Isle of Man types of company

The UK's three IOFCs, Jersey, Guernsey and the Isle of Man have developed in different ways; the Isle of Man is not dominated by any one particularly activity, but has across-the-board strength in the financial sector, with substantial business in banking, fund management and captive insurance. The Isle of Man has also encouraged manufacturing and trading operations, which can be fiscally offshore while staying within the EU's VAT regime.

The island's trust sector is long-established and has a solid backing of law firms, trust managers and advisory practises. The Isle of Man has instituted a favourable regime for ship management but this sector has not shown very fast growth.

In December 2000 the Isle of Man government introduced the Corporate Service Providers Act 2000, which creates a licensing regime for corporate service providers (CSPs) and empowers the Financial Supervision Commission to process applications for CSP status and to investigate CSP license holders. CSPs must operate client accounts like other professionals. Under the act it is an offence for a CSP to operate without a licence.

In 2001 the Government passed the OnLine Gambling Regulation Act, and the first three licences for international gaming operations were issued in September 2001. Although three more licenses were issued in 2002, the Island's regime came to be seen as too onerous by 2003, and a number of license-holders left. By 2006 however it was clear that changes to the regime had been successful in re-kindling interest in the sector.

Late in 2001 the Government completed a new legislative regime for international pension schemes, and this became available for use early in 2002. For details, see the Insurance section via the link below.

The Island's 2003 budget included a major reform package for the Island's fund industry. Key measures included:

A zero tax rate for all third party fund administrators, and for Managers of EIFs and PIFs - representing an extension of the existing zero rate tax regime on fund managers' profits to both fund administrators and to managers of Experienced and Professional Investor Funds;

VAT Exemption for Experienced and Professional Investor Funds - representing an extension of the VAT exemption on management fees.

Overseas Funds Exemption in the context of Isle of Man regulation - such that an overseas fund may be administered in the Isle of Man without "dual regulation" where it is incorporated in a jurisdiction having an appropriate regulatory framework.

In July, 2006, the Isle of Man Financial Supervision Commission reported continued strong growth in the jurisdiction's financial services sector in the previous year, in spite of a "challenging" climate.

In its annual report for 2005/6, the FSC revealed that deposits on the island grew by 19%, while funds under management and administration grew by 76%.

For the last two years the number of new incorporations of Isle of Man companies has also continued to increase. Currently the number is over 40% up on the comparable period in the previous year. According to the FSC, this statistic "provides a very positive background" against which the planned new Manx corporate vehicle will be launched, later in 2006.

Together with the recent introduction of the 'zero/ten' tax regime, the FSC stated that it can plan its future growth strategy from a "confident and competitive position". The Annual Report notes, however, that over the last twelve months the climate remained challenging, and there was a continuing focus on reducing costs.

The report went on to note that the offshore sector as a whole continued to be highly competitive, with quality business increasingly focusing on well-regulated jurisdictions.

During the year, the Commission commenced a major project to consolidate and modernise the Isle of Man's financial services legislation, and has put forward important proposals to enhance its accountability and transparency as part of this project. The Commission also set out a mechanism under which there would be involvement of the industry in the setting of regulatory strategy. This project will also embrace innovative proposals for the regulation of e-money, to be drawn up in conjunction with the e-business sector which continues to have strong growth potential.

The Isle of Man's invitation to become a full signatory to the IOSCO Multilateral Memorandum of Understanding will also ensure that Manx-based businesses enjoy access into major markets overseas, the report stated.

Other developments during the year included the enactment of legislation for the licensing and supervision of trust service providers. The Commission took steps further to strengthen its own arrangements for good corporate governance. This section of the lowtax.net site describes the most important types of offshore business activity carried out from the Isle of Man.

ISLE OF MAN COMMERCIAL TRADING COMPANIES

The Isle of Man has encouraged commercial activity and manufacturing, especially in high technology, taking advantage of its physical location alongside the UK and the EU.

The Government offers capital grants of 40% of the costs of new buildings or improvements in buildings and of new machinery and plant, including energy conservation work, and consultancy costs. There are operating grants of 40% of non-recurring first-year costs and of marketing expense for new ventures; and up to 50% of training costs.

