Writen by Bruce Stander
There are five types of companies that may be registered in the Cayman Islands – resident companies, non-resident companies, exempted companies, limited duration companies and foreign companies. They may be incorporated with members' liability limited by shares, guarantee as unlimited companies, or as non-profit organizations.
Exempted Corporation
Exempted companies are identities where the proposed activities of a company are to be carried out mainly outside the Islands. The most appropriate use of offshore transactions is the exempt company which is prohibited from doing business in the Cayman Islands except in pursuance of its offshore business.
Benefits the Exempted Corporation:
An exempted company:
- need not keep a register of members, nor file annual returns with the Registrar
- need not hold an annual general meeting
- Has written guarantee that if taxes ever be introduced in the Islands the company will be exempt for an initial period of 20 years, which period can be increased to 30 years.
- May alter its Memorandum and Articles of Association without restriction.
- may issue shares with nominal or no par value, and which can be either negotiable
or non-negotiable annual meetings must be held once a year in the islands by the company's board of directors
The annual return to the Registrar is a simple matter, requiring only the declaration that:
- No changes, other than those notified to the Registrar, have been made in the Memorandum of Association
- The provisions of the Companies Law have been observed
- The company's operations have been mainly outside the Islands
- An exempted company need not include the word "Limited" after its name
- The Registrar must give one month's notice before taking action to strike off an exempted company
- An exempted company may express its capital in any currency
Incorporation of an Exempted Company Corporate name
A name can be reserved for 30 days.
Any of the following words or abbreviations can not be included:
Chamber of Commerce
Building Society
Royal
Imperial
Empire
Municipal
Chartered
Mutual fund
No name may contain the words "co-operative", "assurance", "bank", "trust", "Insurance or any similar word which in the opinion of the
Registrar connotes any of such activities or any derivative of any of such four words or of such similar words, whether in English or in any other language, or in the opinion of the Registrar suggests or is calculated to suggest any of such activities.
Corporation Registration
They are able to arrange the registration of an exempt company on a same day basis although it will usually take a day or two for the co stating documents to be returned to us.
Resolutions or Amendments
All special resolutions of the company including the change of name of a company or amending the Memorandum or Articles of Association must be filed with the Registrar of Companies within 15 days. A resolution changing directors and officers of the company or changing the registered office of the company must be filed with the Registrar of Companies within 30 days. In addition, an exempt company is required to hold an annual meeting of the directors once a year in the Cayman Islands, and to file an annual return. Alternate directors who approve and file the annual return usually hold the annual meeting. This satisfies the requirement to hold a meeting in the Cayman Islands without actually requiring the directors to come to the Cayman Islands.
Banks, Insurance, and Trust companies Banks, insurance, re-insurance and trust companies may be registered as exempt companies provided they are licensed accordingly.
Capital and Members
The minimum government incorporation fee allows for a share capital of up to US$960,000.00 (US$900,000 for an exempted company) which is, therefore, the authorised share capital most commonly chosen by companies. There are no minimum capitalisation requirements (other than for banks, trust companies and insurance companies).
Shares
Cayman Islands companies may issue shares of different classes and designations such as preferred, common or
Confidentiality
The Register of Shareholders of an exempt company is a confidential document, which may be held at the registered office of the company or at any other place within or outside the Cayman Islands.
Directors and Officers
A minimum of two directors is usually appointed (one director can serve as secretary). There are no nationality or residence requirements for directors.
The subscribers of the Memorandum and Articles of Association appoint the first directors of the company. After that, the shareholders or the existing directors appoint directors for such term as determined by the shareholders or the shareholders or the directors. If not, unfilled positions can be filled by a resolution of the shareholders or of a remaining director. The directors generally elect the officers.
Generally the Register Agent require all directors, officers and members of an exempt company to provide them with two business references each to meet our internal due diligence requirements. If the company intends to be licensed by the Cayman Islands Government, the directors, officers and shareholders (who are natural persons) will be required to complete and file with the Monetary Authority a personal questionnaire in which they will be required among other things to demonstrate their relevant experience in the respective business.
The Register of Directors and Officers in not a public documents, although copies of the registers are filed with the Registrar of Companies.
The Articles of Association of a company may be drafted to permit a director or officer of a company to bind the company and directors and officers have ostensible authority to bind the company.
It is normal for the Articles of Association of a company to permit the Resolutions of the directors to be passed by unanimous consent in writing. Similarly this is normally permissible for shareholders resolution as well.
Meetings
Shareholders must assemble at least once a year at a general meeting. The shareholders' meetings can be held anywhere in the world.
The Articles of Association of an exempt company will define the quorum required at a meeting of the shareholders or the Board of Directors.
The use of proxies or of alternate directors who are local residents can meet this requirement. Directors have the right to appoint a company manager. If the Memorandum and Articles so provide, a meeting of members or directors is considered valid if only one person is present.
The Articles of an exempt company will define the notice the notice period required for meetings of the company.
Books and Registers
A simple exempt company, which has no licenses, will not require to file annual accounts.
An exempt company is required to maintain a register of directors, officers and mortgages and charges at its registered office and a register of members at any place within or outside the Cayman Islands.
It is normal for an exempt company to obtain a company seal, which normally kept at the registered office of the company.
Duplicate seals may be authorised by the company and may be kept at a location approved by the directors of the company. A Company is not required to obtain a seal and pursuant to Cayman Islands law all documents, which were required to be sealed may now be executed as deeds and are not required to be sealed.
An exempt company is required to file an Annual Government Return, and to pay an annual fee to maintain its good standing. In addition an exempt company will normally pay an annual registered office fee. There is no taxes payable by an exempt company and the company may apply to the Executive Council of Government for a tax undertaking. When obtained this guarantees to company exemption from taxes for a period of twenty years from the date of issue.
The information that is available to the public is the following:
Company Name
Date of Incorporation
Company type (i.e. exempt, non-resident etc.)
Company Status (i.e. active or inactive)
Name and Address of registered office
Company Number
Bruce Stander is the Director of UK based Worldwide Corporate Services, specialists in offshore company formation.
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