Simcocks has produced a comparison between the Isle of Man Companies Act 2006 and the BVI Business Companies Act 2004.

International Business Companies (IBCs) have a 30 year history in the BVI: the original International Business Companies Act (replaced by the BVI Business Companies Act 2004) was enacted in 1984.

The Isle of Man's response in 2006 was the Companies Act 2006: simple, non-technical and easy for corporate service providers to administer.

The 2006 Act is, in most respects, almost identical to the BVI Act. However, there are some notable differences we believe the comparison document highlights.

Introduction

In 1984, the British Virgin Islands (BVI) legislature passed the International Business Companies Act, 1984 (the IBC Act). This radical piece of legislation was remarkably successful as a user friendly, flexible corporate vehicle for multiple commercial purposes and it established the BVI as a dominant presence in the offshore corporate field. The IBC Act was copied (often largely word-for-word) all over the Caribbean and, in 2006, formed the basis for the Isle of Man Companies Act 2006.

Jurisdiction and legislation

  2006 Act Company BVI Act Company
Jurisdiction Isle of Man (IOM) British Virgin Islands (BVI)
Legislation Isle of Man Companies Act 2006 (2006 Act) See below. BVI Business Companies Act, 2004 (BVI Act) See below.
IOM: The Isle of Man Companies Act 2006 established a new companies regime for the IOM, intended to run in parallel with the Companies Acts 1931 – 2004.
BVI: International corporate vehicles were incorporated under the IBC until 2004 when it was repealed and replaced by the Business Companies Act, 2004.

Types of company

  2006 Act Company BVI Act Company
Limited, unlimited, etc. See below. Same.
IOM: A company may be incorporated or continued under the Act as a company limited by shares; a company limited by guarantee that is also authorised to issue shares; a company limited by guarantee that is not authorised to issue shares; an unlimited company that is authorised to issue shares; or an unlimited company that is not authorised to issue shares.
  2006 Act Company BVI Act Company
Restricted Purposes Companies No provision for Restricted Purposes Companies. See below.
BVI: The BVI Act allows incorporation of "restricted purposes companies". The Memorandum must state that the company is a restricted purposes company and the purposes of the company. A restricted purposes company can only be registered on incorporation. It may amend its Memorandum to modify its purposes but not to remove the statement that it is a restricted purposes company.

Incorporation, status, capacity and powers of companies

  2006 Act Company BVI Act Company
Application to incorporate a company Application to Registrar by the first Registered Agent attaching the Memorandum and (generally) the Articles. Same.
Memorandum Must state such details as the type of company (eg, limited by shares), registered agent and registered office, agreement to take shares, etc. Same.
Memorandum (cont.) May contain a statement specifying the purposes for which the company is established or the business, activities or transactions which the company may undertake or the restrictions (if any) thereon. Same; but may incorporate as a restricted purposes company above.
Articles Prescribed Model Articles may be used or excluded. No equivalent.
Effect of Memorandum and Articles The Memorandum and Articles are binding on the company and the shareholders; but only to the extent they comply with the Act. Same.
Amendment of Memorandum or Articles Generally, the Memorandum or Articles may be amended by resolution. The Memorandum may provide that the Memorandum or Articles may be amended by a specified majority of shareholders; or only if certain conditions are met; or (with restrictions) by the directors. Same.
Notice of Amendment A notice of amendment plus restated Memorandum or Articles must be filed with the Registrar within one month. Same; but no time limit - effective only when filed.

Company names

  2006 Act Company BVI Act Company

Required part of company name

    
Limited company Must end with "Limited"; "Corporation"; "Incorporated"; "Public Limited Company"; or abbreviation. Same; also "Societe Anonyme", "Sociedad Anonima"or abbreviation.
Unlimited company May end with "Unlimited" or abbreviation (optional). Must end with "Unlimited" or abbreviation.
Restricted purposes company n/a Must end with "SPV (Limited)" or abbreviation.
Segregated portfolio company that is a restricted purposes company n/a Must include "SPV" before "Segregated Portfolio Company" or abbreviation.
Company number as name No express provision. Expressly allowed in the form – BVI Company Number xxxxxxx [Limited].
Foreign character name A company may have an additional foreign character name approved by the Registrar. Same.
Restrictions on company names Rules on prohibited, identical, similar, reserved and offensive names and those containing restricted words. Same.
Change of name A company may resolve (pursuant to its Articles) to change its name and apply to the Registrar accordingly. Same.
Registrar may direct change of name If he considers on reasonable grounds that the name of a company does not comply with the provisions of the Act. Same.
Re-use of names. Registrar may re-use company names of companies struck off or dissolved or which have changed their names. Same.
Reservation of name by Registered Agent Allowed for a period of 12 weeks. Same; 90 days.
Details to appear on legal documents Full name and foreign character name (if any) must appear. Same.
Details to appear on written communications Full name and foreign character name (if any), company number, place of incorporation and registered office must appear. Full name and foreign character name (if any).

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.