There is a wide variety of offshore company formats to choose from to suit all purposes. For a company importing or trading in physical goods in the EU, an offshore company form can be combined with a base in the Ronaldsway Freeport to give a very effective result. The island's inclusion in the EU's VAT regime is also helpful in many trading situations.

Along with other offshore jurisdictions, the Isle of Man is a suitable place in which to base e-commerce services for retail or wholesale distribution of material or non-material goods. For a company with B2C or B2B trading operations in high-tax countries, large parts of its sales, marketing and procurement activities can be based in a low-tax area such as the Isle of Man.

Distribution of physical goods in high-tax areas can be outsourced or can be handled locally, while distribution of digital goods (eg software or music) can of course be undertaken locally. Corporate structures can be adjusted so that profits do not have to be remitted to the high-tax jurisdiction.

ISLE OF MAN INVESTMENT AND FUND MANAGEMENT

The first mutual funds were established in the Island in the mid-1960s and were mainly used by British expatriates. New legislative initiatives in the early 1980s created opportunities for growth and gave rise to a rapid expansion of the Island's fund management industry. The Isle of Man became the first offshore jurisdiction to be granted 'designated territory status' by the UK in 1986, thus enabling Isle of Man funds to apply for SIB recognition in the UK.

Confirmation of the Island's OECD membership in 1990 subsequently led to Isle of Man funds being approved by the Japanese Securities Dealers' Association, although the fall of the Asian economies somewhat dampened this achievement. The introduction in 1991 of a 5% rate of tax on fund managers' profits provided a further incentive for managers to look towards the Isle of Man.

Mutual funds can take the form of companies (open or close-ended), trusts, limited partnerships or pure contractual arrangements.

As in other offshore jurisdictions, managers in the Isle of Man are more focused on administration than asset allocation. Where a manager chooses not to establish a real presence in the Island, it is a requirement that its business must be administered by a licensed third party fund administrator.

The leading association in the Island is the Fund Management Association. In late 2003, in its ninth annual report on the Isle of Man, independent investment fund research company, Fitzrovia International revealed that the jurisdiction's funds industry has stood up remarkably well to the sustained pressure inflicted by difficulties in global equity markets.

According to Fitzrovia, a key factor in the industry's impressive performance has been growth in the number of Experienced Investor Schemes. These schemes, launched in October 1999, now make up around 63% of all funds notified to the Financial Supervision Commission, and in mid-2003 there were 122 in operation on the Island, up from just 48 in 2001.

By mid-2006, out of 184 investment funds domiciled in the Isle of Man, with total capitalisation of US$30bn, 135 were Experienced Investor Funds.

In July, 2005, after consulting with the Isle of Man Fund Management Association, the Commission revised its policy in relation to who, locally, may act as a Custodian to an Experienced Investor Fund (EIF) or Professional Investor Fund (PIF).

In addition to licensed banking institutions in the Isle of Man, the Commission will now consider certain licensed investment businesses, namely those with a Category 4 or 5 licence.

Such licenceholders wishing to act as Custodian will be assessed on a case by case basis taking into account the type or nature of the underlying scheme assets. It will also be required to demonstrate to the Commission that it is an entity with adequate financial resources and has the relevant track record, competence, experience and systems to undertake this function.

The Commission’s existing policy (i.e. under which only a licensed banking institution can act as a Custodian in the Isle of Man) is being retained for those persons wishing to act as Trustee/Custodian of an Authorised or 'pure' International Scheme.

John Aspden, Chief Executive of the FSC commented: “This development should further enhance the attractiveness of the EIF fund structure which was established in 1999 as a flexible fund structure to promote the establishment of hedge and alternative investment funds”.

The Experienced Investor Fund (“EIF”) structure was launched in October 1999 and was designed to provide a simple, inexpensive and flexible solution to the ever more complex needs of sophisticated individuals, market professionals and global asset managers, while seeking to provide an adequate level of comfort to investors by ensuring proper disclosure and administration.

