The accounting and audit requirements for a company in the Cayman Islands
are simple and, in general, they only make it mandatory for company owners to submit a simple annual return. Particular cases include those companies that are regulated by the Cayman Islands Monetary Authority, as our agents who specialize in Cayman Islands incorporation
The Cayman Islands is an attractive offshore jurisdiction not only because of the tax-free regime for exempted companies but also because the general management of the legal entity is a simple one, with few statutory requirements for accounting and audit.
The only existing professional accountancy organization in the Islands is the Cayman Islands Institute of Professional Accountants (CIIPA) and it is mandatory for auditors in this jurisdiction to be a practitioner member of CIIPA and also hold a license. The law governing this profession is the Accountants Law of 2016.
When setting up a Cayman Islands company investors should consider working with local licensed professionals and for this purpose, they can reach out to our team.
Annual filing requirements for a Cayman Islands exempted company
The exempted company
is the business form generally incorporated by foreign investors who wish to perform various offshore activities in this jurisdiction. The general incorporation process is fast and straightforward and, as listed below, the annual filing requirements are simple.
Companies are required to file an annual return that contains the following information:
- relevant changes: these include any changes to the company’s articles of association and memorandum since the last filing took place.
- the nature of the operations: a statement proving that the operations of the company were mainly conducted outside of the Cayman Islands, so as to comply with the exempted status.
- non-trading compliance: a statement showing that the company is not engaged in trading with local companies, except for the promotion of the offshore business.
- the fees: upon filing the annual return the company must also pay its annual fees with the Companies Registry.
Companies in the Cayman Islands need to keep books of accounts but are not required to file the financial statements. This is because they are not under the regulation of the Monetary Authority nor any other government authority. Small and medium companies may also need to prepare a general purpose financial statement and for this purpose, they can use the International Financial Reporting Standards (IFRS) for SMEs or any other recognized Generally Accepted Accounting Principles (GAAP) framework.
The company’s registered agent files the annual return and all of the other submissions necessary throughout the year. The registrar of beneficial ownership of the company also needs to be updated, however, this information remains confidential. One of our agents who specialize in Cayman Islands incorporation can help you with detailed information about confidentiality and the use of nominee directors and shareholders.
Accounting and auditing requirements for a regulated Cayman Islands company
The statutory accounting and auditing requirements differ for companies in the Cayman Islands that are regulated by the Monetary Authority. These companies need to prepare and file financial statements on an annual basis.
The companies that are regulated by CIMA include those who are established and function under the Banks and Trust Companies Law, the Mutual Funds Law, the Insurance Law or the Securities Investment Business Law.
Audit reports for these types of regulated businesses need to be issued by a licensed member of the Institute of Professional Accountants. In most cases, the audit is performed by observing the US Generally Accepted Auditing Standards (GAAS) or the International Standards on Auditing (ISA). According to the Companies Law, however, companies established on the territory of the Cayman Islands are not subject to an annual audit although it is permitted by law to audit the financial statements periodically as determined by the company. One of our Cayman Islands company formation agents can give you more information about the auditing requirements as well as recommendations according to the type of business the company is engaged in.
The Cayman Islands allows for a flexible adoption of the accounting and auditing standards that are to be used by regulated entities. In practice, many of these are performed by observing the United States auditing standards or the international financial reporting standards.
For more information about accounting and auditing requirements in the Islands, please contact
one of our Cayman Islands incorporation specialists
. We can answer specific questions on the requirements according to the type of company and its activities.