FORMS OF ISLE OF MAN COMPANIES

Limited Companies
There are five types of company available:

Limited by Shares
A company limited by shares is probably the most popular type of trading company formed with the liability of its members limited to the amount unpaid on the shares they hold. The standard authorised capital on formation is usually £2,000 divided into 2,000 shares of £1 each as this attracts the minimum amount of Capital Duty payable on formation. There is currently no limit on the number of classes of shares a company may hold and the minimum or maximum share capital. If required an Isle of Man company can convert its share capital to a different currency such as the dollar.

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. This is commonly £1 per member. 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 payments to the collateral of the company.

Limited by Guarantee and having a Share Capital: “Hybrid Companies”
This type of company has two classes of membership, 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 wound up (generally a minimum of US $100). Hybrid Companies are frequently established in such a way that the guarantee member has the sole right to participate in distributions, but has no voting rights, with the shareholder having the sole voting rights but no ability to participate in any distributions. Thus, all control rests with the shareholders but all benefits flow to the guarantee members, who may be able to avoid reporting requirements, as they hold no assets nor have any control.


  The infinite flexibility provided by this form of company structure has led to its increasing use as a quasi trust or “Manx Foundation” particularly by those resident in civil law countries that do not recognise trusts. The shares can be issued to professional managers, who act as quasi trustees and as such are not entitled to receive financial benefit from holding the shares. The varying rights and obligations that attach to each class of membership are laid down in the articles of the company and can be tailored to the precise needs of the client.

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 similar to civil law partnerships and their use is generally limited to complex situations where extreme flexibility of capital structuring is required or where corporate personality only is needed.

Limited Liability Companies
A Limited Liability Company does not have a share capital. Instead, the members declare in the articles of organisation their capital contributions and their voting rights and profit share are deemed to be proportionate to their capital contributions unless the operating agreement provides to the contrary.

The significant difference between a Limited Liability Company and a Limited Company is that a Limited Liability Company does not have directors but is managed by the members. The members though may appoint one or more managers. For taxation purposes a Limited Liability Company is treated as a partnership rather than a corporation.
"THE SECRET IN BUSINESS IS TO KNOW SOMETHING
THAT NOBODY ELSE KNOWS"
- Aristotle Onassis