The Experienced Investor Fund is subject to a form of regulation that is aimed at the 'Experienced Investor'. Such schemes are exempted from certain of the legal and regulatory requirements that are generally applicable to International Schemes through the Financial Supervision (Experienced Investor Fund) (Exemption) Order 1999.

In April, 2006, following consultation with the Fund Management Association, the Manx Financial Supervision Commission revised its policy on the activities that a fund administrator or fund manager can undertake for a foreign Collective Investment Scheme.

Under the revised policy, Isle of Man licenceholders will be able to provide broader administration services to operators of foreign schemes provided these are carried out under an outsourcing contract, and the appropriate licence extension is obtained from the Commission.

Previously, outsourced services could only be provided in relation to one of the 'core' activities of fund administration.

Commenting upon this change, John Aspden, Chief Executive of the Financial Supervision Commission noted that:

“The Commission is always seeking to maximise flexibility in the regulatory environment and to support new business opportunities for industry where it can do so without compromising the regulatory standards."

"The review of the inward outsourcing policy will enable local fund managers and administrators to take on more business with minimal regulatory hurdles.”

The Financial Supervision Act 1988 governs financial services in the Isle of Man, and established the Financial Services Commission which exercises regulatory powers. The legislation distinguishes various types of fund: Authorised Collective Investment Schemes.

These funds may be marketed to the public in the Isle of Man, the UK, Ireland, Jersey, Guernsey and Hong Kong. The island obtained designation under Section 87 of the UK FInancial Services Act 1986, and has equivalent arrangements with the other countries mentioned. An authorised fund must have independent Manx Manager and Trustee: the Manager must himself be licensed, and the Trustee must have a banking license.

Regulation falls under section 3 FSA and there is a statutory compensation scheme, similar to that in the UK.

Recognised Collective Investment Schemes

These are foreign funds which the Commission admits for local marketing purposes if it is satisfied that the level of supervision and regulation is adequate. Recognised funds must maintain facilities on the island where documents can be seen, and payments in or out can be effected. Regulation falls under sections 12 or 13 FSA.

Restricted Collective Investment Schemes

All other collective investment funds fall under this heading. Restricted schemes (funds) may be marketed only to Manx professional investors or to existing fund members in some cases, or to overseas investors (if permitted). They must have Managers with Manx Section 3 licenses, and Trustees who are either banks or are authorised to be Trustees in the countries with which the Isle of Man has agreed reciprocal arrangements (UK, Ireland etc as above). Regulation falls under section 11 FSA.

Professional Investor Funds

Unregulated funds that are specially designed for the exclusive use of institutional and professional investors.

Exempt Schemes

Unregulated private funds which cannot be marketed to the public and are restricted to having no more than 49 participants.

Close-Ended Funds

Strictly speaking not classified as mutual funds and are used for illiquid long-term investments.

All investment business are expected to exercise a "Know Your Customer" policy in order to minimise the possibility of being used for laundering the proceeds of drug trafficking or other criminal activities.

Fees

Annual fees are as follows:

Authorised funds pay GBP850 per fund;

Umbrella funds pay GBP450 per sub-fund;

Recognised funds pay GBP1,050 per fund;

Section 13 Single Tier Funds pay GBP1,200 per fund;

Section 13 Umbrella Funds pay GBP350 per sub-fund;

International Funds pay GBP1,000 per fund.

Professional Investor Funds and Experienced Investor Funds do not pay fees. Fund managers require a business license: it costs £6,600 for managers of authorised funds, and £4,300 otherwise.

ISLE OF MAN BANKING

There are currently some 54 banks established on the Isle of Man, and although this figure has fallen slightly over the last 5 years, the calibre and scale of banking operations has been showing marked improvement. The Royal Bank of Scotland International, the Royal Bank of Canada, Coutts (Northern European HQ) and Merrill Lynch have all moved to the Isle in the last few years and NatWest has ring-fenced its offshore business by moving to the Island.

Several international banks with branches on the island offer global payment-processing solutions, and Manx Telecom offers an Island-based secure e-payment platform which can take multi-currency and Sterling-based transactions, enabling Island businesses to market their products globally.

