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Isle Of Man: New Regulations Improve Companies Act

Mandy Robinson, Tax-news.com, London

23 January 2001

New provisions to the 1931 Companies Act, approved by Tynwald at the December 2000 sitting, came into operation on 1 January 2001. The provisions are in the form of new regulations that have been added to the 'exemptions from prospectus' requirements.

The provisions are now known, under the Companies Act 1931, as The Companies (Private Placements) (Prospectus Exemptions) Regulations 2000. The regulations exempt certain private placements of shares or debentures from the provisions of the 1931 Act which govern the content of prospectuses.

The exemption in the Regulations applies inter alia under three circumstances:

  • where the shares or debentures are offered to a restricted circle of fifty or less persons who are acquiring the securities for investment purposes and not for imminent resale;

  • to persons who are sufficiently knowledgeable to understand the risks involved in accepting the offer;

  • or to persons whose ordinary activities as principal or agent involve them in the acquisition, disposal, holding or management of shares or debentures

In a press released issued by the Financial Supervision Commission, Chief Executive, Mr John R Aspden, said: 'The industry has welcomed the opportunities the Regulations present, as the administrative and cost burden of meeting the prospectus requirements under the Companies Act 1931 no longer apply to certain venture capital offers. In particular, the Regulations facilitate the use of an Isle of Man company for business ventures requiring staged investment of capital by experienced investors, a common characteristic of the capital structuring of e-businesses. The Regulations also make an Isle of Man company an attractive vehicle for use in private investment schemes.

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