CAYMAN ISLANDS EXEMPTED COMPANIES
The Cayman Islands is a leading offshore jurisdiction that offers a well-regulated and internationally respected, tax-neutral, offshore business environment with a primary focus on the mutual funds industry. The type of Cayman structure required or best suited for a particular activity, will depend largely on the type of business and whether it will be conducting its affairs locally or outside of the Cayman Islands.
The principal statute governing the operations and formation of Cayman Companies is the Companies Law. A limited company may be incorporated either as an ”ordinary company” which is predominantly used and owned by Caymanian residents or as an “exempted company”, a company where the operations of the company are carried on mainly outside of the Cayman islands.
The Companies Law provides for the following types of exempted companies :-
- Exempted Company – May only conduct business from outside of the Cayman Islands. An exempted company is prohibitive from making any invitation to the public to subscribe for any of its shares
- Exempted Limited Duration Company – These are limited to a lifespan of 30 years or less
- Segregated Portfolio Companies – Only an exempted company can apply for registration as a segregated portfolio company
Key Advantages of the Exempt Company
Incorporation Period –
- It usually takes 3-4 working days to incorporate an exempted company
Restrictions on Names and Activities –
- Exempted companies have no restrictions on names. As a matter of local company law the company MUST maintain a registered office address within the Cayman Islands and must also appoint a Cayman resident as registered agent. We would generally provide these services as part of the domiciliary service fee.
Directors and Officers –
- Minimum of one director and corporate directors permitted
Cayman resident directors –
- No requirement
Filing of register of directors –
- Must be filed at the Registrar within 60 days of the first appointment of any director or officer but not available for public inspection
- No requirement for resident shareholder
Liability of Shareholders –
- The liability of the shareholders of an Exempted Company is limited up to the unpaid amount of the shares they hold.
Minimum Number of Shareholders-
- The minimum number of shareholders of an Exempted Company is 1 and the maximum is unlimited.
Nationality/Residency of Shareholders –
- There is no restriction on the nationality or residency of the shareholders.
Restriction on Foreign Investors –
- There are no restriction on foreign investors
Corporate Shareholders –
- The shareholders of an Exempted Company can be individuals and/or legal persons.
Nominee Shareholders –
- The use of nominee shareholders is allowed
Annual Return –
- An annual return must be submitted to the Registrar each January together with the appropriate filing fee. Returns filed after 30 March will incur a penalty fee
- No requirement to file shareholder register or maintain the register at the registered office. Beneficial ownership must be disclosed to Osiris the Service provider
Annual General Meetings –
- No requirement
Company Shares –
- Complete flexibility and can be issued with or without nominal or par value
Bearer Shares –
- Bearer shares must be deposited with a licensed custodian in the Cayman Islands to be held to the order of the beneficial owner.
Company’s Name –
- Can be with a dual name in a foreign script
Books and Records –
- A Cayman company must keep proper records of account with respect to income flows, expenditure and its assets and liabilities
Financial Year End –
- No restrictions, any date may be specified
- No requirement to appoint auditors or file financial statements
Exchange Control –
- No exchange control laws and no restriction on the flow of funds in or out of the Cayman Islands.
- There is no corporation tax, income tax, capital gains tax, inheritance tax or gift tax or any other applicable tax exempt stamp duty on certain documents. An Exempted Company may obtain an undertaking by the Cayman Islands Government confirming its tax-free status for a period of 20 years.
Capital Duty –
- There is a capital duty of CI$50 on the issuance of shares
Withholding Tax on Dividends –
- Dividend payment by a Cayman Islands company to a foreign shareholder (company or individual) does not suffer any withholding tax. Dividend payment by a Cayman Islands company to another Cayman Islands company does not suffer any withholding tax
Debt Finance –
- Cayman Islands companies are often capitalised primarily with debt rather than equity, whether it is by way of intra-group debt or external borrowing. Companies are not required to file financing statements in the Cayman Islands when borrowing money. There are no restrictions prohibiting Cayman Islands companies from giving financial assistance for the acquisition of their own shares, and no requirement to go through a “whitewash” procedure.