Family Law in the Cayman Islands

The Cayman Islands ("Cayman") is a British overseas territory which is English speaking, economically successful and politically stable. The country offers a well-regulated and respected business environment which is tax neutral and as such, no taxes are payable on:

(a)   Dividends paid to corporate shareholders;

 

(b)   Dividends received from foreign companies;

 

(c)    Interest paid to foreign corporate shareholders; or

 

(d)   Intellectual property (IP) royalties paid to foreign corporate shareholders.

 

Further, there are no transfer pricing rules, restrictions on loans for foreign affiliates or controlled foreign company rules. As a result, Cayman is a highly regarded jurisdiction in which to have a business and complimented by world class corporate and service companies.

 

The type of Cayman company structure will largely depend on the type of business and whether it will be conducting its affairs locally or outside of the Cayman Islands.

company law in the Cayman Islands

The Cayman Islands

Types of Corporate Vehicles

The Companies Law (2012 Revision) governs company formation and the process is straightforward.

 

Where business is conducted within the islands, a local ordinary resident company is used or a foreign company can simply register with the Registrar of Companies.

 

Other forms of business vehicles are: 

(i)    Partnerships - commonly used for private equity funds; 

(ii)   Trusts (including STAR Trusts); and, 

(iii)  Unit Trusts.

 

Where business is conducted outside of Cayman, foreign investors typically use Exempted Limited Liability Companies (ELLC).

 

For more information on ELLC's, click here >

 

Registration and Formation

To form an ordinary resident company:

(a)   The company’s Memorandum & Articles of association must be filed with the Registrar;

 

(b)   The constitutional documents are registered and a certificate of incorporation is issued;

 

(c)    The date of incorporation will be on the date the documents were lodged with the Registrar.

There is no requirement to provide the details of shareholders although the annual return must include a declaration that:

(a)  the company has conducted its operations mainly outside the Cayman Islands; 

(b)  the company has complied with the Companies Law (2013 Revision); and,

(c)  all bearer shares (if any) are kept by an authorised custodian.

Regulated entities must submit audited accounts to the Cayman Islands Monetary Authority but there is no obligation to file accounts with the Registrar.

Duties of Directors and Officers

Directors owe their duties to their company and to shareholders collectively. These duties exist through common law and statutory obligations which include:

(a) A duty to act in good faith and in the best interests of the company;

 

(b)  A duty to exercise due care and skill;

 

(c)  A duty to exercise powers in the company’s interests and only for the purpose or purposes for which they are given;

 

(d) A duty not to put himself in a position where there is an actual or potential conflict between his duty to the company and his personal interests;

 

(e)  A duty not to improperly fetter the exercise of the director’s present or future discretion.

The Use of Corporate Structures

As a tax neutral jurisdiction, the Cayman Islands is a major international finance centre which is highly regulated. Companies incorporated in the jurisdiction are used for a variety of commercial and private purposes, including: 

(i)  Hedge Funds & Investment Companies;

 

(ii)     Asset holding structures;

 

(iii)    Probate & privacy;

 

(iv)    Professional service companies;

 

(v)     Special purpose vehicles (SPV);

 

(vi)    Shipping companies;

 

(vii)   Patent, copyright and royalty companies;

 

(viii)  Banking & Insurance.

To form an ELLC

It is a legal requirement that we must "know our client" and that includes knowledge of the proposed activities of an exempted company which is formed by us. Consequently, we must have basic information on the company’s directors, officers and shareholders. Prior to us incorporating any exempted company, we require the completion of a due diligence questionnaire.

Reporting Requirements

Ordinary Resident Companies:

(a) Annual returns specifying the names, addresses and nationality of the shareholders;

 

(b)  The number of shares held by each identified shareholder; and,

 

(c)   A list of Directors and Officers.

 

Exempted Limited Liability Companies:

In addition to the requirements above, an exempted company must file the following information (including any changes) with the Registrar:

(i)   Location of the registered office; and,

 

(ii)  Details of Directors and Officers.

Regulated Entities
Share Capital and Shareholder Rights

Although there is no minimum or maximum share capital, the size of the authorised amount determines initial registration and government fees.

 

The Companies Law reserves certain rights to shareholders in general meeting or by special resolution. Other rights of shareholders are set out either in the Articles of Association of by way of a shareholder agreement.

formation of Cayman Islands companies

Corporate Management Structures

Companies are managed by a board of Directors. Except that regulated entities are required to have at least two Directors, there is no statutory minimum. Corporate directors are permitted and there is no local residency requirement.

compay formation | Cayman Islands