Our highly professional business team has developed the Ethical Structured Company for shariah, philanthropic and green clients
An Ethical Structured Company is uniquely limited by both shares and by guarantee, and is a legally recognised and incorporated company.
All countries understand what a company is. Not all have a place in their legal systems for trusts, foundations and waqfs, and this leaves them exposed to challenge.
The Ethical Structured Company takes the form of an Isle of Man “hybrid” limited company governed by the Isle of Man Companies Act 2006, which has both shareholders and guarantee members. The company’s directors and shareholders manage the day to day operations. The shareholders’ rights and the powers of the Directors combined can be likened to the powers of a Trustee, the Board of a Foundation or the administrator (nazir, mutawalli, kayyim) of a Waqf.
The guarantee members alone are entitled to receive distributions. The guarantee members are in a similar position to beneficiaries under a trust, foundation or waqf – able to benefit but not needing themselves to be involved in the company’s administration.
The difference between Shareholders and Guarantee Members
Shareholders are required to acquire shares and their liability is limited to the value of the shares. Guarantee members undertake to pay a fixed (but nominal) amount on an insolvent liquidation or winding up of the Company.
Supervisory Board
The defining characteristic of the Ethical Structured Company is that at its heart is a Supervisory Board. The role of the Supervisory Board is to engage closely with the company’s legal and investment advisors. The Supervisory Board provides the company’s ‘conscience’ as policy advisers and policy compliance auditors to the Board of Directors.
Its members are not Directors and are not entitled to manage or control the company or to bind the Directors in any way.
However, in managing and controlling the Ethical Structured Company, and in exercising their fiduciary responsibilities, the Directors must take into account the advice which they receive from the Supervisory Board.
Members of the Supervisory Board are chosen by the guarantee members and may include representatives of the company’s legal and investment advisers.
What are the Ethical Purposes?
The range of environmental, social and governance purposes for which this structure is suitable includes Shariah compliance, green social impact investment and philanthropy.
Shariah Compliance
Compliance with the principles of Shariah law will be ensured by the Supervisory Board, consisting of Sharia scholars and other suitably qualified experts.
The internal documents which provide rules for the Supervisory Board are in accordance with the Guiding Principles on Shariah Governance Systems issued by the Islamic Financial Services Board [ www.ifsb.org ] in December 2009.
The investment adviser to the company will construct and administer the investment portfolio, guided by the Supervisory Board.
Green Social Impact Investment
The Supervisory Board will be guided by the investment adviser to the company.
Among the key issues will be, for example, the importance of mitigating climate change, protecting biodiversity and the sustainable use of resources to ensure a positive future for the global economy.
There is likely to be an emphasis on the positive societal impact of investments with a particular focus on social inclusion, education, healthcare and quality of life.
The appropriate standards will be tailored to meet the ethical concerns of each client set against globally recognised standards in green finance.
Are there any restrictions on Philanthropy?
Philanthropy and the idea of public benefit are culturally determined.
The Ethical Structured Company embodies no restrictions on the means by which this is to be achieved. The rules of the Supervisory Board are drafted by the company’s legal advisers to enshrine client specific philanthropic objectives and aims.
The company’s investment adviser guides the Supervisory Board on how these objectives and aims are to be achieved.
Why the Isle of Man?
The Isle of Man is a British Crown Dependency, whose parliament (named by the Vikings, “Tynwald”) and whose judiciary have their origins over a thousand years ago. It is fiscally benign and economically strong.
The Isle of Man offers a safe, politically stable and secure venue, with unique and enduring legislation which supports both the Ethical Structured Company and its commercial activities.
Ethical Structured Company | What we do
As professional lawyers we need to be familiar with your objectives, reasons why you want to use an Ethical Structured Company, any concerns you may have, and the assets involved to help organise and set up the company. We will assist you with the creation and onward administration of the discretionary trust and advise on the best way to maximise the benefits.
Talk to us today
If you need to talk to someone about an Ethical Structured Company, then take the first step and email [email protected] or call us on 01624 639350 to arrange your free initial consultation with us today at our office, over the telephone or via video call.
Reasons to use the MannBenham Group
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