Manx Internet banking operations tended initially to share the rather limited success that attended Internet banking operations generally. One of the more high-profile Isle of Man Internet banks was F Sharp, a subsidiary of the Bank of Ireland, and in October 2001 it was merged back into the offshore operations of its parent, Bank of Ireland, to be known in future as Bank of Ireland F Sharp. In recent years, however, most of the better known Manx banks have begun to offer Internet facilities.

During the year to June, 2006, deposits with Island banks rose 19% to GBP40bn from GBP33bn, according to the Financial Supervision Commission. Over 20 banks had capital ratios exceeding 20% at the end of March, 2005. (The capital adequacy of Isle of Man incorporated banks is measured on a risk-weighted basis in accordance with the Basel Capital Accord.)

The Island's banking industry is dominated by subsidiaries or branches of the main UK clearing banks and some foreign banks. The majority of banks in the Isle of Man are engaged in providing private banking services to UK expatriates and to foreign nationals.

The services offered often extend beyond deposit taking to establishing and administering trusts and managing the underlying companies and assets held by those trusts, including investment management. The growth in other areas of the Island's finance sector, including captive insurance, life assurance, collective investment schemes, investment management and ship management, means that these organisations have sums of money to invest and therefore require investment management services. Some banks also act as trustees to collective investment schemes.

Banks operate under either a full or restricted banking licence. The Financial Supervision Commission regulates the banking and investment industry under the powers created by the Financial Supervision Act 1988 and the Investment Business Act 1991. To obtain a domestic licence a bank must have a real presence on the island, while an Offshore Banking Licence allows banking business to be conducted from outside the island through a locally-incorporated bank on a managed basis.

The FSC has a system of supervision based on quarterly or half-yearly financial returns. This is reinforced by annual audited accounts which must be audited by qualified accountants who have effected professional indemnity insurance currently at £10 million.

For taxation purposes a "managed bank", in accordance with the Banking Act 1975, signifies that the bank has no local premises or staff but is operated on the island by an approved local bank. Since 12th July 1989 the Treasury may exempt, for a specified period, all or part of the profits or income of a "managed bank" from income tax. Where such exemption exists, the Assessor cannot require deduction of income tax from payments to non-residents and cannot pursue income tax liability of non-residents on such payments. An application for exemption is submitted to the Financial Supervision Commission. Exemption must not be granted unless the Treasury is satisfied that the bank:

does not transact, directly or indirectly, any banking business with any Isle of Man resident other than a bank,

has been granted a licence under the Banking Act 1975, and is managed by the holder of such a licence.

Fees for exemption applications can be prescribed by order by the Financial Supervision Commission. A bank which has been granted exemption must produce accounts, etc if required.

Unlicensed banking operations remain a problem and have become known as 'brass plate' companies. These 'rogue' operations are, when reported, investigated by the Enforcement Division of the FSC.

The Banking Act (as amended) recognises the contractual duty of a banker to keep the affairs of his customer confidential and the customers' entitlement to confidentiality. There are very few limited exceptions to these principles, set out in the Financial Supervision Act 1988, and these include circumstances where disclosure is required to assist criminal proceedings or to enable the FSC to discharge its statutory functions.

All banking licence holders are required to participate in the Depositors Compensation Scheme. The FSC is the Scheme Manager. The Banking Business (Compensation of Depositors) Regulations 1991 extends to all licensed banking institutions, except those listed by name in the Schedule. Deposits are protected up to 75% of the first £20,000 per depositor and the Scheme extends to the sterling equivalent of foreign currency deposits. Compensation is not available with regard to secured deposits or deposits which had an original term to maturity of more than five years.

The Scheme was successfully operated in respect of the default of BCCI which had a branch in the Isle of Man.

The government announced in July 2001 that it would become the first Crown Dependency with a financial ombudsman which means that customers worldwide will have access to an independent dispute-resolution scheme covering Isle of Man-based financial institutions. The 'Financial Services Ombudsman Scheme' covers complaints about financial advice and products across the range of personal finance such as banking, credit, insurance and investments. The scheme is open to individuals with a financial complaint against an Isle of Man firm that the firm has been unable to resolve.

