The Cayman Islands provide a highly regulated, internationally acknowledged, tax-neutral offshore business climate which is dynamic and responsive, with more than 90,000 active companies being registered in this jurisdiction.
The Islands were one of the traditional offshore jurisdictions alongside Bermuda and it is their longstanding tradition that continues to make them attractive to foreign investors worldwide.
The fact that they were once part of the British Empire means that the current legal system is based on the English Common Law – another advantage for foreign investors.
Requirements for registering a company in Cayman Islands
A company in the Cayman Islands can be set up as an Exempted Company or as a Non-Resident exempted Company. The first business form tends to have a higher degree of popularity among foreign entrepreneurs because of its tax-exempt status.
Shelf companies or readymade companies are available for those foreign investors who wish to purchase a company that has already been incorporated.
The company can select a name that is either in English or in Chinese and the minimum share capital upon incorporation is 50,000 USD. There are no restrictions on the nationality of the company founders and shareholder and directors can be either individuals or other corporations. Annual fees or registration will apply, although they are not burdensome for investors.
A requirement for company formation in Cayman Islands is to have a registered office and a registered agent. All of the official communications from the relevant agencies will be sent to the company’s registered office located in the Islands. The location of the office is public and any individual can obtain the address after submitting a proper inquiry with the Registrar. Another requirement is that the office is clearly marked with the company’s logo or name. The address of the registered office can be changed by means of a Director’s Resolution and an approval from the Registrar to move the office is issued within 30 days from the date of the Resolution.
While it is not mandatory to appoint an officer, it is advisable to appoint a secretary for the company who will fulfill a set of administrative actions, including but not limited to making sure that the company submits all of the filings in due time.
The registered office and the registered agent services can be included in the special company formation packages offered by companies that provide incorporation services.
The company must submit a set of annual returns to the Registrar, however, the requirements are light and contain the following:
-a statement that there has been no change in the company’s constitutive documents, name, and objectives, other than the ones previously reported (if any).
-the operations of the company have been performed outside the Islands (for the most part and since the last filing).
-the company has not engaged in trading within the Islands, with a company or an individual.
We invite you to watch the following video on company formation in Cayman Islands:
The list below summarizes the main rules for those who want to register a company in Cayman Islands. Our team of agents can help detail each of these requirements.
Incorporation capital: the Cayman Islands do not require investors to provide a specific amount of authorized capital upon incorporation.
Director: just one company director is needed to form the company and there are no residency requirements.
Shareholder: a Cayman Islands company can be incorporated with a minimum of one shareholder
Company name: it must be unique and not infringe any other existing names; certain words, like the word bank, can be included only if the company has a valid license for the activity.
Registered office: a registered office in the Island is mandatory for company formation
Registered agent: the registered agent must be appointed for the purpose of forming a company in the Cayman Islands.
Most company formation packages in the Cayman Islands will offer a registered office and registered agent services. Additional services that may be required, and that should be requested during the early stages, are the nominee director and the nominee shareholder services.
Additional information for Cayman Islands incorporation
The Cayman Islands are among the top destinations for offshore business purposes, where the requirements for company formation, company taxation and reporting are minimal. Investors should also take into consideration that annual fees will apply for the registered agent.
Setting up a Cayman Islands company is a straightforward process and one that can take approximately three or four days, depending on the documentation that is required and whether or not investors provide the needed documents at once.
The Cayman Islands company formation process is one that is accomplished in a few key steps. The simplicity of the requirements, as well as the fast procedure, are important factors for investors who choose to incorporate here. When the Articles of Association are prepared and the company name is a unique one, the incorporation and registration can take as little as one day.
The first step for company formation in Cayman Islands is reserving a company name with the Registrar of Companies. the name must be unique and this is a reason why investors who propose a unique name from the beginning will enjoy a faster process. Once this is complete, the founders can proceed to draw up the Articles of Association and the Memorandum.
The application for registering a company in Cayman Islands will generally include the constitutive documents, proof of payment for the applicable fees and a sworn affidavit stating that the company will perform most of its operations outside the Cayman Islands. The registration is complete when the Certificate of Incorporation is signed.
Advantages of setting up a company in the Cayman Islands
Company formation in Cayman Islands has numerous advantages, among which we mention:
•Minimized international taxation: When appropriately structured, a company which is set up here can legally attain international income and minimize international taxation;
•Easy and simple company incorporation: investors need to submit the company’s constitutive documents along with the approved company name, types of shares, authorized capital and registered office address with the Registrar of Companies.
•Light reporting requirements for companies: There are no annual requirements for annual audits or complex accounting procedures. The only requirement is to file an annual return.
•Minimum company management requirements: Cayman Islands company incorporation is possible with only one shareholder and one director. The shareholder and director can be the same individual or a legal entity, and the company can be owned 100% by a foreign citizen;
•Tax-free jurisdiction: There is a complete lack of direct taxation which can be sustained by a 20-year government guarantee against the taxation introduction. To obtain this guarantee, the business owner has to apply for a tax exemption certificate. This implies that there are no corporate taxes, no capital gains taxes, no payroll taxation, no real estate taxes, and no withholding taxes. It is important to note, though, that the tax exemption certificate is only available for exempted businesses;
•Easy management: After the Cayman Islands exempted company registration the business can be managed from any country outside of the Islands.
The Cayman Islands not only provide a tax-free business environment and very low corporate maintenance requirements but they also offer a high degree of investor protection. This is possible because there are no mandatory requirements to disclose the identities of the company shareholders and directors.
