In banking and finance matters, a legal opinion is often sought from Isle of Man advocates to confirm the capacity and valid incorporation and existence of a legal entity (whether the legal entity is a company incorporated under the Companies Acts 1931-2004 or a company incorporated under the Companies Act 2006, a limited partnership or limited liability company), established under the laws of the Isle of Man and the ability of the legal entity to enter into transactions and documents. Legal opinions are also often requested in connection with property transactions (for example in connection with the sale and purchase of freehold and leasehold real estate).
Information usually requested
The Isle of Man advocate providing the legal opinion will often request some or all of the following information in connection with the transaction:
- a structure chart;
- a copy of the legal entity's constitutional documents, certificate of incorporation and any certificate of change of name, the last annual return (all of which may be obtained by undertaking a company search at the Isle of Man Companies Registry);
- draft board minutes relating to the transaction;
- if relevant, a copy of any draft shareholder resolutions;
- a certificate from the Registered Agent of the company (if the company is incorporated under the Isle of Man Companies Act 2006); and / or
- a certificate from a director of the company, depending on the subject matter of the opinion.
The Isle of Man advocate instructed to act would usually review any transaction documents being entered into by the Isle of Man legal entity from an Isle of Man law perspective. If Isle of Man law security is being granted by the Isle of Man legal entity, the Isle of Man advocate acting for the bank / lender would usually be involved in drafting this documentation and negotiating its terms with the legal advisors for the Isle of Man legal entity.
Director's & Registered Agent's certificates
Whilst public registry searches are available, limited information may be ascertainable from public records in certain cases (for example in respect of Isle of Man 2006 Act companies). Isle of Man advocates often therefore rely on a certificate from a director of the company which is the subject of the opinion to confirm various information which either cannot be obtained from public records or to supplement the information which is publicly available. A director's certificate will need to be signed by a director and dated the date of the opinion (or reconfirmed as at that date).
In bank financing transactions, it is often a condition precedent to drawdown of the facility that a director of the relevant company provides a certificate confirming, amongst other matters, the solvency of the company in question and appending certain copy documents in relation to the company.
The giving of the director's certificate should be authorised at the relevant board meeting.
Where the company is incorporated under the Isle of Man Companies Act 2006, a certificate from the registered agent of the company in question will be required on (or very close to) the date the opinion is required.
Assumptions and qualifications
Legal opinions will include a number of standard assumptions and qualifications. This is in part because only limited information may be available to the Isle of Man advocate providing the legal opinion, but also because legal opinions given may require further explanation.
The legal opinions given will be subject to a number of assumptions and qualifications, for example:
- assumptions will be made as to matters such as the genuiness and authenticity of signatures,
- assumptions as to compliance with applicable laws,
- assumptions that the transaction will be of commercial benefit to the relevant company,
- an assumption as to the good title of the Company to the assets being secured (in respect of which the Isle of Man advocate may have limited knowledge).
Qualifications will often deal with matters such as legal limitations on the enforceability of transaction documents.
There may also be transaction-specific assumptions and qualifications included in legal opinions from time to time.
The issue of the legal opinion
More often than not the legal opinion will be issued on the basis of executed and dated transaction documents or on the basis of executed but undated documents. It is less usual for a legal opinion to be issued on the basis of draft, unsigned documents.
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.