In June, 2005, the Isle of Man's Financial Supervision Commission announced that a project is underway to update the Banking (General Practice) Regulatory Code 1999. The key drivers for this project were to update the Banking Code in line with current requirements whilst taking into account the recommendations made by the International Monetary Fund (“IMF”) inspection team following its visit in 2002.

As a result, the Banking (General Practice) Regulatory Code 1999 was replaced by the Banking (General Practice) Regulatory Code 2005 on 1st July 2006. The Commission published its approach to Basel II adoption in February 2006.

Says the Commission: 'The EU has issued the Capital Requirements Directive (“CRD”) which all regulators of member states must implement. Although this encouraged adoption from 1st January 2007, the CRD contains a qualification that, where a bank has committed to the standardised approach by 1st January 2008 it can continue to report under Basel I during 2007.

'The Isle of Man is not part of the EU and is not under any legal obligation to require locally incorporated banks to report under Basel II from 1st January 2007 or 1st January 2008.'

However, the Commission says it understands that locally incorporated banks which are subsidiaries of banks in countries requiring Basel II reporting in 2007 may wish to begin similar reporting to the Commission, whether under standardised or more advanced approaches (re parallel runs). With this in mind the Commission intends to have available the necessary reporting forms and guidance during 2007 but may require these banks to also continue reporting under Basel I.

The Commission says it will require locally incorporated banks to report under Basel II with effect from 1st January 2008 for the standardised approaches, with some degree of flexibility on a case by case basis for later adoption.

Basel II will require the Commission to make some changes to the Banking (General Practice) Regulatory Code 2005, as amended (“the Code”). It is expected that these changes will be minor and will focus on capital, risk management, and reporting forms (which are specified in the schedule to the Code). In addition, the Commission anticipates that guidance notes will be utilised to supplement the Code to ensure compliance with Basel II principles contained within Pillar 1 and Pillar 2.

ISLE OF MAN TRUST MANAGEMENT

Trust management, particularly for wealthy UK individuals, has been a traditional business for the Isle of Man. Successive tightenings of UK anti-avoidance legislation have reduced the possibilities for UK citizens, but trust work continues to be significant; many Collective Investment Funds are of course based on Trusts. The recent introduction of the purpose trust will probably lead to an increase in corporate trust work.

The Isle of Man has a well-developed legal and financial infrastructure for trust management. With a large established base of trusts, and a growing reliance on corporate work, the volume of trust litigation is becoming significant.

In common with many other offshore jurisdictions, the Isle of Man responded to pressure from the OECD by tightening up its regulatory regime.

Until 2004, trustees were not licensed or supervised by the Financial Supervision Commission, unless the fiduciary carried on business in investment, banking or insurance, in which case licences were required under those headings.

The Fiduciary Services Act, 2004, extended the Corporate Service Providers Act 2000 to require persons who, by way of business, provide certain services to trusts and partnerships or act as nominee holders of units in unit trusts, to hold a fiduciary licence.

The licensing of fiduciaries brought the Isle of Man into line with similar arrangements already established in other offshore jurisdictions such as Bermuda, Guernsey and Jersey and an external review of the proposals by London law firm Stikeman Elliot found the bill compares favourably with legislation in these places.

Alongside the Fiduciary Services Act, the Isle of Man Financial Supervision Commission updated its Fiduciary Services Regulatory Codes.

“In amending the draft Fiduciary Services (General Requirements) Regulatory Code and the Fiduciary Service (Clients’ Money and Trust Money) Regulatory Code and associated guidance notes, we were particularly aware of the industry’s concerns in respect of potential conflict with trust law and that the financial resources requirements should not be too onerous,” noted Jane Bates, Head of Authorisations & Companies at the FSC.

“We hope that we have now achieved a good balance and have set standards that will meet the Commission’s regulatory imperatives without placing an unreasonable burden on the industry,” she added.

ISLE OF MAN INSURANCE

Insurance business carried on in and from the Isle of Man is controlled by the Insurance Act 1986, updated through the Insurance Amendment Act 2004. Domestic insurance business is largely carried on by 'permit-holders', being foreign companies, mostly UK insurers.

