Besides being a tourist attraction, the Cayman Islands remains one of the hotspots for going offshore worldwide. If you’re taking an interest in this beautiful and full of opportunities island, this is the right blog to spend time on!
This blog will cover all the key features of incorporating an exempted company in the Cayman Islands as well as the application process that you will encounter.
1. The Cayman Islands – Hotspot for Offshore Seekers
Situated in the Caribbean basin, the Cayman Islands is home to one of the leading offshore jurisdictions in the world. One of the reasons behind its popularity is the flexibility of the Cayman Islands “Companies Law”.
Plus, due to the stable government (it is British’s overseas territory) and economy, the Cayman Islands is the perfect opportunity for foreign investors who are offshore seekers.
Most offshore companies in the Cayman Islands are incorporated for holding or international trading purposes. There are several types of companies in the Cayman Islands but in this particular blog, let’s discuss the most go-for type of offshore company – exempted company.
2. Exempted Company – all you should know
It is no doubt that Exempted Companies are the most common form of offshore company in the Cayman Islands. It offers tons of ideal benefits that most foreign investors are longing for.
In simple terms, according to the Companies Law 2020 (Revision), a Cayman Islands exempted company is a company that carries its business mainly outside of the boundaries of the islands. In the case of an exempted company wishing to conduct business within the Cayman Islands, it must hold a license from the relevant authorities.
2.1 Key features of Cayman Islands Exempted Company
Set apart from other types of legal entities in the Cayman Islands, exempted companies come with a diversity of key features that most offshore seekers can’t miss:
The Memorandum of Association. The Memorandum of Association is the constitution of a Cayman company. The Memorandum has to include the following information:
The name of the company
The names of the initial subscribers and how many shares each one owns (one share per subscriber at the minimum)
The company’s purpose
The address of the registered office
Declaration confirming the limited liability for all of its shareholders
Authorized share capital (can be in any currency)
Articles of Association. As the Memorandum of Association, the Articles of Association is also the constitution of the company in the Cayman Islands. The Articles of Association includes internal rules and regulations:
Shares information: issuance, types, how they are transferred, repurchased, or redeemed
Meetings of shareholders
Voting rights of shareholders
Appointment of officers and directors as well as their powers, meetings, compensation
Payments of dividends
Winding-up
Registered Office. A local premise at the Cayman Islands is compulsory. Each company has to file a registered office to the Registrar and publish it by public notice. In the case of changing the registered office address, it must be done in a formal resolution. A certified copy of the new location must be filed with the Registrar within 30 days of the resolution being passed.
Shareholders and Directors. Only one shareholder and one director are required, and it can be the same person. Plus, the directors can be non-resident in the Cayman Islands and can live in any country.
Accounting. There are no special requirements for accounting and bookkeeping. Still, an exempted company must maintain accounting records that clearly state the income, expenses, assets, and liabilities. Even though the records are not compulsory to be kept within the Cayman Islands, they must be available upon request of the governments and its tax authorities.
There is also no requirement for any audits or the appointment of auditors.
Annual Filing. In January each year, the company has to file a return with the Registrar to inform whether any changes to the M&A or not. Plus, information about all businesses that were operated outside of the islands must also be presented in this filing.
Moreover, an annual renewal fee must be paid in January for the next year.
Taxes. When it comes to countries without taxes, Cayman Island (and Exempted Company to be specific) is one of them. No income tax, no corporate tax, no wealth tax, or any other tax.
Nonetheless, there are international rules such as the CFC rules in the US, that may tax your income earned with this type of company.
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