Besides being a tourist attraction, the Cayman Islands remains one hotspot 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.
You may also refer to Cayman LLC – another choice in the Islands for foreign entrepreneurs to have a comparison to exempted company.
2. Key features of Cayman Islands Exempted Company
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.
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
Copies of the Memorandum and the Articles of Association (the M&A) must be available upon request of all the shareholders.
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. You must file a certified copy of the new location with the Registrar within 30 days of the resolution being passed.
Shareholders and directors
Only one shareholder and one director are required, and they can be the same person. Plus, the directors can be non-resident in the Cayman Islands and can live in any country.
3. Procedure to incorporation
A signed original Memorandum of Association and Articles and an appropriate incorporation fee must be submitted to the Registrar.
Also, a declaration conducted by the subscriber of the company must be handed to the Registrar that the business operation of this proposed exempted company will be mainly outside of the Cayman Islands.
Normally, it will take 3-5 business days for the Registrar to register an exempted company.
4. Post-registration & related matters
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.
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, this filing should also contain information about all businesses that were operated outside of the islands.
Moreover, the company must pay an annual renewal fee in January for the next year.
When it comes to countries without taxes, the Cayman Islands (and Exempted Company to be specific) is one of them. No income tax, no corporate tax, no wealth tax, or any other tax.
International regulations and reports
As a US resident seeking new business opportunities across the border, you’ll need to pay attention to certain rules and standards that may affect your Cayman company.
There are international rules such as the CFC rules in the US that may tax your income earned with this type of company.
Wonder what are CFC rules? Find out in our article: An Overview of Controlled Foreign Corporation Rules.
5. See how BBCIncorp can help!
It is undeniable that the exempted company in the Cayman Islands is an ideal type of legal entity to go offshore. From the stable political environment to the minimum or zero requirements, exempted companies are an ideal option to save your money and invest more.
So, why BBCIncorp?
- Starting from US$3299, only 24 hours and your exempted company is ready to kick off.
- Centralized management portal is where we bring you a streamlined process, great experience, and no worry about key compliance deadlines with auto reminder.
- Various banking options and add-on services to suit your business’s needs after registration.
With a fully online incorporation process at BBCIncorp, you can now easily register your own exempted company in the Cayman Islands.
But forming an offshore company is not something to decide in a rush, in case you need further consulting, our experts are always available to assist you. Just drop us your questions at email@example.com.
See more about our Cayman Exempted Company Formation here.