What is a company re-domiciliation?
Re-domiciliation is the process by which a company moves its domicile from one country to another by changing the country under whose laws it is registered.
Companies incorporated in jurisdictions outside the Isle of Man may be able to enjoy the many benefits that the Isle of Man has to offer through the process of re-domiciliation.
By the process of re-domiciliation, a company incorporated outside the Isle of Man (a "foreign company") can apply to the Isle of Man's Registrar of Companies ("Registrar") to be continued as an Isle of Man company (a "continued company").
The continuance of a foreign company in the Isle of Man does not create a new legal entity or prejudice the continuity of the company, nor does it affect the assets or properties originally held. Furthermore, the continued company will not be released from any contractual obligations, claims and/or actions (criminal or otherwise).
Any foreign company can apply to be continued into the Isle of Man:
- except those carrying on insurance or other prescribed business (where you must elect to transfer under the 1931 Act); or
- under the 2006 Act, unless:
the laws of the jurisdiction in which it is currently incorporated do not permit it to be continued in the Isle of Man. Reciprocal legislation must be in place allowing the foreign company to be discontinued in its jurisdiction of incorporation and continued in the Isle of Man;
A company cannot be redomiciled where:
- it is in liquidation or subject to insolvency or analogous proceedings in any jurisdiction;
- a receiver or manager has been appointed in relation to any of its assets;
- it has entered into an arrangement with its creditors that has not been concluded;
- it fails to satisfy the solvency test set out in section 49 of the 2006 Act. A company will satisfy the solvency test if it is able to pay its debts as they become due in the normal course of the company’s business and if the value of the company’s assets exceeds the value of its liabilities.
Before making a formal application, a foreign company’s officers should also consider:
- Where the proposed activity of the company is licensable in the Isle of Man, it is advised to contact the appropriate regulator in advance to ascertain the appropriate licence or consent that is required;
- reserving the proposed company name to ensure availability and that it is acceptable to the Isle of Man Registrar of Companies;
- whether the company’s existing articles of association should be tailored, or standard form model articles can be adopted;
- gathering the consent of any charge holder prior to the continuation application being made; and
- (in respect of 2006 Act companies only), appointing a registered agent.
It is important that the officers of the company comply with all the requirements of the company’s current jurisdiction and obtain proof that the company has obtained all necessary authorisations in that jurisdiction. This can often take the form of a legal opinion from a law firm qualified to practice in the jurisdiction addressed to the Isle of Man Companies Registry.
The re-domiciliation process
From an Isle of Man perspective, the process of re-domiciliation is quick, simple and inexpensive.
An application for consent to be continued in the Isle of Man (in the prescribed form) must be submitted to the Registrar accompanied by, amongst other things:
- a memorandum stating the proposed name of the company, the jurisdiction in which the company was initially incorporated, and the address of the first registered agent of the company in the Isle of Man;
- the articles of association that are to apply to the company upon continuance in the Isle of Man;
- a statutory declaration regarding certain solvency-related matters; and
- payment of the prescribed fee (currently £320).
The benefits of using the Isle of Man as a jurisdiction
By redomiciling to the Isle of Man, a company would be able to enjoy, amongst other things:
- the Isle of Man's first-class reputation as a well-regulated international finance centre (reinforced by Moody's and Standard & Poor's "AAA" rating);
- the Isle of Man's favourable tax regime: a zero percent income tax rate for companies and no capital gains tax, inheritance tax, stamp duty (including on share transfers) or withholdings on dividends;
- the similarity of the underlying principles of Isle of Man law to English law;
- the ability to obtain a stock exchange listing without the need for prior regulatory approval in the Isle of Man;
- Satisfy the legal requirements for companies operating in certain ‘Relevant Sectors’ to have real economic substance in the Isle of Man.
Please call our office for further information on how we can help facilitate a re-domiciliation of your foreign company.