the expectations of institutional and sophisticated investors);
  • shares in Isle of Man companies are capable of being held in dematerialised form through CREST without the need to put in place complex depositary arrangements;
  • an Isle of Man company can have shares denominated, and can prepare accounts, in any currency; and
  • professional advisers on the Island (lawyers, accountants and bankers) are knowledgeable about, and experienced in servicing the needs of, sophisticated investment entities such as hedge funds and private equity vehicles.
Type Of Companies

Sponsors and managers electing to locate their investment entities on the Isle of Man have the choice of using one of the following two corporate entities:

  1. a company incorporated under the Isle of Man Companies Acts 1931-2004 (a "Traditional Company") which is very similar to a company incorporated under the English Companies Act 1985 (as amended); or
  2. a company incorporated under the Isle of Man Companies Act 2006 (a "New Manx Vehicle" or "NMV") which is legally robust yet more flexible and easier to administer than a Traditional Company.

The investment entity could also be structured as an Isle of Man limited partnership.

Neither a Traditional Company nor an NMV seeking access to the SFM would be required to comply with any prescriptive Isle of Man prospectus requirements as any offer made by such a company would be restricted to institutional and sophisticated investors.

Due to its increased flexibility and ease of administration, it is likely that the NMV will soon become the Manx corporate vehicle of choice for listings (Kazakhstan Kagazy plc is an NMV). An NMV may, for example, declare and pay dividends and purchase, redeem or otherwise acquire its own shares subject only to meeting a statutory solvency test. Furthermore, an NMV is not subject to any financial assistance prohibitions, accounting requirements are less prescriptive than for Traditional Companies and there are relatively simple merger and consolidation procedures.

Our Experience

Cains has extensive experience in advising Isle of Man companies seeking access to capital markets. Over the past few years, the firm has acted on over 27 listing transactions including:

  • Close High Income Properties plc (London Stock Exchange – 2003, 2004 & 2005)
  • Nikanor plc (AIM - 2006)
  • Lamprell (AIM – 2006)
  • Kazakhstan Kagazy plc (London Stock Exchange – 2007)

Our experience enables us to provide a service that is both efficient and cost-effective.


1 Based on market closing prices 20 September 2007

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

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

In association with
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.