Overview of Company Registration in the Cayman Islands
The Cayman Islands is situated in the Western Caribbean and is a popular destination for entrepreneurs worldwide. Earlier, The Cayman Islands used to be a colony of the British Empire, but later it became a British Overseas Territory. The islands are popular and preferable tourist destinations and therefore the tourism sector is one of the key drivers of the nation’s economy.
The islands are a major attraction for entrepreneurs due to their 0% tax rate and reputation as a global centre for financial services, making it a great place for establishing their businesses. Additionally, incorporating a firm on Cayman Island is easy, owing to its minimum compliance requirements.
Benefits of Company Registration in the Cayman Islands
The benefits of Company Registration in the Cayman Islands are enlisted below
Absence of Shares Transfer Tax
One of the benefits of registering a company in the Cayman Islands is the absence of any stamp duty or tax for transferring shares to a third party. However, if the shares are somehow related to the investments in real estate, the entrepreneur would be required to pay the stamp duty and taxes.
Entrepreneur isn't required to submit or file their personal necessary papers with the government of the Cayman Islands. The personal necessary papers include the official papers related to the business intended to be registered and such necessary papers can be kept with the entrepreneur itself. Another point that proves Cayman Islands privacy is the non-requirement of meeting minutes or a shareholder meeting, or even an annual audit, as all such records of the Company are kept private in the Cayman Islands.
Permission for Mergers
This territory permits the merger of the entrepreneur's firm with other firms. The ultimate merger can take place either in that firm or under any jurisdiction. Usually, the merging firms opt to stay in the Cayman Islands because of the several perks offered by the destination.
Fewer Capital Requirements
Several countries mandate a huge deposit in an escrow or a bank before proceeding with the registration of a company which isn't the case for company registration in the Cayman Islands as there isn't any minimum capital requirement for the same.
The stable government and rapidly growing economy owing to the powerful banking structure, tourism, and offshore companies have been the driving factors which attract entrepreneurs.
The process of company registration is extremely quick due to the relatively fewer compliance requirements.
Business Entities for Cayman Islands Company Registration
The different business entities which can be incorporated in the Cayman Islands are discussed below
Limited Liability Company
Entrepreneurs can opt for an LLP if the activities of the Company are majorly carried out offshore. This Company has a separate legal identity; therefore, the members of the Company don't have a personal liability towards the debts and liabilities of the Company.
A foundation company has a separate legal identity and is formed by the founder of the Company for any lawful object, which needn’t be beneficial to other persons only if it falls within the wide parameters permitted by the legislation (Foundation Companies Law, Companies Law, etc.). Its constitutive necessary papers are its MOA and AOA.
An ordinary resident company conducts business within the Cayman Islands. Resident companies should maintain at their registered office a register of the past and present members of the Company, which shall be open for public inspection, and must report to the Registrar annually, giving the names and addresses of members, directors, and the amounts of paid-up capital. This type of Company is also allowed for holding land as defined under the Companies Law.
Non Resident Company
An ordinary non resident company is granted non-resident status through an application to the Minister of Finance through the Registrar of Companies and should state that the Company have no intention of conducting business within the Cayman Islands. The Company may deal in shares of exempted companies, foreign corporations and partnerships, but may only conduct such other business in the Cayman Islands as is necessary for the furtherance of its foreign business.
The applicants can opt for this type of Company if they intend to carry out the proposed activities of a company mainly outside of the Cayman Islands – offshore. The Exempted Company can be further classified into
This type of Company operates until the terminal time or event specified in its MOA However, its duration shouldn’t exceed 30 years and it must have at least two members.
An SPC enables the segregation of the assets and liabilities of individual portfolios, also known as cells in some parts of the world, from the overall Company's general assets as well as from other portfolios. Each portfolio, however, isn’t seen as a separate legal entity.
An overseas company (also known as a foreign company) is a company outside the Cayman Islands. Registration in accordance with Part IX of the Companies Law is essential to enable overseas companies for holding land or conducting business in the territory or to act as the general partner of an Exempted Limited Partnership.
Special Economic Zone Company
A special economic zone company is authorised for conducting business in a special economic zone in accordance with any Law in force in the Islands. The Companies Law (PART VIIIA) permits the re-registration of existing exempt companies as special economic zone companies. The MOA of such companies must mention the intention of carrying on special economic zone business. The name of the Company must include "special economic zone company" or "SEZC."
In the case of an unlimited company, the liability of all its shareholders or members is unlimited. Its members or shareholders have joint, several and non-limited obligations for meeting any deficiency in the assets of the Company for settling outstanding debts in the event of the winding up of the Company. The MOA and AOA must mention the number of members with which the Company proposes to be registered and, if the Company has a share capital, the amount of share capital with which the Company proposes to be registered.
Associations not For Profits
It is usually formed for the purpose of education, religion, and charity. It is approved by the governor of Cayman Island. Association not for profits doesn’t have to publish their name or constituent members to the registrar. Any profits earned by this association would be mainly utilized for the purpose of religion, education as well as charity.
Eligibility Criteria for the Cayman Islands Company Registration
The applicant must fulfil the below-mentioned eligibility criteria for company registration in the Cayman Islands
- Minimum 1 Shareholder
- Minimum 1 Director
- No Minimum Paid up capital
- Yearly Annual General Meeting
- Yearly Annual returns
necessary papers Required for Company Registration in Cayman Islands
The necessary papers required for Company Registration in the Cayman Islands include
- Articles of Association
- Approval from the Cayman Islands Monetary Authority:
- Memorandum of Association:
- Evidence that the financial statements are accurate
Procedure of Company Registration in the Cayman Islands
The procedure for company registration in the Cayman Islands is discussed below
Selection of the business structure for the Company
The first step of company registration in the Cayman Islands is the selection of the business structure of the Company as per its operations.
The applicant must choose a unique name and reserve the same for its Company. The chosen name shall be reserved only upon the approval of The Companies Registry. The applicant must ensure that the chosen name isn’t similar to any other firm in order to avoid duplicacy of names, In case the proposed name contains restricted words or phrases prior approval is required from CIMA or the Registrar before an application is submitted for incorporation.
Filing and Submission of Applications and necessary papers
After the reservation of the name, the applicant must file the application for the registration of the Company along with submitting the necessary papers required for the same to the General Registry of the Cayman Islands.
Completion of Registration
The applicant's Company shall be registered if the competent authority is satisfied with the adequacy and accuracy of the registration application.
Opening a bank account
Upon the successful registration of the Company in the Cayman Islands, the applicant is required to open a bank account to carry out the business transactions.
Tax System in the Cayman Islands
The Cayman Islands tops the list of tax havens. Unlike most other countries, the Cayman Islands doesn’t generally impose a company tax, making it an ideal location for foreign businesses to establish their business entities or save their revenue from taxation.
Apart from freedom from corporate income tax, the territory doesn't impose any direct tax on its residents. There isn’t any property tax, income tax, payroll tax, withholding tax, or even capital gains, due to which the Cayman Islands are considered tax neutral.