The Cayman Islands Exempted Company is the most widely-used business form by foreign investors looking to do business in the British overseas territory. This company can carry out its activities outside the Islands, however, it may hold investments here.
Cayman islands company formation is a facile process and this particular type of company offers a number of benefits, including but not limited to full foreign ownership and no taxes.
The characteristics of the Exempted Company
The Cayman Islands Exempted Company offers a multitude of benefits, and this type of company is one of the primary reasons why the jurisdiction is chosen by many offshore investors. Below is a list of the most important advantages of the exempted company:
Full foreign ownership: this company can be 100% foreign owned and it can be incorporated with just one director, with no residency requirements.
Limited liability: the founders are liable up to the amount they invest in the company
No capital: there are no requirements for the mandatory subscription of a share capital upon incorporation.
Minimal accounting: for this type of company, the annual reporting requirements are reduced to a minimum.
No public information: the details about the company shareholders are not disclosed publicly, like in other countries.
The exempted company derives its name from a twenty-year guarantee that is will not be subject to taxes (the exemption, although there are no taxes for companies in the Cayman Islands at present).
Cayman Islands exempted company incorporation steps
A number of steps are mandatory for the incorporation of this business form. Below, our team of agents lists the most important ones. For more information on each of these points, as well as personalized assistance during incorporation, please do not hesitate to reach out to us.
Company name: the exempted company is not required to include any abbreviations or words after its chosen name; it can be in English, however, it needs to ne unique; this is why our team recommends that investors propose at least two name variants;
The capital: although there are no requirements, in practice investors will observe the amount indicated by the Government that will allow them to pay the lowest annual government fee (please find below details about this tax);
The objects: the Cayman Islands exempted company does not carry out activities in the Cayman, although it is incorporated here; as previously stated, it engages in activities outside the jurisdiction, however, it can perform part of those in the Cayman for the purpose of the advancement of its offshore activities;
Others: another important requirement of for the company to have a registered office in the Cayman Islands.
These requirements need to be observed when opening an offshore company in this jurisdiction. Our team offers complete company incorporation packages that observe these requirements. Moreover, foreign investors benefit from a fast-track incorporation, in most cases this being possible within one or two days after the receipt of the required documents.
We invite you to watch a video about the Cayman Islands exempted company:
Exempted company fees
A Cayman Island exempt company is required to pay a registration fee and an annual fee depending on its subscribed capital. Below, our team lists the capital values and the fees imposed by the Companies Register.
Please keep in mind that these fees can be subject to change. If you wish to register a company in 2021, our team will be able to provide you with information on the current fees, if they have been subject to any change, as well as other requirements.
- when the capital is between $0 – $42,000, the fee is $675;
- for a capital between $42,001 - $820,000 the fee is $900;
- when the capital is between $820,001 - $1,640,000 the registration fee is $1,884;
- for a capital between $1,640,001 and $9,999,999,999,999 the registration fee is $2,468.
- when the capital of the company is between $0 - $42,000 the fee is $700;
- for a capital between $42,001 - $820,000 the fee is $1,000;
- when the company's capital is between $820,001 - $1,640,000 the annual fee is $1,984;
- for a capital between $1,640,001 -and $9,999,999,999,999 fee is $2,568.
Other fees are imposed by the Registry for different types of services. For example, an express service for issuing any type of certificate is usually $100. Penalties apply for failure to notify certain company changes as well as for other late filings. For example, investors in the Cayman Islands can expect to pay a penalty of $10 per day and $500 maximum for failure to file the increase in share capital documents (in addition to the fee for increasing the share capital of $400 for all types of companies).
Business owners who open a Cayman Islands exempted company will also have to keep in mind other fees, apart from those for registration and the annual fee. These can include the ones for Intellectual Property Registration, for those interested in this step. A trademark registered in the Cayman Islands has a validity period of 10 years and it can be renewed for up to six months after its expiry (with an application for restoration afterward). Examples of registration fees are listed below:
- $200 for one trademark class;
- $65 for each subsequent class;
- $250 for a notice of trademark opposition;
- $200 for trademark renewal, $300 for late renewal and $350 for trademark restoration.
Our team can give you more details about the trademark application process if you need to know more before you register your exempted company.
The regulations for the Exempted Company
Any changes to the location of the company are to be notified to the Registry. In order to incorporate this legal business form, investors will need to draw up the Memorandum and Articles of Association.
A Cayman Islands exempted company observes the International Tax Co-operation (Economic Substance) Law. This means that companies carrying out certain types of activities need to prove economic substance in the Cayman Islands and exempted companies are oftentimes the types of legal entities that need to meet this compliance.
The economic substance test is conducted in relation to the relevant activity in which the legal entity in involved. Some of the issues that are verified include whether or not the company is directed and managed accordingly s per the relevant activity, if it has a reasonable amount of expenditure incurred in the Islands, if it has a proper physical presence and if it has an adequate number of full-time employees.
Our Cayman Islands incorporation agents can help investors with special services, such as registered agent services. Although not mandatory, it is highly recommended to appoint the registered agent.
The Cayman Islands are one of the leading offshore centers in the world, mostly due to the favorable legislation for companies and the flexibility of the business forms.
You can contact us for more details about Cayman Islands company formation and for complete assistance for opening an exempted company.
Call us now at +1 888 959 8022to set up an appointment with our lawyers in George Town. Alternatively you can incorporate your company without traveling to Cayman Islands.
As a Compass 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.