Against a background of high levels of privacy and data protection, the Cayman Islands attract businessmen seeking to ensure the anonymity of their financial transactions. The rich financial infrastructure and experienced professionals make these islands an ideal choice for setting up and managing offshore companies.
ADVANTAGES OF COMPANY FORMATION IN THE CAYMAN ISLANDS
The main advantages of setting up a company in the Cayman Islands:
- there is a favorable and reliable regulatory regime;
- zero-tax jurisdiction – no corporation tax, property tax, capital gains tax, payroll tax, withholding tax, income tax;
- one person can serve as a director and/or shareholder and have any nationality, also no residency in the Cayman Islands is required;
- there is no minimum capital requirement;
- no annual audit is required for an offshore company in the Cayman Islands;
- confidentiality – there are well-established mechanisms for cooperation with law enforcement agencies, both local and foreign, to ensure the highest standards of integrity throughout the financial industry in the Cayman Islands.
TYPES OF COMPANIES IN THE CAYMAN ISLANDS
According to the Cayman Islands General Registry (“CIGR”), the following legal forms exist in the Cayman Islands:
- Associations Not for Profit;
- Exempt Company;
- Foundation Company;
- Limited Liability Company;
- Non-Resident Company;
- Overseas Company;
- Resident Company;
- Special Economic Zone Company;
- Unlimited Company.
The most widespread organizational and legal forms are:
- Exempt Company – if the proposed activities of the company will be conducted mainly outside the Cayman Islands – offshore areas – registrants can apply for registration as an Exempt Company. It is created under Part 7 of the Companies Act (2023 Revision) (“CA”).
The requirements for the Exempt Company are outlined in Table 1 below:
Table 2. Requirements for the Exempt Company
|Name||it is not required to include the word “Limited” or the abbreviation “Ltd.” at the end of the name|
|Registered Office||registered office in the Cayman Islands|
|Minimum number of shareholders||1 shareholder (individual/legal entity) who can be a resident of any country|
|Minimum number of directors||1 director (individual/legal entity), who can be a resident of any country|
|Company Secretary||yes (individual/legal entity)|
|Public register of members||there is no obligation to keep a register of members open for public viewing|
|Annual meetings||there is no obligation to spend in the Cayman Islands|
|Authorized capital||there is no minimum authorized capital requirement, but it is recommended that it should not exceed 50 000 USD|
|Founding documents||Memorandum of AssociationArticles of Association|
|Types of shares||shares with or without par value|
|Confidential Information||the company is not required to maintain a register of members, which will be open for public viewing|
|Reporting||there is no requirement to file the results of the audit, you only need to keep records of your financial activities (ledgers)|
|Economic presence||required for certain types of business (for example, banking, insurance, finance and leasing, intellectual property business, etc.)|
- Limited Liability Company or LLC – If the proposed business of the company will be conducted primarily outside the Cayman Islands – offshore areas – registrants may apply to register as an LLC under the Limited Liability Companies Act (2021 Revision) (“LLCA”).
The LLC requirements are outlined in Table 2 below:
Table 2. Requirements for the Limited Liability Company
|Name||can, but is not required to, include as a suffix the words “Limited Liability Company” or the abbreviation “L.L.C.” or “LLC”;in the case of an LLC operating in a special economic zone, include the words “Special Economic Zone” or the letters “SEZ”; may be accompanied by the double foreign name|
|Form||the LLC is a hybrid between a partnership and a company: like companies limited by shares, it has legal personality, so company members cannot be held personally liable for the company’s debts or obligations; while like partnerships, LLCs are governed by a agreement between the participants (the LLC Agreement)|
|Office||registered office in the Cayman Islands; the LLC may also, in accordance with the terms of the LLC Agreement, change its registered office address to another address in the Islands and, within thirty days of such change, file (in original, copy or by authorized electronic means) with the Registrar an amendment to the registration statement setting forth the new registered office address and the prescribed fee|
|Minimum number of shareholders||1 shareholder|
|Minimum number of directors||1 director|
|Management of Business||carried out either by the members acting by majority vote (or singly, as provided in the LLC Agreement) or by a manager or board of governors elected by the members of the LLC|
|Share capital||does not have charter capital, but the participants acquire a share of LLC|
PROCEDURES FOR REGISTERING COMPANIES IN THE CAYMAN ISLANDS
There are two registration procedures:
- Standard Procedure – it may take 1 week to process the company registration and issue the Certificate of Incorporation.
- Express procedure – the company registration will be processed in 1 day, after payment of an additional “express” fee of 500 USD (government fee).
TAXES IN THE CAYMAN ISLANDS
One of the main advantages of an offshore company in the Cayman Islands is the complete absence of taxation – no income tax, capital gains tax, estate, inheritance or gift tax. There is also no value added tax in the Cayman Islands, as well as personal income tax.
There are no exchange controls in the Cayman Islands.
For the Exempt Company, it is possible to obtain a tax exemption certificate for a period of up to 20 years.
WHY THE CAYMAN ISLANDS ARE THE BEST CHOICE FOR SETTING UP A COMPANY?
The Cayman Islands are seen as an attractive choice for company formation for a number of reasons, including:
- Tax environment: one of the key pluses is zero taxation. This makes the Cayman Islands an attractive destination for businesses looking to minimize tax liabilities.
- Friendly business environment: the jurisdiction is renowned for its business-oriented and welcoming atmosphere. The government authorities and regulators are generally supportive of business and provide simplified procedures for company registration and management.
- Stability and reliability: The Cayman Islands are politically stable and have a well-developed legal system based on British law.
- Privacy: The Cayman Islands provides a high level of privacy for business transactions. Business owners can remain anonymous, which can be important for those seeking to protect their financial data.
- International prestige and credibility: The Cayman Islands is a well-known offshore center for many companies from around the world.
- Diverse company structures: The Cayman Islands offers a variety of corporate structures, including Exempt Companies, LLCs and other forms of organizations. This allows you to find the best fit for your specific business goals.
- Geographic location: the Cayman Islands’ convenient geographic location in the Caribbean provides easy access to customers and markets in North and South America, Europe.
The Manimama team is ready to help you open a company in the Cayman Islands.
We also provide services to help companies obtain a VASP license and assist in opening bank accounts.
|What is the main advantage of creating an offshore company in the Cayman Islands?|
|The Cayman Islands is a zero-tax jurisdiction with no corporate tax, property tax, capital gains tax, payroll tax, value added tax, withholding tax, or income tax.|
|Is it necessary to have a registered office in the Cayman Islands for an Exempt Company or a LLC?|
|Yes, having a registered office in the Cayman Islands is a mandatory requirement for these types of companies.|
|What is the minimum number of directors required for an Exempt Company or a LLC?|
|Under the current laws (CA and LLCA) you need to have at least one director.|
|For which activities must the Exempt Company adhere to the requirement to have an economic presence in the Cayman Islands?|
|An Exempt Company needs to adhere to this requirement to carry out activities such as, for example, banking, insurance, finance and leasing, intellectual property business, etc.|
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