The Isle of Man Hybrid Company has a share capital and is limited by a guarantee. It’s a fusion between a Limited Liability Company (LLC) with a Company Limited by Guarantee and a Company with Share Capital. Basically, members contribute capital to become shareholders and agree to contribute capital if the company becomes insolvent or enters a liquidation process.
The principal law governing Hybrid Companies is The Companies Act of 1931 (amended in 2004). Otherwise, the Isle of Man follows British Common Law.
Background
The Isle of Man is and island located in the British Isles. While being a territory of the British Crown, it is an internally self-governing dependency. For the past 1,000 years, their Parliament (called the Tynwald) creates its own laws and handles its own internal administration. The British government handles external issues like military defense and foreign representation,
Isle of Man Hybrid Company Benefits
An Isle of Man Hybrid Company enjoys the following benefits:
• Total Foreign Ownership: Foreigners can own all the company shares.
• Limited Liability: Same protections as a Limited Liability Company (LLC).
• No Taxation: No corporate taxes and no dividends tax; U.S. taxpayers and everyone taxed on global income must notify their tax authorities of all global income.
• Privacy: Ultimate beneficial owners’ names are never disclosed.
• Perpetual Life: No limits on how long the company can exist.
• Low Minimum Authorized Share Capital: The minimum authorized share capital is very low.
• One Shareholder: Only one shareholder is required to form a Hybrid Company.
• Two Managers: Two managers are required.
• Protector: A Protector may be appointed to protect the shareholders.
• English: The official language is English.
Company Name
The company must not be identical or similar to an existing Isle of Man company name. Prior approval of the company name can be received from the government prior to application as a registered company.
The usage of a name implying international trade or business must be supported with proof of such wide ranging activities. The use of the word “Holding” will only be allowed with proof the company holds at least 51% of the shares on another company. The usage of the word “Group” will only be permitted upon proof the company owns a group of companies. The use of a word implying it is a “Trust” can only be used with proof of being a licensed trust services company under the Financial Services Act of 2008 (FSA).
The company name may be in any language using Latin alphabetic letters. Foreign language names must be translated into English so the Register of Companies can determine its desirability.
The end of the company name must presume limited liability by using the word “Limited” or the abbreviation “Ltd”.
Registration
Submit a Memorandum and Articles of Association with Form l which nominates the first secretary and two directors along with previous company name approval with the Registered Office.
Confidentiality of Beneficial Owners
Beneficial owners’ identities can remain confidential if corporate nominee shareholders act on behalf of the true beneficial owners as long as they are not involved in criminal activities.
Hybrid
Companies Limited by Guarantee
These type of companies generally are established as clubs, charities, mutual associations, and non-profit organizations as members ownership is common but none of the members as individuals have any person interests or rights therein.
Companies with Share Capital
These companies are typical as shareholders contribute capital to own a percentage of the company based on threat contribution to the total capital.
Combining the Two
The combination of a Company Limited by Guarantee with a Company with Share Capital forms the Hybrid Company where the Isle of Man laws offer flexibility which neither of these companies have individually.
Hybrid Companies can have membership in two classes:
1. The first class is registered shareholders (members) who control the company. However, they will not have the rights to benefit from the profits distribution. They only have voting and administrative powers such as electing directors to manage the company. The law firm or company formation entity can provide nominee first class members.
2. The second class is the beneficial members whose identity remains anonymous in public records. These are the only members entitled to profit sharing. Only the directors are authorized to make the company’s distributions.
Additional classes can be created with different rights.
Advantages of a Hybrid Company
The main advantage for a Hybrid Company over a Trust is that no rule against perpetuities limits its lifespan. In addition, the Hybrid can engage in trading activities and commerce.
The major advantage a Hybrid Company has over a Private Limited Liability Company (LLC) is it can be formed where the economic interests are separate from control. This is appealing to citizen of countries with strict CFC rules.
The biggest advantage for a Hybrid Company over a Foundation are lower costs as the minimum authorized share capital is only 2 GBP while the Foundation requires at least $10,000 USD.
A Hybrid’s Articles of Association can provide for a Protector (like a Trust) who supervises the directors and has authority regarding electing members and disposing of assets.
There are additional tax savings a Hybrid Company offers for other jurisdictions, as well.
Shareholders
Only a minimum of one shareholder (member) is required. Foreigners can own 100% of the shares.
Managers
A minimum of two managers (directors) are required who can be residents of any country. Only natural persons can serve as managers.
Secretary
A company secretary is required who must be a natural person and can reside in any country.
Protector
The company may appoint a Protector to safeguard the interests of the beneficial members. His or her approval is required to make any changes in membership or to dispose of assets.
Registered Office
Every company must maintain a registered office in the Isle of Man.
Minimum Share Capital
The minimum authorized share capital is 2 GBP or its equivalent in other currencies. The minimum issued capital is one share of par value.
Taxes
A Hybrid Company pays no corporate tax and no withholding tax on dividend payments to its shareholders. Note: U.S. taxpayers and everyone taxed on global income must notify their tax authorities of all global income.
Annual General Meetings
Annual general meetings are required, but can be held anywhere in the world.
Accounting
Every company must maintain internationally acceptable accounting records which accurately reflects the financial status of the company which are kept at the registered office and are not available to the public.
There is no requirement to file audited financial statements with the government. Accounting records can only be kept out of the jurisdiction for six months. Failure to maintain accounting records at the registered office or to make them available for inspection is a crime with possible fines and imprisonment.
Public Records
Only the Memorandum and the Articles of Association are filed with the government. The names of the shareholders do not appear in any public records.
Time to Register
Registering a Hybrid Company may take from one to three business days.
Shelf Companies
Shelf Hybrid Companies are not available for purchase.
Conclusion
An Isle of Man Hybrid Company enjoys the following benefits: Total foreign ownership, one shareholder, limited liability, no taxes, shareholders’ privacy, protector to protect the shareholders, company perpetual life, low share capital, and English is the official language.
