The Cayman Islands limited liability company
is a type of legal entity that allows investors to benefit from the protection awarded by only being limited up to the amount of invested capital.
In order to open an LLC in the Cayman Islands
, investors will need to follow a few steps. They will still benefit from the tax-exempt regime in the Islands and several of the other advantages available when setting up a Cayman Islands company
The characteristics of the LLC in the Cayman Islands
There are several types of business entities
that can be incorporated in the Cayman Islands, among which the two most popular are the exempted company and the non-resident company. The LLC
is also a business form that has won the attention of foreign investors because of its characteristics that allow, as the name suggests, for liability only up to a certain invested amount.
This business form was introduced rather recently, through the Limited Liability Companies Law of 2016. The LLC is a business entity that has legal capacity and whose members have limited liability, at the same time being a type of structure that allows for a great deal of flexibility. It can be used for the creation of investment funds, joint-venture companies or other structures.
The LLC does not require a minimum capital, its members are not made public and it is not subject to taxation. This type of company requires at least one member at all times and, after the business is formally registered, the company may add new members. The LLC does not have a Board of Directors and, when permitted by the company’s founding documents, the manager may also act as a company member.
LLC incorporation in the Cayman Islands
Choose a company name: this is the first step and the company’s name should contain the abbreviation of the business form.
Establish a registered office: this is an address in the Cayman Islands where the company will be based and where all of the notices will be sent.
Draft the company’s documents: these will contain information as per the duration of the company, a declaration of the business that will be undertaken by the LLC (which must not contravene with the Cayman Islands permissions).
Application for registration: the LLC will receive its Registration Certificate from the Register within three to five days after the application was submitted.
It is important to note that the LLC is conditioned to not undertake business within the Cayman Islands. This means that it will engage solely in activities outside of this jurisdiction, such as international business services, international trade, asset holding or others. For this purpose, the company founders will submit a declaration upon incorporation that shall state the fact that the business will comply with this restriction. Failure to comply with this measure would deem the company manager guilty of an offense and the company would be removed from the Register.
One of our Cayman Islands incorporation agents can provide more details on the conditions for registration. Once this process is complete, the company receives a Registration Certificate – this is proof that the new business is compliant with the Cayman Islands laws. Any change in the company particulars is to be notified to the Registrar within 30 days of such occurrence.
Investors who open a company in the Cayman Islands can expect their registration certificate to be issued within three to five days. An expedite option of 24 hours is available for an additional fee.
The Limited Liability Company Agreement
An LLC in the Cayman Islands will be incorporated based on a special Agreement. This document is of great importance to this business form as it lays out the duties, liabilities, and rights of the members, the manner in which they may retire or transfer shares and interests as well as the manner in which they will be able to make contributions and allot shares. It is also used for guidance in case of company wind-up as well as for reference for executing documents.
Investors should remember that this document may be drawn up to include the provisions they so wish, provided that they do not contravene with the laws of the Cayman Islands or any express laws that may apply in the case of the LLC. There is a great degree of flexibility in structuring the LLC Agreement and our Cayman Islands incorporation agents can assist investors who wish to draw up this document.
Requirements for a Cayman Islands LLC
An LLC is required to comply with certain mandatory requirements. We list these below:
Registered office: the company must maintain an office at all times in the Cayman Islands; when provided via a registered office service, the said provider must be a licensed one.
Register of members: this must be kept and updated accordingly; it includes the names and the addressed of the company members; a separate manager's register should also be kept.
Register of security interests: this includes the notes that have been served at the registered office pursuant to law.
Others: separate registers are to be kept for mortgages and charges; others can include proper books of account and a record of the contributions of each member.
The Cayman Islands limited liability company is a business form that is very popular among foreign investors, most notably U.S. entrepreneurs who are interested in opening an offshore but also individuals from other countries. This is a flexible vehicle that, although recently introduced, it can be used as structured as the investors see fit. It may serve as a special purpose vehicle, for asset holding, or for the purpose of creating an investment management company.
Companies that provide certain types of services, such as trading, need to obtain special permits and licenses. A Trade and Business License is issued by the Department of Commerce and Investment
Requesting specialized assistance from our team of professionals is one of the most convenient ways in which investors can open this type of company in the Cayman Islands. Our packages include complete assistance for registration as well as additional services such as nominee director and shareholder services, virtual office and registered office services.
The Cayman Islands remain a popular jurisdiction for offshore company formation, as reflected in the following statistics presented by the Cayman Islands General Registry:
• 1,141: the number of companies registered in the Cayman Islands during October 2019;
• 110,451: the number of active companies as per the data available for the third quarter of 2019;
• 16,326: the total number of companies registered during 2018 in the Cayman Islands;
• 13,046: the total number of companies registered in 2017 in the Cayman Islands.