Isle of Man Companies Act Undergoes Revision

by Jason Gorringe, Tax-News.com, London

05 August 2009

In light of forthcoming amendments to the Isle of Man’s Companies Act, the Financial Supervision Commission has issued a statement informing companies, and their stakeholders, that upon entry into force on September 1, 2009, the Companies (Amendment) Act 2009, will have an immediate impact on all Isle of Man businesses.

Changes that will occur as a result of the Companies (Amendment) Act 2009 from September 1 include:

Company prospectuses

The information contained in a prospectus (for a company incorporated under the Companies Act 1931) must include all matters that intended recipients could reasonably expect to find, instead of the previous specific list of information required under Schedule 4 to the Companies Act 1931 (which has now been repealed).

A signed copy of the prospectus must be delivered to the Companies Registry for registration prior to its issue.
Where the Companies Registry becomes aware of false or misleading claims in the prospectus, it has the power to make a direction to amend the prospectus. This direction will be placed on the company’s public file.

Registration of charges

Companies will be permitted to file a certified copy of the charge instrument or the original document. This will remove conflicts that existed between the Companies Registry and Land Registry requirements.

Changes to accounting provisions

The requirements under the Companies Act 1931 are clarified to require (for newly-incorporated companies) that the first financial statements must be prepared for a period of no longer than 18 months from the date of incorporation. The financial statements of a company must be laid at least once in every calendar year before the members in general meeting within 6 months of the financial year-end for a public company, and 9 months for a private company. This represents a reduction in the current time limit.

Accounting provisions under the Companies Act 2006 permit accounting records to be held at a place other than the Registered Agent’s office, provided the Registered Agent is kept informed of where the records are held and further, that copies are remitted to the Registered Agent on demand but at least annually.

The latest act, in addition to the aforesaid, empowers any member or director of the company to require financial statements to be prepared. Where the company fails to accede to the request, a member will have the right to have sight of the underlying accounting records.

Also, the definition of who may audit an Isle of Man company has been expanded.

Limited Liability Companies Act 1996

Changes to the Limited Liability Companies Act 1996 remove the provision that provides for the automatic winding up of the company within 60 days for failing to file a notice in the prescribed form on the death, dissolution, resignation etc of a member.

Treasury shares

The Act has added a new section 25A of the Companies Act 1992 and section 58A of the Companies Act 2006. These sections give the Commission powers to make regulations that could allow a company to create treasury shares. While the Commission has underlined that it currently has no intention to introduce treasury share regulations, it has asked that interested parties present their views on the matter. Should there be sufficient interest shown in this area, informed the Commission, consideration will be given to consulting further on whether to make treasury share regulations.

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