'Captive' insurance companies are normally incorporated in the Isle of Man and are authorised and supervised by the Insurance Supervisor. Additional legislation is contained in the Insurance (Amendment) Act 1995 (Redomiciliation of Captives). There are quite comprehensive annual reporting requirements. Effective 1st April 2006, all IOM captives became liable for tax; however the tax rate is zero per cent.

Insurance companies are required to satisfy the Supervisor that the company will be properly managed in the Island and will have adequate financial resources and reinsurance support for the business to be undertaken. The application costs GBP1,000 and an additional GBP500 is payable annually for renewal of the authorisation.

The captive insurance sector has been quite successful in the Isle of Man, if not quite matching Guernsey. In mid-2005 there were over 170 captives and 19 long-term (life) companies on the island with assets exceeding GBP23 bn and annual premium income of about GBP4.5bn.

Rent-a-captives are permitted; and in 2001 the findings of a detailed review of developments in Protected Cell legislation conducted by the Insurance and Pensions Authority (IPA) prompted the Isle of Man Treasury to extend proposed Protected Cell Companies legislation to companies in general. PCC legislation is particularly relevant to captive insurance business, but the IPA review has led the Treasury to believe that there may be opportunities for it to be used by other types of companies.

PCC legislation was included in the Companies (Amendment) Bill 2002, and in 2004 the FSC promoted regulations which to allow the use of PCC structures for international collective investment schemes.

The regulations provide for funds constituted as International Schemes including Experienced Investor Funds and Professional Investment Funds (but excluding Exempt International Schemes) in the Isle of Man to incorporate as, or convert into, protected cell companies.

It is expected that the PCC concept, which provides statutory segregation through partitions (cells) within a company into which separate assets may be placed, will be of particular value for schemes which have a series of sub-funds, the FSC stated.

The liabilities of each cell are legally ring-fenced under Isle of Man law and cross contamination of cells is prevented, giving protection from risk arising from gearing, or otherwise, in other cells.

The Protected Cell Companies (Prescribed Class of Business) (Collective Investment Schemes) Regulations 2004 came into effect on 1st August 2004. In August, 2004, the Isle of Man Insurance and Pensions Authority (IPA) introduced new regulations which allow bodies other than limited companies to carry on insurance business in or from the Island.

The Insurance (Limited Partnerships) Regulations amend the Insurance Act 1986, and the Insurance Regulations 1986, to allow limited partnerships to carry on insurance business.

The new regulations attempt to introduce a regulatory framework for limited partnerships that mirrors that already established for limited companies. The new regulations became effective from the beginning of August.

Isle of Man International Pensions Legislation

During 2000 and 2001 the Isle of Man put in place a series of pieces of legislation aimed at creating a favourable environment for tax-effective retirement schemes for individuals and companies.

First, Tynwald established the Isle of Man Insurance & Pensions Authority, and in October 2000 the Island passed the Retirement Benefits Schemes Act 2000 (RBSA 2000), a core piece of Legislation which established a broad pensions framework for all schemes operating in or from the Isle of Man.

As a further evolution, and in consideration of the fact that domestic and international markets are entirely different from both a regulatory and a marketing perspective, the Insurance & Pensions Authority decided to develop market-specific legislation subordinate to RBSA 2000 by creating separate "international" and "domestic" regulations under the main Act.

This "umbrella" approach (ie. the ability to address home and overseas markets within one overriding Act) is entirely consistent with the new "level playing field" approach to regulation that is being adopted within the Island. Late in 2001 the Authority put in place a framework to enable the creation of authorised international retirement benefits schemes in the Isle of Man.

The Retirement Benefits Schemes (International Schemes) Regulations enable the Isle of Man to strategically enter the global pensions market, a market of increasing importance within the international financial services industry.

The International Regulations are now embodied within the Retirement Benefits Schemes (International Schemes) Regulations 2001, and took effect from January 2002.

Mike Lightfoot, the Authority's Marketing Executive (Pensions) clarifies that "The Authority has spent a great deal of time developing the framework to ensure its fit with the market, and as part of this process we have consulted extensively with the pensions and financial services industry both within the Island and elsewhere. As a consequence I firmly believe that we are in the right place at the right time with what we have to offer, and this has been reinforced by the response that has already been received from many parts of the world".

