Firms tap London via Isle of Man

The Isle of Man is proving to be a gateway for London's capital markets for Indian companies.

India Inc is using the prominent tax haven in Europe to incorporate their offshore investment vehicles to raise money by getting listed on the London Stock Exchange's Alternative Investment Market (AIM).

Isle of Man, situated in the British Isles, is a tax haven that offers firms various tax as well as administrative benefits such as zero corporation tax, economic independence and flexible regulatory regime.

Indian companies, which are increasingly using the AIM platform to raise money, are setting up their offshore entities in the Isle of Man to escape the heavy taxation in the United Kingdom (UK). This helps them to bring down their costs to a greater extent.

At present, around 29 Indian entities are listed on the AIM platform. Around 22-23 of them have entered the British market through the Isle of Man route.

The island is a self-governing British crown dependency and has constituted its own laws, government and Parliament.

LSE's AIM typically attracts small- and medium-size companies from the Bric nations "� Brazil, Russia, India and China. The companies can also raise project-specific funds at AIM, as a result of which mining, infrastructure and energy companies from various regions are seen raising money on the AIM.

Cyprus and Cayman Island are also some of the other tax havens used by investors.

"We are offering the rapidly growing Indian companies an excellent corporate structure with lower taxation and clearly defined regulations. The island has nil corporation tax, lesser share transfer fees, which have been significant tax breaks for the incorporating companies," Daniel Mackelden, head of Isle of Man-based law firm Cains, said.

The firm has advised around 75 per cent of the Indian companies listed on the AIM. At present, it is negotiating with around six companies from the media, real estate, power and mining sectors.

Unitech Corporate Parks, KSK Power Venture, Hirco and Trinity Capital are some of the Indian companies which got listed on the AIM in recent months, using the Isle of Man route and were advised by Cains.

Around 23 of the 29 Indian entities listed on the AIM platform have entered the British market through the Isle of Man

AIM typically attracts small- and medium-size companies from the Bric nations and allows the companies to raise project-specific funds