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The Cayman Islands, located in the western Caribbean Sea, began developing itself into a major international financial center in the 1960s. There are more than 92,000 companies registered with the Registry of Companies in Cayman Islands. The Companies Registry has played an integral part in the development of the Cayman Islands as a highly ranked financial center.
in the international business community. The growth continues at a steady pace with an average of 9,200 new companies registered each year over the past decade.
Advantages of registering a company in the Cayman Islands include the following:
1. Ready availability of investment, legal and other advice and expert management services at competitive fees;
2. Reasonable reporting requirements;
3. Ability to form a company with only one shareholder, with no minimum capitalization requirements;
4. Tax neutrality - there are no corporation, capital gains, payroll, property or withholding taxes on any type of company, domestic or foreign.
The range of purposes for which a Cayman company can be used includes investment, sales processing, trading, shipping operations, stock dealing, real estate holding, the ownership and licensing of patents, international financing, mutual funds, insurance, securitization, structured finance and aircraft finance.
For Chinese investors, Cayman Islands has been widely recognized and used for public listings on the Hong Kong Stock Exchange. As one of the policies to lure Chinese investors, Chinese names are allowed on the Certificate of Incorporation and the migration of domicile permitted.
There is a variety of types of companies that can be registered in the Cayman Islands: Resident Company, Non-Resident Company, Exempted Companies and Foreign Company. They may be incorporated with members' liability limited by shares or by guarantee, as unlimited companies, or as non-profit organizations. Exempted Companies are the preferred type for international transactions.
Resident Company.
Companies conduct business primarily in the Cayman Islands.
These are, for the most part, companies carrying on business within the Cayman Islands. A company conducting banking and or trust business must obtain a license under the Banks and Trust Companies Law. Companies administering mutual funds are licensed under the Mutual Funds Law. Companies engaging in the insurance business must obtain a license under the Insurance Law, and those wishing to operate in company management must obtain a license under the Companies Management Law.
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 amounts of paid-up capital. This type of company is also allowed to hold land as defined under the Companies Law.
A company wishing to trade within the Cayman Islands, e.g., in retail trading, real estate, hotel or restaurant operation, maintenance services or local shipping, must obtain a license under the Trade and Business Licensing Law, and if less than 60 percent of the equity is Caymanian-owned, the Trade and Business Licensing Board will have to be convinced of the need for the company's services.
Non-Resident Company.
Company conducting business in the Cayman Islands only as needed to further a foreign business (virtually identical to an exempted company, except for, such companies must maintain at the registered office, available for public inspection, a register of their past and present members).
The non-resident company is an alternative to the exempted company. Such 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. The company may deal in shares of exempted companies, foreign corporations and partnerships, but may only carry on such other business in the Cayman Islands as is necessary for the furtherance of its foreign business. Application for nonresident status should be addressed to the Minister of Finance through the Registrar of Companies and must state that the company does not intend to carry on business within the Cayman Islands. Non-resident companies may convert to Resident Companies or to Exempted Companies.
Exempted Companies.
Companies conducting business activities primarily outside of the Cayman Islands.
An exempted company is not required to keep a register of members open for public inspection (a requirement for resident and non-resident companies). It is not required to hold an annual general meeting in the islands (which resident and non-resident companies must). An exempted company may alter its Memorandum and Articles of Association without restriction, but must notify the Registrar of any changes. It may offer shares to the public in Cayman if listed on the Cayman Islands Stock Exchange (CSX). An exempted company may issue shares with nominal or no par value. The annual return to the Registrar requires a 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; the company's operations have been mainly outside the Cayman Islands; and all bearer shares are kept by an approved custodian.
An exempted company is also not required to include the word "Limited" or the abbreviation "Ltd." after its name. The Registrar must give one month's notice before taking action to strike off an exempted company. An exempted company may express its capital in any currency or in multiple currencies.
Within the exempted type, the following are also offered:
Foreign Company.
A company incorporated outside of the Cayman Islands which carries on business locally.
Registration as a foreign company in the Cayman Islands is necessary to enable non-Cayman Islands companies to hold land or carry on business in the Cayman Islands, or to act as the general partner of a Cayman Islands Exempted Limited Partnership.
Such a company must be registered in Cayman, and for this the Registrar must be supplied with: A certified copy of the foreign company's certificate of formation or incorporation, or the equivalent document issued by the relevant authority as evidence of its formation; a certificate of good standing issued by the relevant authority or, if the relevant Authority does not issue a certificate of good standing, a declaration signed by a director of the foreign company that the foreign company is in good standing with the relevant authority; a certified copy of any charter, by-laws or memorandum or articles of association or other constitutional document of the foreign company; a list and specified details of the directors, and the name and address of a person resident in the Islands who is authorized to accept service of process and any notice(s) on behalf of the company.
The most convenient way to incorporate a company in the Cayman Islands is to engage one of the professional firms licensed for this purpose. These firms can provide such services as: registered office; nominee shareholders; directors and other officers; and management of the company on the instruction of the beneficial owners.
Basic information required for incorporation is a set of Memorandum and Articles of Association subscribed by the proposed shareholders and accompanied by the relevant incorporation fee and revenue stamps. Where an application is in respect of an exempted company, an affidavit duly signed and notarized must be enclosed.
There is no minimum paid-in capital requirement in Cayman Islands. Companies must have at least one member. A register of directors and officers must be filed with the Registrar of Companies, and annual returns must be fined with the ROC.
All companies must have a registered office in the Cayman Islands. For exempted and non-resident companies this must be provided by a local CIMA licensed company management, law or accountancy practice or trust company. Such firms will supply their schedules of fees on request.
There is no requirement that a company's directors have to hold annual meetings in the Cayman Islands. Only regulated entities i.e. banks, trusts companies, insurance companies or other financial service providers are required to file annual audited accounts with the Regulatory Authority. Audited accounts to regulators will include profit statements. Annual returns to the Registrar of Companies do not include financial statements.
All service providers are required to keep a file of information which can be produced pursuant to procedures provided in legislative enactment. Regulated entities are required to keep full accounts and file the same with regulators. All entities are required to keep accounts.
There are well-established mechanisms for cooperation with law enforcement agencies, both locally and overseas, to assure the highest standards of probity throughout Cayman's financial industry. Within this framework, protection of the legitimate interests of clients is safeguarded. Cayman Islands has a wide network of Tax Information Exchange Agreements (TIEAs) which allow for information exchange as per the agreements. Cayman Islands signed a TIEA with China in 2011.
The Registrar is able to release on inquiry the name, type of company, the date of registration, the address of its registered office, and the status of the company. Except where assistance to law enforcement agencies to combat illicit activity is mandated or authorized, disclosure of information by government officials, professional agents, attorneys and accountants and their staffs is prohibited.