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Manx company law is largely derived from the compatible company law
provisions of the United Kingdom. The main body of Manx company law is to be
found in the Isle of Man Companies Acts 1931 to 1993. Manx companies are
eligible for a variety of treatments for the purpose of Manx income tax.
There are four types of company available.
- Limited by Shares:
A Company limited by shares is probably the most popular type of trading
company formed today with the liability of its members limited to the amount
unpaid on shares they hold. The standard authorised capital on formation is
usually £2,000 divided into 2,000 shares of £1 each. This attracts the
minimum amount of Capital Duty payable on formation.
- Limited by Guarantee:
Companies limited by guarantee have no predetermined capital and thus no
shares. Members' liability is, limited to the amount they have agreed to
contribute to the company's assets if it is wound up. Essentially used as a
mutual company for charitable, quasi-charitable, non profit or social
purposes, this form of company can be utilised to great effect for tax
planning purposes by means of pledged payment to the collateral of the
company
- Limited by Guarantee and having a Share Capital:
This type of company is commonly known as a "Hybrid company",
combining the features of both companies limited by shares and companies
limited by guarantee. Members consist of those whose liability is limited to
the amount unpaid on shares, which they hold, and those whose liability is
limited to the amount they have agreed to contribute to the company's assets
if it is wound up. The flexibility provided by this form of company
structure has led to its increasing use as a ‘Foundation’, a
popular alternative to the discretionary trust and for proprietary purposes.
- Having a Share Capital with Unlimited Liability:
This form of company has a share capital in exactly the same way as a
company limited by shares, but there is no limit to the liability of
members. Such companies are not dissimilar to civil law partnerships and
their use is now usually limited to complex situations where extreme
flexibility of capital structuring is required or where corporate
personality only is needed.
Public and Private Companies
All companies are designated as either public companies or private
companies. A public limited company (PLC) may offer its shares for sale to
the general public and must on an annual basis, deliver audited accounts to the
Companies Registry. A private company on the other hand, may not issue shares to
the public and is not required to deliver accounts to the Companies Registry.
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