Private acquisitions in the Isle of Man
are typically performed by a public or private limited liability company. The seller is also a company that can be either public or private. In most situations, these companies are incorporated in the Isle of Man or in Wales.
The most common manner in which a private acquisition can take place is by purchasing the entire issued capital of the target Isle of Man company. This is done by means of a share purchase agreement.
Acquiring shares in an Isle of Man company can be a suitable option for some investors. There are no applicable statutory restrictions on the share transfer and, in general, the Isle is perceived as a beneficial location to do business in Europe despite the fact that it is not part of the EU.
Our Isle of Man company formation agents
answer a set of common questions asked by foreign investors who are interested in acquiring shares in companies located in this jurisdiction. Specialized assistance is offered buy our team of agents who can advise investors on the applicable laws, including the Isle of Man Financial Services Act.
What are the restrictions on share transfers?
Restrictions on the share transfers apply only when the company is a regulated body. When this applies, the Financial Services Act provides the needed information and this document should be carefully reviewed. Apart from this document, the others that can influence the transfer of shares are the company’s statutory documents, like the Articles of Association or a shareholder’s agreement, if such an agreement was concluded. The types of restrictions that may be included in these company documents can include:
• Pre-emption rights: when other shareholders are the first to receive shares, and this is a mandatory step.
• Drag along rights: when the shareholder who is selling shares will also require the others to do the same.
• Tag along rights: when other shareholders of the company targeted for the private acquisition are entitled to sell their shares along with the first one doing so.
• Others: special consideration should be taken when the shares of the company have been changed.
Are there any foreign ownership restrictions?
These are not applicable in the Isle of Man, however, certain limitations may exist in the company’s Articles of Association as to who is allowed to hold shares in the company. Rare protectionist clauses can be used in some cases, especially for government grants. One of our agents who specialize in offshore company formation in the Isle of Man
can provide interested investors with specialized counseling according to the particularities of the purchase.
Share purchases for private acquisitions in the Isle of Man
When purchasing the entire issued capital of an Isle of Man company, the buyer acquires the assets of the targeted company. In this situation, there is no need to conclude additional contracts for the transfer of assets, however, an important issue to take into consideration is that the buyer will also inherit the liabilities of the target company. Included here are those that might have been excluded when the acquisition was performed through an asset purchase. For those investors who are interested in private acquisitions in the Isle of Man our agents recommend due diligence. This is an essential step in both types of acquisitions, those through a shares transfer and those through an asset purchase.
Some of the preconditions for a private acquisition through a share sale includes obtaining the approval of the seller company’s board, the approval of the target company’s board, the shareholder approval and the third-party or regulatory approvals, in those cases when these are necessary. The main documents that are to be concluded for acquisition include the share purchase agreement, the board minutes of the target company, the stock transfer forms, the release of security and others.
In the acquisition agreement, the parties will have to include the sale and purchase provisions, the seller warranties, limitations on claims, the applicable indemnities, the confidentiality clauses, governing law and jurisdiction as well as details of the key assets and the documents that are to be delivered upon the completion of the acquisition. Some of these agreements can include special clauses for having a foreign governing law and the events in which the Isle of Man High Court will be the one to have jurisdiction.
Our Isle of Man company formation agents
can help investors with more information about private acquisitions. Investors can contact us
for more information about the advisory and company registration services we offer in this jurisdiction