company law in the Cayman Islands
This guide sets out a summary of the requirements relating to the formation of an exempted company in the Cayman Islands.
The Cayman Islands 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, there is no personal or corporate taxation.
We strongly recommend that before incorporating a company in the Cayman Islands, you consult with tax, legal and other professional advisers in your own country; this firm will not advise on any foreign legal or tax matters outside of the Cayman Islands.
The information required for incorporation is as follows:-
(i) The preferred name of the exempted company with at least two alternatives.
(ii) The authorised share capital of the exempted company. The majority of exempted companies are incorporated with an authorised capital of US$50,000 as this is the maximum authorised capital permitted for payment of the minimum government fee.
(iii) Any special classes of shares desired and the par value of the shares.
(iv) The full contact details of the beneficial owner(s) of the shares;
(v) whether the shares are to be registered or bearer; and,
(vi) the number of shares to be issued to each shareholder.
(vii) If the objects of the exempted company are to be restricted, particulars of the purpose of the exempted company will be required; our standard objects clause is widely drafted.
(viii) The names and addresses of the directors and officers which must be filed at the office of the Registrar of Companies. A simple notice of acceptance of appointment by each prospective director and officer should also be provided. Please note that an exempted company need only have one director.
An introduction to the Cayman Islands Exempted Company
An "exempted company" under The Companies Law of the Cayman Islands (the “Companies Law”) is one whose objects are to be carried out mainly outside the Cayman Islands. The advantages afforded by the law to exempted companies over ordinary (non-resident) companies include:
(a) An exempted company may be granted a twenty year guarantee that it will not be subjected to taxation in the event taxation is introduced in the Cayman Islands;
(b) Names of the shareholders of an exempted company are not required to be filed with the Registrar of Companies and an exempted company need only have one shareholder;
(c) Names of the shareholders of an exempted company are not required to be filed with the Registrar of Companies and an exempted company need only have one shareholder;
(d) The annual reporting requirements are minimal and consist only of a statement, signed by the company secretary or a director, that operations of the exempted company have been carried out mainly outside of the Cayman Islands and that the provisions of Section 193 of the Companies Law have been complied with.
(e) An exempted company is permitted to issue "no par value" shares.
(f) An exempted company is not required by law to hold a general meeting of its members.
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.
Incorporation Costs, Annual Fees & Disbursements
Aside from the incorporation, filing fees and stamp duty (presently US$1,357), there are annual fees which are due in January. Currently, the annual fee for an exempt company is US$863.66.
We charge US$1,200 to incorporate an exempted company and US$500 per hour for general legal work which you may require over and above the incorporation.
Please note that an additional ‘express fee’ will be payable for an expedited incorporation.
exempt companies in the Cayman Islands
Once all due diligence procedures have been completed, material documents are filed with the Registrar and the date of incorporation will be the date of filing. Whilst it may take about a week to receive the Certificate from the Registrar, this process can be expedited upon the payment of an ‘express fee’.