He continues "We have focussed very much on our role as prudential regulator and the need for us to ensure that all schemes authorised by the Authority provide suitable protection for members and beneficiaries, in addition to making sure that we have reached the right balance between providing the market with a large degree of flexibility in scheme construction, and establishing our core Regulatory controls.

"Given that we are looking at a global market, the ability for schemes to be tailored to suit multi-jurisdictional requirements is a highly attractive feature of our infrastructure. We have already been involved in discussions with multi-national companies who feel that the Island has a great deal to offer in this area."

The Authority sees the introduction of the international regulations as an opportunity for Manx Companies to capitalise extensively on pensions trustee, and pensions investment and administration business - particularly as the Island is home to highly skilled legal, trust, insurance, corporate and fund administration industries.

The International Regulations prescribe that all schemes established on the Isle of Man in respect of non Island based employees are operated by appropriately approved and registered trustees and administrators, and specify the information that must be provided to members of such schemes. Additionally, they set out rules regarding the management and reporting requirements associated with international retirement benefits schemes.

The overall objective is to provide suitable protection for members and beneficiaries, which the Insurance & Pensions Authority sees as its primary regulatory responsibility. However, having achieved this objective, the Authority has avoided being too prescriptive regarding the way in which schemes are constructed, or the precise format or dates at which benefits can be taken by members. This enables scheme rules to be adapted to take into account bespoke jurisdictional or corporate requirements, which should assist scheme construction for certain global markets.

ISLE OF MAN SHIP MANAGEMENT & MARITIME OPERATIONS

The Isle of Man passed the Merchant Shipping (Registration) Act 1984 in order to encourage registration of ships on the island. There is a zero-tax regime for ship management companies based on the Isle of Man. There are a number of ship management operations on the island, and a number of ships are registered on the island, particularly from the UK.

In August, 2006, the Isle of Man reached the White List of the Paris MOU. According to the Paris MoU, the recent trend has seen the number of flags placed on the White List growing, while the number of flags on the Grey and Black lists is shrinking, indicating a movement towards quality flags. Annually over 18,000 inspections take place on board foreign ships in the Paris MOU ports, ensuring that these ships meet international safety, security and environmental standards, and that crew members have adequate living and working conditions.

In May, 2006, the government announced that it is in the process of introducing an Aircraft Register, intended to mirror the success of the Island's highly respected and successful Shipping and Superyacht Register.

This new Register is being implemented after consultation between the Government, the private sector on the Island and the UK. Legislation is currently being enacted for the establishment of the Register and Brian Johnson has been appointed Director of Civil Aviation.

Mr Johnson, who took up the post on 27th March 2006, has worked for more than 10 years in the flight operations inspectorate of the UK Civil Aviation Authority. Latterly he was Head Flight Operations Inspectorate - Aeroplanes, based at Gatwick, and also acted as the UK Safety Assessment Coordinator - Foreign Aircraft Programme, for the UK Department for Transport.

Commenting on the new initiative and Mr Johnson's appointment, Alex Downie, Minister for Trade & Industry, said:

"I am delighted that Brian has agreed to become the Isle of Man's first Director of Civil Aviation. His knowledge and experience will be invaluable to the Department as we progress negotiations with the UK authorities for a civil aircraft register. We have already achieved agreement to the principle of an aircraft register and Brian will lead detailed negotiations in respect of the supporting legal and technical framework.

"Government is fully committed to the establishment of an aircraft register and I believe that it has very significant potential as a further element of economic diversification. The Isle of Man already has a very successful ship register that is independently recognised as among the best in the world and we will aim for similar quality for our aircraft register. We also have a strong cluster of aircraft manufacturing and design, plus some niche aviation businesses. I am confident that by establishing an aircraft register we can further raise the Isle of Man's profile as a leading jurisdiction for aviation business and encourage further growth, bringing with it increased wealth and new jobs."

Regarding his appointment Mr Johnson said: "I feel very privileged to have this opportunity to help establish a Civil Aircraft Register in the Isle of Man and I look forward to us developing a Register, which is internationally respected for quality and service."