The Cayman Islands, consisting of Grand Cayman, Cayman Brac and Little Cayman, are located in the western Caribbean, about 150 miles south of Cuba, 460 miles south of Miami, Florida, and 167 miles northwest of Jamaica. The capital of the Cayman Islands is George Town which is situated on the western shore of Grand Cayman. Geographically, the Cayman Islands are part of the Cayman Ridge, which extends westward from Cuba.
The legal system of the Cayman Islands is based upon English Law and is a combination of common law and statute. The Cayman Islands is a British overseas territory, with its judiciary appointed by the territorial government. The Privy Council in London, United Kingdom is the ultimate appellate court.
The Cayman Islands Companies Law governs the operations of the Cayman Islands Exempted Company.
Key features of the Cayman Islands Exempted Company:
- An exempted company may not conduct business within the Cayman Islands
- A tax exemption certificate is available for application with an initial period of 20 years or 30 years
- Simple corporate structure – minimum requirement of one shareholder and one director
- Information on shareholders is not available for public inspection
- Registers of Directors and Officers are required to be filed with the Companies Registry, however they are not available for public inspection
- No minimum share capital is required, and it can be expressed in any currency
- Shares can be issued with or without a nominal or par value
- Chinese company names can be registered with the Registrar
- No requirements for audited accounts or holding of annual general meetings
Benefits of the Caymans Exempt Company include:
A Cayman Islands Exempted Company offers the following benefits:
- 100% Foreign Owners: Foreigners can own all the shares.
- Limited Liability: Only the unpaid amount for all the shares is a shareholder’s liability.
- Privacy: The names of the shareholders and directors are not available to the public. Bearer shares are permitted.
- No Taxation: The Cayman Islands do not levy any type of taxes on the company and shareholders. However, United States residents must declare all global income to the IRS just like residents of other countries taxing global income.
- One Shareholder/Director: Only one shareholder and one director is required who can be the same person.
- No Required Meetings: There are no requirements to hold shareholders or directors meetings.
- No Audits: There are no required accounting standards and no required audits.
- English: English is the official language.
Cayman Islands Exempted Company Name
As long as the proposed company name is not similar to any other legal entity’s name in the islands, exempted companies may choose a name in any language. They can even have a dual name in English and in another language without having to provide a translation.
Proposed names can be reserved for a limited time with the Registrar for a small fee.
Exempted companies are not required to use “Limited” or “Ltd” although they are limited liability companies.
Certain words may not be used with a company name as they are restricted including “bank”, “chartered”, and “royal”.
Types of Exempted Companies
The Companies Act provides for variations of exempted companies with different features:
Exempted Company – This type of company cannot engage in business inside the Cayman Islands with citizens or residents. However, they can contract with service providers to obtain internet, water, electricity, and other necessary services to run a business. To become registered, an applicant must file a declaration that no business will be conducted inside the islands.
Segregated Portfolio Company (SPC) – An exempted company is the only type which can apply to become a segregated portfolio company. The SPC can separate its assets and liabilities into portfolios independent of each other and the general assets of the company.
Exempted Limited Duration Company – This type of company limits its lifespan to a maximum of 30 years when it automatically dissolves.
Memorandum of Association
The constitution of a Cayman company are the Memorandum of Association and the Articles of Association. The Memorandum must contain this information:
• Company name;
• Initial subscribers’ names along with how many shares each one has subscribed (minimum of one share per subscriber);
• Purpose for the company;
• Registered office address;
• Declaration confirming the limited liability for its shareholders; and
• Authorized share capital in any currency.
Articles of Association
The Articles of Association describe the internal rules and regulations including:
• Shares issuance, types, how they are transferred, repurchased, or redeemed;
• Shareholders’ meetings;
• Shareholders’ voting rights;
• Appointment of officers and directors along with their powers, meetings, compensation, and indemnification;
• Dividends payments; and
• Winding-up towards dissolution.
A copy of the Articles of Association and the Memorandum of Association must be made available to all shareholders upon request.
Limited Liability
A shareholder’s liability is limited to his or her unpaid amount for all shares.
Registration
Two signed copies of the Articles of Association and the Memorandum of Association are filed with the Registrar of Companies who issues a Certificate of Incorporation. These documents will not be made available for public inspection.
