Limited Liability Companies – An Overview

As a modern Finance Centre the Isle of Man provides a wide variety of legal structures for businesses & individuals, including 1931 & 2006 Act Companies, Foundations, Trusts & Limited Partnerships.

As a modern Finance Centre the Isle of Man provides a wide variety of legal structures for businesses & individuals, including 1931 & 2006 Act Companies, Foundations, Trusts & Limited Partnerships.

Historically 1931 Companies were the only option for those looking to incorporate their business, but more recently clients have opted for the flexibility that 2006 Act Companies can offer, and for some clients looking to incorporate whilst simplifying regulation, an Isle of Man Limited Liability Company (“LLC”) can be a viable alternative.

Originally popular in the USA and offering many advantages for small businesses over sole traders or 1931 Act Companies, the LLC was established on the Isle of Man in 1996 as a hybrid structure bringing in attributes of both a Company and a Partnership.

Like a Company, the LLC is a legal entity in its own right, separate from its Members, Manager and Registered Agent. This can provide asset protection where Beneficial Owners work in higher risk industries. Unlike with a Company however, profits generated are treated as income of the Members for the purposes of Income Tax (something akin to a Partnership).

Regarding practicalities, instead of requiring Company Directors and a Secretary, LLC’s require a Registered Agent (a licenced entity regulated by the Isle of Man Financial Services Authority) and Manager to be appointed. The Manager(s) can either be the members themselves or others appointed by them, in accordance with the LLC’s Operating Agreement.

Two members of an LLC are required as a minimum and the respective liability of members is limited to the extent of their contribution to the capital. Details of the registered members are held on public record, however LLC’s also allow Nominee officers to act as members on behalf of ultimate beneficial owners, in order to preserve privacy.

From an Administrative perspective, there is no requirement for a LLC to hold an Annual General Meeting, nor any other formal meetings, which can greatly reduce associated time and costs. There is also no requirement to file annual accounts, although records must still be kept in order to show the financial position of the LLC.

In many situations LLC’s can be a cost effective, practical solution for clients and Peregrine can provide Registered Agent, Nominee, Manager and Registered Office services to LLC’s where appropriate.

If you would like to learn more please contact James McKenna on: +44 (0) 1624 626586 or at jmckenna@burleigh.co.im.

Peregrine Corporate Services Limited is licensed by the Isle of Man Financial Services Authority.

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