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Offshore: Cayman Islands

The Cayman Islands is a popular jurisdiction for the establishment of offshore companies. 

Whilst the Cayman Islands offers political stability, sophisticated infrastructure and a strong economy based on international banking and tourism, the main features of Cayman Islands that have attracted many international businesses and investors are:

 

  • No local taxes - there is currently no income tax, non resident tax, capital gains or other similar taxes in the Cayman Islands.

  • Privacy - no reporting of income or ownership to any government agency.

  • Investment freedom - no restrictions on investment purchases.

  • No exchange controls.

 

It is no wonder that it is a favored location for companies wishing to list in the stock market. 

 

ABOUT CAYMAN ISLANDS

Introduction

The Cayman Islands are likely best known for pristine beaches and premier diving. Explore a little further and you will find a variety of resorts, hotels, water-sport operations and restaurants that will suit the needs of anyone looking for the perfect Caribbean vacation. Those who call the Caymans home enjoy the ideal Caribbean lifestyle; beautiful beaches, climate and waters with the highest standard of living in the Caribbean. 

The Cayman Islands are a British colony situated in the Caribbean Sea approximately 800 kilometers South of Miami, Florida. It consists of a group of three islands in the Caribbean Sea: Grand Cayman, Cayman Brac and Little Cayman. Located west of Jamaica, and just south of Cuba, these three islands are home to approximately 40,000 people. The official and spoken language is English and its currency is Caymanian Dollar. There is no exchange controls in the country. Over the last 30 years, the Cayman Islands have matured into one of the world's largest international financial centers. Grand Cayman is the biggest and most developed of the three islands. It is home to not only the majority of the population, but to many banks and financial institutions where local and international investors find the infrastructure, services and financial expertise matched to the best available worldwide. The capital, George Town, is the nucleus of this international centre. 


Political Structure

The Cayman Islands are a British colony with the responsibility for administering its own internal affairs. The head of the Islands' Government is the Governor, who represents and is appointed by Her Majesty the Queen. The Governor administers the Islands' affairs together with an Executive Council and a Legislative Assembly. 

The Islands' legal system is based on English common law and rules of equity, and on local statutes. 

The Registration and Control of Companies is governed by the Companies Law (Cap. 22), enacted in 1961, as subsequently amended. The administration of the Companies Law is under the supervision of the Registrar of Companies. 

The Companies Law distinguishes between local companies, which are predominantly owned by Cayman residents, and exempted companies, which are not. Only local companies can carry on and compete for business within Cayman. Exempted companies must carry on their business activities external to Cayman. 

Infrastructure and Economy
The Cayman Islands economy is based almost entirely upon the Islands' role as an international financial centre and tourism. The Government's chief source of revenue is a 20% across-the-board import duty.

 

Currently more than 585 banks and trust companies are registered in the Cayman Islands.

 

SETTING UP OFFSHORE COMPANIES
IN CAYMAN ISLANDS

Foreign businesses and investors may register for an Exempted Company for their offshore businesses. Exempted Companies are not entitled to trade in the Cayman with any person except in furtherance of business "carried on outside" Cayman. Features of exempted companies include the following:

 

  • An exempted company need not keep a register of members open for public inspection (This is a requirement for resident and non-resident companies.).

  • An exempted company need not hold an annual general meeting (which resident and non-resident companies must), but the Board of Directors must hold a meeting at least once a year in the Cayman Islands.

  • It can offer shares to public in Cayman if listed on the Cayman Islands Stock Exchange (CSX).

  • It may issue registered or bearer shares with nominal or no par value.

  • It should be noted that an exempted company which is empowered by its Articles of Association to issue bearer shares, certificates or coupons cannot hold land in the Cayman Islands. An exemption allowing the holding of land may be obtained from the Financial Secretary where the company has neither issued nor is empowered to issue any such shares.

  • An exempted company may express its capital in any currency.

  • The annual return to the Registrar is a simple matter, requiring only the declaration that: - no changes, other than those notified to the Registrar, have been made in the Memorandum of Association; - the provisions of the Companies Law have been observed; and - the company's operations have been mainly outside the Cayman Islands.

  • An exempted company need not include the word "Limited" or the abbreviation "Ltd." after its name.

 

FORMATION AND STATUTORY REQUIREMENTS

The documentation that needs to be lodged upon incorporation of an exempted company, is the Memorandum and Articles of Association to the Registrar of Companies, together with a sworn statement declaring that the business activities of the proposed company will be undertaken mainly outside the Cayman Islands. The names and addresses of the proposed first directors must be disclosed to the Registrar. 