Registered Office
Every company must have a local registered office whose location is filed with the Registrar and published by public notice. If the directors change its location it must be done by a formal resolution. A certified copy of the change of location resolution must be filed with the Registrar within 30 days of the resolution being passed.
Shareholders
A minimum of one shareholder is required who can be the sole director of the company.
A Registry of Members (shareholders) is required, but does not have to be kept at the registered office. Nor does the Registry of Members have to be available for inspection by the government or the public. The only exception is when an order for production is issued under the Tax Information Authority Law.
Shares may be issued:
• With or without nominal or par value;
• Negotiable or non-negotiable;
• Premium over par value:
• Issued in fractions of shares (with corresponding fractions of rights and liabilities);
• Issued with deferred, preferred, or other special rights; and
• Bearer shares (except when the company owns Cayman real property).
Share certificates are proof of ownership, but shares can be issued without certificates. Registered shares are also allowed.
Shares may be transferred if the Articles of Association provide for them or may restrict transfers.
Dividends may be paid out if the Articles of Association so provide.
Directors and Officers
A minimum of one director is required. Directors may be residents of and residing in any country. Since the Memorandum of Association lists the initial director(s), any removal and addition of directors must be in accordance with the Articles of Association.
Liabilities of the directors may be limited or unlimited according to the Articles of Association.
The Board of Directors is responsible for the management of the company and its officers. The Articles of Association should provide all the powers, duties, and responsibilities for the directors and officers.
The company has the option to appoint officers to manage the daily affairs like a President, Treasurer and/or a Secretary.
The names and addresses of the officers and directors must be maintained in a Register of Directors & Officers stored at the registered office. Within 60 days of the first appointment, a copy of the Register must be filed with the Registrar of Companies. The same requirements apply for any changes of directors or officers.
Accounting
The government does not require specific standards for accounting and bookkeeping. However, every company must maintain adequate accounting records showing income, expenses, assets, and liabilities. While the records do not have to be kept in the Cayman Islands, they must be available if the government and its tax authorities were to give notice or an order to inspect them.
There is no requirement for any audits or the appointment of auditors.
Minimum Authorized Capital
While not required, most exempted companies choose an authorized capital of $50,000 because this is the maximum capital a company can have to qualify for the lowest government registration fee.
Annual Filing
Every January each company must file a return with the Registrar declaring whether any changes to the Memorandum of Association have been made, and that all business was conducted outside of the islands and that no trade was conducted inside the islands.
An annual renewal fee must be paid by December 31 for the next year. The fee is a sliding scale based upon the authorized share capital amount.
Taxes
There are no taxes. No income tax, no corporate tax, no capital gains taxes, no gift taxes, no inheritance taxes, no wealth tax, or any other tax for a company exclusively conducting business outside of the islands.
Annual General Meeting
There is no requirement to hold an annual general meetings for the directors or the members (shareholders).
Public Records
The only document filed with the Registrar is the Memorandum & Articles of Association which is not accessible to the general public.
Registration Time
(Once you’ve passed Compliance checks) a Caymans Exempt Company can be registered in as little as 3 to 4 business days.
Shelf Companies
Shelf companies are not available for purchase in the Cayman Islands.
Summary
A Cayman Islands Exempted Company offers the following benefits:
- 100% foreign ownership
- no taxes
- privacy
- limited liability
- one shareholder/director for greater control
- no audits
- no required meetings
- English is their official language AND
- The Cayman Islands is a highly respected name/jurisdiction in International Business and Investment markets making it attractive to investors, banks suppliers and clients
OCI FEES FOR CAYMANS EXEMPT COMPANIES
INCORPORATION
Incorporation – Exempt Company $US 3,271.50
(Government Filing, Beneficial Ownership Filings, Economic Substance
Notification and Filing, Annual Return Filing, and Professional Fee)
ANNUAL MAINTENANCE
Annual Registered Office / Registered Agent $2,721.50
(Fee includes Annual Compliance Review – Regulatory
and Beneficial Ownership, Economic Substance
Annual Notification & Return Filing),
Government Annual Fee (Standard Share Capital))
DISBURSEMENTS
Notary Fee 35
Online Filing Fee 25
Incoming wire transfer (bank fee) 15
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DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.
