Simcocks Director, Alex Spencer, discusses the firm's experience and expertise in providing Isle of Man legal opinions.
What is a legal opinion?
In banking and finance matters, a legal opinion is often sought to confirm the capacity and valid incorporation and existence of a legal entity. They are commonly sought in the context of loan and security transactions, property sale and purchase transactions and share sale and purchase transactions.
When might a client require a legal opinion from an Isle of Man advocate?
Where a transaction involves an Isle of Man entity / structure (for example an Isle of Man company, partnership or trust), a legal opinion may be required by, for example, a bank / lender or transaction counterparty, in respect of Isle of Man law to confirm, amongst other things, that the Isle of Man entity is duly incorporated and validly existing and that the documents being entered into by the Isle of Man entity have been correctly executed are binding and enforceable.
Legal opinions are commonly sought in the context of loan and security transactions, property sale and purchase transactions and share sale and purchase transactions.
Wouldn't that information already be publicly available?
Whilst public registry searches are available, they reveal only limited information. For example, a company incorporated under the Isle of Man Companies Act 2006 is not required to notify changes in respect of its directors, nor is it required to file details of its members or share capital. In the case of trusts, there is no public register, and trust deeds are private.
It is customary to undertake searches at the Isle of Man Companies Registry and the High Court Rolls Office. The purpose of the Companies Registry search is to check, amongst other issues, whether or not a company is duly incorporated and validly existing, whether or not any mortgages or charges have been registered against the company's file and whether or not any filings in respect of liquidation or winding-up have been made. The Rolls Office search is to reveal whether or not a company (or partner or trustee in relevant cases) is subject to litigation in the Isle of Man.
Isle of Man advocates often rely on a certificate from a director, registered agent, trustee or other relevant person to confirm information which either cannot be obtained from public records or to supplement the information which is publicly available.
In bank financing transactions, it is often a condition precedent to drawdown of the facility that a director of the relevant company provides a certificate confirming, amongst other matters, the solvency of the company in question and appending certain copy documents in relation to the company.
What sort of information is usually requested?
The Isle of Man advocate providing the legal opinion will often request some or all of the following information and documentation in connection with the transaction: a copy of the legal entity's constitutional documents, its last annual return (all of which may be obtained by undertaking a company search at the Isle of Man Companies Registry); a structure chart; copies of the relevant transaction documents; board resolutions relating to the transaction and, if relevant, shareholder resolutions; a certificate from the registered agent of the company (if the company is incorporated under the Isle of Man Companies Act 2006); and / or a certificate from a director of the company, depending on the subject matter of the opinion. Where the opinion relates to an Isle of Man trust, the advocate will require copies of the relevant trust deeds and trustee resolutions and (where the trustee is an Isle of Man corporate trustee), copies of the trustee company's constitutional documents. Similarly, where the opinion relates to an Isle of Man partnership, the advocate will require a copy of the partnership agreement, partners' resolutions and (where the partners are Isle of Man companies), copies of the partner companies' constitutional documents.
What would an Isle of Man advocate do once instructed?
The Isle of Man advocate instructed to act would usually review drafts of any transaction documents being entered into by the Isle of Man entity / structure from an Isle of Man law perspective. The Isle of Man advocate will often also review drafts of any board and shareholder resolutions (in the case of companies) and trustee and partners' resolution (in the case of trusts and partnerships) relevant to the transaction.
Where Isle of Man law security is being granted by the Isle of Man legal entity / structure, the Isle of Man advocate acting for the bank / lender will usually be involved in drafting this documentation and negotiating its terms with the legal advisors for the Isle of Man legal entity.
In loan and security transactions, the Isle of Man advocates acting for the lender will often complete the registration of particulars of relevant security documents at the Isle of Man Companies Registry (and Isle of Man Deeds / Land Registry where Isle of Man property is subject to the security).
What experience does Simcocks have with providing legal opinions?
At Simcocks, we have a dedicated team handling legal opinions on a daily basis. Our clients include public and private companies, financial institutions and other regulated businesses, public sector bodies, partnerships and individuals. We have handled thousands of opinions, from straightforward cases to more complex transactions. Our advocates are regularly instructed by firms of solicitors / lawyers from other jurisdictions or by clients directly. We are often the first port of call for many financial institutions, both locally and internationally, and our knowledge and experience enables us to advise them in respect of all areas of their operations.
Why choose Simcocks?
We have strength and depth of experience in our principal practise areas which include regularly acting on high-value, complex transactions with cross-border dimensions. We provide proficient, and commercially focussed advice to enable transactions to complete without delay. As a long-established Isle of Man law firm, Simcocks has developed specialist legal skills, as well as a practical understanding of the changing demands of business.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