Time to Incorporate
Cayman Islands exempted companies can be ready-incorporated and held as shelf companies on an immediate basis and can deliver incorporation documents by courier within 48 hours. When a specific name is required, incorporation can normally be arranged within 2 days, with courier delivery of the incorporation documents within one week. 

Please feel free to contact us if you wish incorporate a Cayman Islands exempted company or to request for a list of ready-incorporated shelf Cayman Islands exempted Companies. 

Authorised and Issued Share Capital 
The minimum is US$1, but it is normal to incorporate with an authorised share capital of US$50,000; divided in to 50,000 common voting shares of US$1, this being the maximum for the minimum capital duty payable to the Registrar of Companies. 

The minimum issued share capital is one share of no par value or one share of part value. Classes of Shares Permitted are registered shares of par or no par value, preference shares, redeemable shares and voting or non-voting shares. 

Licence Fees 

  • For exempted companies with a share capital not exceeding US$50,000

    • US$575

 

  • For exempted companies with a share capital greater than US$50,000 but not exceeding US$1 million

    • US$805

 

  • For exempted companies with a share capital greater than US$1 million but not exceeding US$2 million

    • US$1690

 

  • For exempted companies with a share capital exceeding US$2 million

    • US$2400

 

 

Shareholders, Directors, Secretary, Registered Office
Shareholder(s) and director(s) may be of any nationality and need not be Caymant Island residents,. The shareholder(s) and director(s) can be a natural person or a corporate body. Only one shareholder and director is required. Shareholder(s) and director(s) may be the same person. 

The Cayman Islands Companies Ordinance does not make any specific reference to a requirement for a company secretary. However, it is customary to appoint one, who may be either a natural person or a body corporate. 

A Cayman Islands exempted company must have a Registered Office and a Registered Agent in the Cayman Islands. A copy of its Shareholders Register has to be kept at the Registered Office but is not open to public inspection. 

Financial Statement Requirements
Unregulated exempted companies do not need to file annual accounts with the authorities. 

Public Access to company information
Documents on record at the Registrar, in respect of a Cayman Islands company may only be inspected by a shareholder of the Company and are NOT open to public inspection. This means that even though registers of Shareholders and Directors must be filed with the Registrar, they are not matters of public record and cannot be retrieved by a company search at the Companies Registry. The Registrar is allowed to release only the name and type of company, the date of registration, and the address of its registered office. 

Restrictions on Trading 
Exempted companies cannot trade within the Cayman Islands, own real estate in the Cayman Islands, cannot undertake the business of banking, insurance business or mutual fund business unless licensed and cannot solicit funds from the public. 

Taxation 
There is no form of taxation in the Cayman Islands relating to individuals, corporations or trusts. 

Double Taxation Agreements 

The Cayman Islands has no double tax agreements. 

 

OTHER TYPES OF CAYMAN ISLANDS COMPANIES

Exempted Limited Duration Companies (LDC)
Exempted limited duration companies were introduced in 1993. This form of exempted company, while preserving the limited liability to its members if desired, offers the possibility in certain jurisdictions of advantageous treatment as a partnership. An LDC continues until the terminal time or event specified in its Memorandum of Association. However, its duration must not exceed 30 years and it must have at least two members. 

Upon its duration expiring, it is deemed to have automatically commenced voluntary winding up and dissolution. It may, however, be wound up earlier voluntarily if the members pass a special resolution to that effect. Compulsory liquidation remains available to creditors of the LDC and also for its members in the circumstances applicable to other companies incorporated under the Companies Law. The name of the company must end with "Limited Duration Company" or "LDC."

 

Segregated Portfolio Companies 
The Segregated Portfolio Company (SPC) is a form of exempted company whose business is restricted to offshore insurance and which possesses either a restricted or unrestricted class "B" insurer's licence granted under the Insurance Law (1998 Revision).

 

Foreign companies 
A foreign company is a company incorporated outside the Cayman Islands but carrying on business locally. Such a company must be registered in Cayman.

 

Non-Resident Companies 
The non-resident company must maintain at their registered office, open for public inspection, a register of their past and present members. They must also report annually to the Registrar, giving the names and addresses of members, directors and the amount of paid-up capital. 

The company may deal in shares of exempted companies, foreign corporations and partnerships, but may not carry on such other business within the Cayman Islands except where necessary for the furtherance of its foreign business. Non-resident companies may convert to Resident Companies or to Exempted Companies.

 

Resident Companies 
Resident companies must maintain at their registered office, open for public inspection, a register of their past and present members. They must also report annually to the Registrar, giving the names and addresses of members, directors and the amount of paid-up capital. This type of company is also allowed to hold land as defined under the Companies Law (1998 Revision).

 

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