It is becoming more and more important for families and individuals to work and invest in an ethical way. Boston Multi Family Office have collaborated with MannBenham to identify and highlight how using an Isle of Man Ethical Structured company can satisfy these needs.
An Isle of Man Ethical Structured company is a Hybrid company, a corporate legal entity which is limited by shares and by guarantee. It is universally recognised and, subject to remaining solvent, it endures until the shareholders and guarantee members decide it is to be wound up.
The guarantee members’ liability is limited to an undertaking to pay a certain amount in the event of a winding up. The guarantee members may be able to receive capital distributions from the company during its lifetime and on liquidation. While the shareholders are required to acquire shares and their liability is limited to the value of the shares.
The Board of Directors are the decision makers and manage and control the company. The combination of the powers of the directors and the shareholder rights, can be likened to the powers of trustees or to the administrators of a Wadq.
A tailor-made Members Agreement governs the internal affairs, which is between the shareholders, guarantee members and the Company. This remains a private document, not available to the public. The Members Agreement will be drafted to suit your specific requirements but usually includes:
- A definition of the Ethical Structured Company with any restrictions required.
- Details of company decisions which would require guarantee member consent.
- Guidelines on how the company’s affairs will be run, including procedures in the event of disagreement between the shareholders and the guarantee members.
- Procedures for the appointment or removal of guarantee members.
- Details of the future guarantee members in the event of the death or incapacity of a guarantee member.
- A strategy to ensure that future shareholders and guarantee members agree to the terms of the Members Agreement.
The Articles of Association include provision for a separate Supervisory Board which, through its members are not entitled to manage or control the Company in any sense. They provide the Ethical Structured Company’s “conscience” as policy advisers and policy compliance auditors to the Board of Directors. The Supervisory Board advises the Board of Directors with regard to the purpose whether that be Shariah compliance, green and environmental sustainability or philanthropy.
So, how can an Ethical Structured company help you meet your ethical requirements?
Shariah Compliance – the internal documents which provide rules for the Supervisory Board comply with the Guiding Principles on Shariah Governance Systems issued by the Islamic Financial Services Board (IFSB)
Green Credentials – Each application is bespoke to meet the individual or family’s requirements.
This could involve:
- Restricting investment into areas that have a potential social impact
- Focusing on areas that promote environmental sustainability
- Avoiding investment into classes that include alcohol, tobacco or fossil fuels.
- There are also globally recognised standards in green finance which can be verified by an appropriate third party for social impact investments which can be adopted.
Philanthropic Objectives – As with Shariah compliance and green social impact investment, the structure can preserve the objectives and aims of the family or individuals.
In summary an Ethical Structured company will appeal to anyone looking for a robust structure for ethical purposes, which are either Shariah compliant or look to meet their philanthropic or green requirements. It is particularly of interest to families or individuals in countries which may not recognise alternative concepts such as trusts, Waqfs or Foundations.
If you would like to find out more please get in touch with us by email email@example.com or by phone +44 1624 692930.