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Minimum Share Capital for a Company in Cayman Island

Updated on Wednesday 03rd July 2019

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Minimum-Share-Capital-for-Opening-a-Company-in-Cayman-Islands.jpgThere is no requirement for minimum share capital for opening a company in the Cayman Islands, however, investors do need to observe the conditions for the share capital of the company, as it is inscribed in the company’s constitutive documents.
 
Because of its characteristics, and the fact that it has low incorporation costs because of the lack of minimum share capital, the Cayman Islands exempted company is a popular business form among investors. Our agents who specialize in company formation can assist investors who wish to open this type of company as well as provide relevant details about the other business forms and the general corporate regulations.
 

What are the conditions for corporate share capital in the Cayman Islands?

 
There are no formal requirements for a minimum authorized capital in the Cayman Islands. While in most jurisdictions investors are required to deposit a minimum amount in a bank account, for the purpose of incorporation, this is not mandatory in the Cayman. In practice, investors can choose to incorporate the company with a minimum share capital of, for example, 1 US$. 
 
One of our agents who specialize in Cayman Islands incorporation can give investors more details on the share amount they can subscribe when they open the company.
 

What is the status of shareholders in a Cayman Islands exempted company?

 
According to the Companies Law, when a legal entity has a share capital and it is, for example, a limited liability company, the liability of the shareholder is the amount paid on the subscribed capital. This is a defining trait for limited liability companies and it is an advantage for investors. Consequently, when the company is wound up, the shareholder may be liable for that amount, but it will not exceed it. 
 

How is the share capital treated?

 
According to the Companies Law, a company in the Cayman islands that is limited by shares can increase its share capital, can concert its paid-up shares into stock, can subdivide the shares into shares with a smaller value (than that provided by the Memorandum; however, subject to certain conditions) and can also cancel shares, which at the date of the resolution for this action have not been taken.
 
The increase in the company capital needs to be approved by a Shareholder’s resolution. The Registrar is to be notified of such action within 30 days of the resolution. 
 
Investors who are interested in Cayman Islands company formation should know that a fee is payable upon the increase of shares.
 
Companies are allowed to reduce their share capital, when the Articles allow for this action and when they receive the confirmation from the Grand Court of the Cayman Islands. the reduction can be made by reducing the liability on the partly-paid shares, by canceling the share capital that is lost or unrepresented by assets or by means of paying off any excess capital. The Memorandum can then be altered. Companies that decide on the reduction of capital are required to obtain approval from the Grad Court in order to confirm that the creditors will not suffer any prejudice as a result of the capital reduction.
 

What shares can a Cayman Islands issue?

 
In case of a Cayman Islands exempted company, the shares may be with or without nominal value, and when they do not have a par value, this will be mentioned in the company’s Memorandum. A company can issue discount shares when this action has been approved by an ordinary resolution and it was sanctioned by the Grand Court (subject to certain conditions). 
 
The purchase or the redemption of shares must be authorized by the company’s Articles of Association, otherwise, such actions are not permitted. 
 

Investments in the Cayman Islands

 
The Cayman Islands offer a favorable business and taxation regime. Some of the advantages include fact incorporation, economic stability, and privacy as well as flexibility in terms of the chosen business structures. The statistics below show the percentage of companies incorporated, as per their type, out of the 106,291 companies that were registered when the data was collected in September 2018:
 
- 84.3% exempt companies;
- 6.3% resident companies;
- 4.6% foreign companies;
 
In April 2019, there were 920 exempt companies registered in the Cayman Islands and 65 limited liability companies. there are 108,035 active companies in the Cayman Islands as per the statistics for the first quarter of the year.
 
Investors who wish to know more about the conditions for Cayman Islands incorporation can contact our agents. Our team is able to provide complete details on the share capital, the pre-incorporation phase, the actual incorporation as well as the post-incorporation actions.
 

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