The Isle of Man LLC was developed from the LLC originally conceived in Wyoming, USA. The Isle of Man LLC was established by and is governed by the Limited Liability Companies Act 1996.

An LLC which is organised under the Act may undertake any lawful activity, trade or business unless specifically excluded by the Act.

An LLC may be used instead of an IBC or other corporate entities for simple situations where the members wish to control the entity.

It may be used as a legitimate tax planning tool, the profits of which will be taxed on the members.

CONSTITUTIONAL CHARACTERISTICS

• An LLC has legal personality and capacity separate from its members or registered agent.
• Members’ liability is limited to the extent of their capital contribution.
• Restrictions imposed on the transfer of members’ interests.
• Management is vested in the members in proportion to their contribution.
• The LLC must be wound up and dissolved on certain events
• Profits of the LLC are treated as income of the members for income tax purposes.

FORMATION

An Isle of Man LLC is formed by the registration, by 2 or more persons, of the Articles of Organisation and subsequent issuing by the Financial Supervision Commission of a Certificate of Registration.

The Articles of Organisation
This is a public document that deals with:-

• Name of the LLC
• Details of the Members
• Details of the Isle of Man resident Registered Agent (every LLC must appoint one)
• Capital contributions of the Members
• Admission of additional Members
• Right of continuance of remaining Members
• Repayment of capital contribution of outgoing Members
• Appointment of a Manager
  

The Operating Agreement
This is a private document entered into by the Members, and deals with the internal governance of the LLC. Subject to a few mandatory aspects relating to governance, the Operating Agreement may be tailored to suit the requirements of the Members. It is comparable to a Partnership Agreement in a Partnership.

Management
There are no registered directors of an LLC. As in a partnership, the Members manage the LLC.

The Members appoint one or more Manager, with powers specifically delegated to him by the Members. The Manager has no assumed powers or duties.

The LLC does not have a share capital. The Members declare in the Articles of Organisation their capital contributions. Voting is deemed proportionate to their capital contribution unless otherwise provided for in the Operating Agreement. The Members have their liability limited to the amount of their capital contribution.

There is no provision for an annual meeting, or any formal meeting of Members. There is no provision for the auditing or filing of accounts, although the members must keep proper accounts.

Charges on the assets of the LLC must be registered.

An annual return is required each year, setting out details of the Manager and the Members.

Taxation
Under Isle of Man tax law, the LLC is taxed as a Partnership and it is a wholly tax transparent entity.

If the LLC is carrying on a trading activity in the Isle of Man, then the LLC may have to register for Value Added Tax.

WINDING UP

Under s27 of the Act, the LLC will be wound up automatically in the event of:
a) unanimous written agreement of the members
b) the death, resignation or disqualification of a Member. If this brings the number of Members to below 2, then winding up will be obligatory. Otherwise the remaining Members may resolve to carry on.
c) where the Court makes an order under s32 of the Act.

This note is published without any responsibility on our part for loss occasioned to any person acting or refraining from acting as a result of any information contained herein.

Limited Liability Companies
Trusts
Fees
Terms of Business
KYC requirements
New Manx Vehicle Guidance Notes

What Do I do If I Wish to Engage Horwath – Companies & Trusts

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