The Cayman Islands are a British Crown Colony consisting of a small chain of islands in the Caribbean lying approximately 480 miles south of Miami, Florida. The area is about 260 square kilometres and consist of the well-known islands of Grand Cayman and the “sister islands” of Cayman Brac and Little Cayman. Grand Cayman, the largest of the three islands, is the only significantly populated island with 30,000 of its approximately 35,000 residents living in George Town, the capital.
TYPE OF COMPANY AND RESTRICTIONS ON TRADING
There are two principal types of companies suited for offshore operations, which are : The ordinary (non-resident) and the exempt, both types of companies are limited by shares.
Structurally, both are the same type of Limited Liability Company. However, the Financial Secretary certifies a non-resident company, as a company, which does not intend to carry on business within the Cayman Islands. An exempt company, instead, has applied for and been granted “exempt” status by the Financial Secretary and cannot carry on business in the Islands either. The exempt company may issue bearer shares and maintain its register of shareholders confidential, although in practice an ordinary (non-resident) company may utilize nominee shareholders. The exempt company files annually a compliance statement, instead of a detailed annual return. An exempt company can be granted an exemption from future taxes for a period of 20 years, which is renewable. However, it should be noted that there are no taxes in the Cayman Islands, anyway. Exempt companies are not permitted to own land in the Cayman Islands. Recently, specific legislation was enacted which introduced the new concept of an “exempted limited Duration Company”. A limited duration company is a company that has at least 2 subscribers or 2 members; a Memorandum of Association which limits the duration of the company to a period of 30 years or less; and the name of the company includes at its end “Limited Duration Company” or “LDC”.
PROCEDURE TO INCORPORATE
Registered Agent will have the company name check for about two to three working days and delivers the Memorandum of Association and Articles of Association to the Registry together with the appropriate fee. The incorporation will usually take about three to four weeks, it depends on the acceptance of the due diligence documents.
** Due Diligence Requirement
LANGUAGE OF LEGISLATION AND CORPORATE DOCUMENTS
Ordinary (non-resident) must utilize the word Limited or Ltd. in their ending, while exempt companies can use virtually any ending, and do not have to specifically connote in the name that the liability is limited. However, it is the practice to use the common endings that include limited liability, i.e.: Inc., Corp., S.A., A.G., Ltd., etc.
LANGUAGE OF NAME
Company can be incorporated using any language. Chinese company name is allowed and will show on the Certificate of Incorporation.
REGISTERED OFFICE REQUIRED
Yes, must be maintained in Cayman Islands at the address of a licensed management company.
NAMES REQUIRING CONSENT OR LICENCE
No Company may use the word bank, trust, insurance, etc., unless a special license is obtained. Similarly, without the approval of the Registrar, no name that is considered to suggest connection with any public board, local authority, or royal connection is permitted.
AUTHORISED SHARE CAPITAL
There is no statutory minimum share capital other than the smallest unit currency in which the capital is authorized. The maximum capital that pays the minimum registration and annual licence fee is US$50,000 for ordinary (non-resident) and exempt companies.
CLASSES OF SHARES PERMITTED
Registered shares of par or no par value, bearer shares, preference shares, redeemable shares and voting or non-voting shares are permitted.
BEARER SHARES PERMITTED
While bearer shares are permitted, in practice they are not encouraged and bearer share certificates only be held by approved custodians.
DISCLOSURE OF BENEFICIAL OWNERSHIP TO AUTHORITIES
Both type of companies must notify the Registrar of the names and addresses of its directors and officers. However, the Registrar can only make this information available to the Registered Office, which can obtain it in the form of a Certificate of Incumbency. Information will not be released in the public records.
Each company is required to keep the following registers, which are usually kept at the company’s registered office, although the register of mortgages and charges and the register of directors and officers are the only registers required by law to be maintained by the registered office:
a. Register of Directors and Officers – This is required only to contain the names and addresses of the directors and officers, but normally also contain their dates of appointment and removal or resignation. A copy of the Register of Directors and Officers is required to be filed in Registrar of Companies but is not available for inspection.
b. Register of Members – This must contain the names and addresses of the shareholders of the company, the numbers of shares held by each, the distinguishing numbers (if any) of those shares, the amount paid or agreed to be paid on the shares, together with the date on which each person became and ceased to be a shareholder of the company. Every exempted company must keep a Register of Members and the original or a copy should be kept at the Registered Office.
c. Register of Mortgage – This must contain details of all mortgages and charges specifically affecting property of the company, including a short description of the property mortgaged for charged, the amount of the charge created and the names of the mortgages or persons entitled to the charge.
An ordinary (non‑resident) company must file an annual return containing details of its shareholders, while an exempt company only needs to file an annual declaration of compliance with the company’s law signed by an officer or director. Annual return is required to be lodged but details of the directors or members will not be disclosed.
MOVEMENT OF FUNDS
There are no exchange control regulations of any type in the Cayman Islands. There is a local Cayman dollar. However, in practice, the US Dollar circulates freely on the Islands, at a fixed exchange rate of CI$1.00 equals US$1.20.
The Confidential Relationships (Preservation) Law makes it a criminal offense, punishable by prison and severe fines, to divulge information obtained as a result of violating professional confidence. The law applies, not only to those caught divulging information in Cayman, but also to outsiders seeking to obtain unauthorized information.
There is a mutual legal assistance treaty with the United States. The information exchanged is strictly for prosecuting unlawful criminal activity, and specifically prohibits using the treaty to obtain information related directly or indirectly to taxation. This treaty has served to enhance the quality and reputation of the Cayman Islands offshore sector and has not infringed on the confidentiality requirements of legitimate business interests.
DOUBLE TAXATION AGREEMENTS
FINANCIAL STATEMENT REQUIREMENTS
Annual accounts do not have to be filed, nor do they require appointment of auditor.
An ordinary (non-resident) company must hold at least one Annual General Meeting of Shareholders, which can be held anywhere in the world. Alternates or Proxies usually accomplish this requirement.
The minimum number of directors is one. Directors may be natural persons or bodies corporate. They can be of any nationality and need not be Cayman Islands resident.
A company secretary is not a requirement under the Act, but at the option of the Company a secretary may be appointed to facilitate signing obligations.
One shareholder is required and no particular nationality or qualification is necessary. For an ordinary (non-resident) company, names and addresses of shareholders have to be disclosed to the Registrar upon filing the annual return and the register is available for public inspection. The Registrar is obliged to keep the information confidential.
Exempt companies may issue bearer shares as long as they are fully paid (restricted mobility), while ordinary (non-resident) companies cannot. For both types of companies registered shares may be issued partly paid.
We are pleased to incorporate a company with client’s proposed name. All companies are provided with our comprehensive company kit, include the following:
* Certificate of Incorporation
* Subscriber Appointment of First Director(s)
* 1 Statutory Book
* Original & copies of Memorandum & Articles of Association
* A Corporate Seal
* A Pre-ink Stamp
* Share Certificates
Panocean Secretarial Group will be happy to provide you with a schedule of our current fees for the company set up and provision of company secretary/correspondence address/nominee services upon request.
These are only the general guidelines and they do not constitute any legal liability for inaccurate information mentioned above.
Panocean Secretarial Services Limited ©2004 Copyright. All rights reserved. It is not allowed to reproduce, transmit or re-keying the above information.