FAQ - Isle of Man Companies Act 2006

2006 Act Companies

Simple answers to some common technical questions…

How many directors does my 2006 Act company require under Manx law ?

Unlike their 1931 Act cousins, 2006 Act companies require a single director.

2006 Act Company requires only a single director, this can be a person or a company – if it’s a company it needs to be a subsidiary of a licensed Corporate Service Provider – or another entity permitted by the Regulator.

Section 91 (7) of the 2006 Act says…

(7) No body corporate shall be, or agree to be, the director of a company unless it, or another body corporate of which it is a subsidiary-

(a) holds a licence granted under the Financial Services Act 2008 which does not exclude acting as such; or

(b) is permitted to do so by regulations

How do I change the Registered Agent and the Registered Office of my 2006 Act Company ?

s75 permits the directors or the members to change in the Registered Office address and the Registered Agent by way of shareholders or board resolutions. 

Resignation of Registered Agent.

Under s76, the registered agent must provide 8 weeks notice of their intention to resign (i) to the Company, at its registered office address and (ii) to a director of the Company at their last known address.

Where are the Capacity & Powers of a 2006 Act Company defined ?

s20 of the Act provides that the Company has unlimited capacity to carry on or undertake any business or activity, to do, or to be subject to, any act or to enter into any transaction.

My Company is owed by a Trust - shall I put the name of the trust in the share register and on the share certificate ?

No, don’t do that.  s63(3) states that no notice of any trust shall be entered on the register of members.

Where are the Capacity & Powers of a 2006 Act Company defined ?

s20 of the Act provides that the Company has unlimited capacity to carry on or undertake any business or activity, to do, or to be subject to, any act or to enter into any transaction..

Does my company need to prepare Financial Statements ?

While preparation of financial statements is not compulsory under the 2006 Act, S80A empowers any director or shareholder to demand their preparation within 6 months by depositing a notice at the registered office.

What are the rules regarding accounting records for a 2006 Act Company ?

s80 requires the Company to maintain reliable accounting records which (a) Correctly explain transactions (b) enable the Company’s financial position to be determined with reasonable accuracy at any time and (c) allow financial statements to be prepared.

When can my 2006 Act company pay a dividend ?

s50 of the Act permits a Company to make a distribution to its shareholders, provided that the company will, immediately after the distribution satisfy the solvency test (see below).

How can my 2006 Act company purchase its own shares ?

s52 s52 s53 s54 s55 & s56 permit a Company to purchase its own shares and sets out the detailed requirements for making an offer to repurchase shares from its shareholders. The process is straightforward but care should be taken to meet the procedural requirements. Also note the provisions of s58 which will require the solvency test to be met following any such transaction

Can I reduce the share capital of my 2006 Act company ?

s58 provides that a Company may reduce its share capital providing that it meets the solvency test following any such reduction

What is the solvency test for a 2006 Act Company ?

s49(a) of the Act sets out the solvency test as follows – a company satisfies the solvency test if — (i) the company is able to pay its debts as they become due in the normal course of the company’s business; and (ii) the value of the company’s assets exceeds the value of its liabilities

What are the rules regarding the correction of the share register for a 2006 Act Company ?

s64 of the 2006 Act permits the directors by resolution, to correct / amend the share register provided that the person thereby affected consents to the amendment.

I am a director of a Company which is going to enter into an agreement with another company that I have an interest in. Is that allowed ?

S104 (1)(2) & (3) of the 2006 Act requires that Interests are immediately and fully disclosed to all other directors. Failure to disclose an interest is an offence. s103 permits a director enjoy the benefit of any Interest provided it has been properly disclosed. However, directors are permitted to enjoy the benefit of any Interest provided it has been properly disclosed.

How can shareholders remove a Director ?

Notwithstanding anything in the Articles, s96 provides that a director can be removed from office by a resolution of the members at the meeting or by a resolution in writing passed by 75% of the members.

What documents does my Registered Agent need to keep at his office ?

s78 requires the following documents to be kept at the office of the Registered Agent. (a) Copies of the M&A signed by the subscribers (b) Register of members (or a copy) (c) Register of directors (or copy) (d) Register of Charges (or a copy) (e) Copies of registry filings (f) original accounting records (or copies under 80(4B)) (g) Original financial statements.

We have a small number of shareholders - do we have to hold formal meetings ?

According to s71, any members resolution can be passed as a resolution in writing or my email, fax etc (without the need for notice).

What are the rules for Members meetings ?

Members business is dealt with in Part IV of the Act. s65 provides that resolutions may be passed in a meeting or in writing. s67 provides that meetings may be called by the directors or any shareholder(s) holding 10% or more of the voting capital, shareholders may participate by telephone or other electronic means. s68 requires 14 days notice (or more) be provided of a meeting but shorter notice is permitted if 90% of shareholders consent.

What are the rules regarding share capital of a 2006 Act Company ?

s29 provides that a share may be issued with or without par value, in any currency and may be numbered of unnumbered.

How many members need to be present at a members meeting ?

s69 allows the quorum for a members meeting to be determined in the Articles but, where the Articles are silent then members representing 10% of more the voting rights must be present.

My Registered Agent wants to keep my accounting records for my 2006 Act Company. Is he entitled to ?

Accounting Records and Registered Agent

Where they are kept elsewhere, s80(4)(B)(a) requires the Company to inform the Registered Agent of the location of the accounting records (4D – updated within 14 days if changed) s80(4)(B)(b) requires (full) copies of accounting records to be delivered to the Registered Agent not less than annually. s80(4)(E)(a) requires the Company to allow the Registered Agent to access and copy the accounting records and s80(4)(E)(a) requires the Company to provide copies (or originals) to the Registered Agent within 14 days.

Does my 2006 Act Company have to keep minutes of directors and members meetings ?

Yes, s84 requires the Company to keep minute books and copies of resolutions in respect of directors and members business.

What are the rules about the location of minute books ?

 

s79 requires the company to keep the following documents and inform the Registered Agent of their whereabouts within 14 days. (a) Resolutions / Minutes of the Members. (b) Resolutions / Minutes of the Directors.

What are the rules about the location of minute books ?

 

s79 requires the company to keep the following documents and inform the Registered Agent of their whereabouts within 14 days. (a) Resolutions / Minutes of the Members. (b) Resolutions / Minutes of the Directors.

Can the directors and shareholders inspect the Company records ?

 s82(1) provides that directors may inspect and take copies of company documents and records. s82(2) requires the Company to make the M&A and the registers available to any member upon reasonable notice.

Are the shareholders entitled to see the accounting records ?

Generally no but…where a Company has failed to prepare financial statements following a demand under 80a(3) then according to 82(2B)(a) members are entitled to review the accounting records

(also permitted with directors consent (82(2B)(b)) and where provided in the Articles 82(2B)(c))