The Cayman Islands exempted company is a business structure with many advantages for foreign investors looking to open an offshore company that is 100% foreign owned and not liable to taxation.
George Town offers a fast incorporation process, privacy and flexibility to investors who choose to register a company in Cayman Islands.
In addition to opening a new company in the Cayman Islands, investors who are interested in registering a trademark can do so at the Cayman Islands Intellectual Property Office.
Frequently asked questions
1. What are the benefits of registering a company in Cayman compared to other countries?
The Cayman Islands is famous for registering offshore companies and it confers and extremely advantageous tax system which does not impose taxes on income, corporate gains, inheritance, capital gains or gifts.
The main difference between the Cayman Islands and other countries, more specifically those that also offer options for convenient offshore company formation, is the use of the offshore business. The Cayman Islands have a well structured company law, a trait that has attracted many foreign investors who were particularly interested in opening businesses of a certain type, for example holding companies. Other differences may also refer to the audit requirements, which may be more stringent in different offshore centers.
2. How much time does it take to incorporate an exempted company in Cayman Islands?
A Cayman Islands exempted company is incorporated when the registration documentation is filed with the Registrar of Companies.
This can take as much as four working days because of the fact that the documents need to be drafted accordingly. Investors who wish to open an exempted company do not need to be in the country at all times, they can outsource the first phase, the one involving preparing the documents, to our team of company formation experts. Therefore, in practice, opening a company in the Cayman Islands will be fast for an interested investor.
The certificate of incorporation is issued by the Registrar of Companies in maximum two to three business days after filing.
3. How many directors must an exempted company have?
Such a legal entity in the Cayman Islands should have at least one director. The company director can be an individual or another company. This requirement is mandatory, however, investors should also know that nominee director services are available upon request. Essentially, this means that the founders do not need to act as company directors. They can add an extra layer of confidentiality if they appoint another individual who will act as director under a fiduciary agreement. The director appointed in such a manner will not be the beneficial owner.
4. Does such a company need to have local directors or shareholders?
It is a frequently asked question we often receive. The answer is no, it is not necessary to have local directors and shareholders for setting up a Cayman Islands exempted company.
5. Is Cayman Islands a tax free country?
The Cayman Islands has an alternative tax system. There are no company or corporation taxes, no income taxation, inheritance, capital gains or gift taxes here.
Investors who wish to register a company in Cayman Islands should note that although there are no corporate taxes, the business, once incorporated, will be asked to pay an annual fee which is based on the authorized capital.
The main fees, in force when this article was written, are listed below:
- 800 $: the registration fee for a LLC in the Cayman Islands and the subsequent annual fee;
- 500 $: the fee for the re-registration of the foundation company;
- 120$: the fee for a 90 days name reservation for a LLC;
- 75$: each amendment to the LLC Registration Statement, for example the change of the registered office.
As seen from this list, there are several fees that will apply upon registration and the subsequent annual fees. Investors should keep in mind that the currency used is the Cayman Islands Dollar and the conversion rate in USD may be set by the General Registry on the date of the payment.
6. How many shareholders should an exempted company in the Cayman Islands have?
An exempted company in the Cayman Islands should have at least one voting shareholder. Like in the case of the director, only one shareholder is required and he can be an individual or another corporation.
7. What addresses have to be provided for every shareholder or director?
For private persons, a residential address is needed. For legal entities, a registered office address or a business address is required.
Another important requirement in terms of addressed for the new company is that it needs to be based in the Islands. The registered office is to be located in the Cayman Islands. Many foreign investors will choose to use a virtual office package when they open a Cayman Islands exempted company. This package is advantageous because the address of the office will be used for registration and, in many cases, the location is a prestigious one, that will add credibility and help maintain a good business image.
8. Do I have to be physically present in the country to set up the legal entity?
It is not mandatory. However, certain documents may need to be signed by the beneficial owner and our team will need a set of documents for the purpose of incorporation. We encourage you to reach out to us in advance in order to find out our express requirements, the documents that are mandatory as well as any other information that may be of interest before starting the actual incorporation process.
9. How much time it takes to close an exempted company in the Cayman Islands?
In general, the time will depend on the size of the business, its activities and whether or not it has due debts to creditors. In practice, in simple cases this can mean approximately three days, however, we strongly encourage you to reach out to our agents to receive more information because a voluntary liquidation is different from a court-ordered one, and the latter is lengthier.
10. How rapidly can I receive the certificate of incorporation?
Our Cayman Islands company formation consultants appreciate that the time needed for receiving the certificate of incorporation is around two to three business days, unless it is filed on an express basis, when the certificate is returned in a few hours.
The Cayman Islands are an attractive jurisdiction not only because of tax neutrality and privacy but also because of the wide range in which the companies set up have can be used. This flexibility, as well as the geographical positioning close to the United States, makes it a preferred offshore investment center, especially for US investors. A Cayman Islands exempted company can be used for holding purposes, as well as trading and engaging in shipping operations, for real estate holding (as opposed to companies that are only involved in stock holding – which is also a valid option) to holding the ownership of licenses and patents.
The multiple uses, quick and easy reporting requirements and the accessible obligations in terms of capitalization and management all make it advantageous to register a company here.
If you have further questions about the Cayman Islands company incorporation procedures, please do not hesitate to contact our staff.
Call us now at +1.345.925.3500to set up an appointment with our lawyers in George Town. Alternatively you can incorporate your company without traveling to Cayman Islands.
As an International Management Services client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Cayman Islands.