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Newsletter | Articles   Companies, etc. (Amendment) Act 2003The Isle of Man introduced the long awaited Companies, etc. (Amendment) Act 2003 last December. Here we set out to cover the most significant of the new sections and amendments to existing provisions of the Companies Acts 1931 to 1993 that will come into operation over the course of the next few months. In addition, although not strictly part of the new Act, we look at details of changes due to be introduced to the Annual Return form which has been amended to include a new declaration relating to company accounts. The main headings of the areas covered are set out below and followed by further details and our brief comments on recommended action and opinion or policy on each subject matter where appropriate:
Transfer of Domicile This was the first of the provisions to come into effect on 19th December 2003. This extended the existing Companies (Transfer of Domicile) Act 1998 in respect of the re-domiciliation of companies into and out of the Isle of Man to include all companies rather than just listed companies as was previously the case. If you would like any further information regarding the procedure and costs for transferring a company, please contact us. Bearer Shares From 1st April 2004 any provision in a company’s Memorandum or Articles of Association to issue share warrants to bearer will be void. With regard to bearer share warrants already in issue at that time, these shall remain valid but no rights attached to share warrants may be exercised by the holders until such time as the share warrants are converted into registered shares. This includes, for example, voting at any meeting of the members or receiving dividends. As all Isle of Man companies are required by law to hold an Annual General Meeting within fifteen months of the previous meeting, it is expected that all share warrants will have been converted to registered shares within this period from the effective date. The conversion of share warrants to registered shares is a relatively straightforward procedure and we can attend to the preparation of all necessary documentation on your behalf. Nominee shareholders can be provided should you or your client wish to maintain privacy. The nominee will issue a Declaration of Trust to document the relationship with the beneficial owner in respect of the shares. In order to keep a company’s constitutional documents in line with current statutory provisions, we would recommend that ALL companies amend their Memorandum and/or Articles of Association to remove all provisions relating to the issue of share warrants whether or not they have ever availed themselves of them. Annual Return Form and Accounts Declaration The Annual Return form (annual summary of share capital, members and officers) has been amended to include a declaration that the company has, during the 12 months preceding the date of the Return, complied with its obligations under Part 1 of the Companies Act 1982. The 1982 Act deals with the requirements and content of the profit and loss account, balance sheet, directors’ report and the requirement to lay the accounts before the members at General Meeting. The statement is fairly onerous and wide-ranging and this means that it is likely to prove difficult for some companies to make this declaration without some form of qualification in respect of the reasons why it has not been able to comply with its obligations. There is the ability to file the Annual Return with a qualified declaration but this is not an option on an ongoing basis for companies that wish to remain on the Isle of Man Register or for licensed Corporate Service Providers administering them. Where we provide directors to a company, we accept that it may be necessary for a qualified declaration to be made in respect of returns filed during the course of 2004 whilst companies bring themselves into good standing in respect of their accounting and reporting obligations but thereafter, we will not be in a position to sign Annual Returns for companies that are still not complying with the requirements of the Act. Where we only provide company secretary, we will not be in a position to sign Annual Returns at all unless we are provided with copies of documentation from the directors to support the declaration that we would be making (i.e. copies of relevant financial statements together with minutes of relevant meetings of directors and members in respect of the approval and presentation of the accounts respectively). This is now a serious and urgent matter for companies where accounts remain outstanding and it is essential that steps be taken immediately to ensure that they are made fully compliant with the provisions at the earliest opportunity. The new Annual Return form comes into effect on 1st April 2004. Dissolution Procedure In order to encourage the proper dissolution of companies, the formal dissolution procedure will be simplified from 1st April 2004 so that the requirements to publish notices and obtain clearance from the Income Tax Division and Customs & Excise will become the responsibilities of the FSC. In addition, the requirement for a company to be in good standing in terms of its statutory filings will be relaxed providing an appropriate declaration can be made to confirm the present organisational structure of the company. In certain cases it may also be possible to apply to the Treasury for certain past fees to be waived by the tax office (e.g. Non-Resident Company Duty) that would otherwise have had to be paid prior to dissolution. This is a very positive step and will make proper closure a much less onerous and expensive process for companies that have come to the end of their useful lives. Changes to particulars required for Register of Directors The particulars to be included in the Register of Directors are to be changed to include the date of birth of the directors. The details of nationality and occupation that are currently required are to be dispensed with. Although no formal notification of the appointed day for this change has been issued it is expected to be effective from 1st July 2004. Please note that at this time, as a consequence, minor alterations will have to be made to the Annual Return form and to the Form 9N (notice of change of directors or secretary or their particulars) to accommodate the changes. Requirements for company letterheads and other “official documents” The main amendment in this respect is the inclusion of electronic communications in the documents to which the requirements apply. The requirement to state a director’s nationality if not British has been dispensed with. These changes are effective from 1st March 2003. In summary, a company must state the following particulars in all official documents, including those sent electronically, on or in which the company’s name appears:
For companies incorporated outside the Isle of Man but that have a place of business on the Island and thus have registered on the “F” Register, a new section has been added which requires the filing of an Annual Declaration on the company’s anniversary of registration in the Isle of Man. This requirement is not expected to be effective until later this year. For more information on any aspect of the changes, please contact Karen Jones. |