Companies & Other Entities
It should be noted that there are no specific Insolvency Laws in
the Cayman Islands. Liquidation procedures are governed by the Companies
Law (2007 Revision) in conjunction with the Winding-up Rules.
Client privacy is protected by the fad
that the Registrar can only release the name and type of company,
its date of registration, the address of the registered office and
the company's status. Disclosing any other information is prohibited
except where assistance to law enforcement agencies is required.
A company may be registered in the Cayman Islands in one
of seven ways:
- Resident Companies – These
are companies carrying on business in the Cayman Islands, who must report annually to the Registrar and are able to hold
land. After registering the company there is a yearly fee of CI$150
for companies with capital of CI$42,000 or less. Companies with
more than CI$42,000 in capital, pay CI$350 per annum.
- Non-resident Companies
– An alternative to exempted company these must report
annually to the Registrar, however they can only carry on such
business in the Cayman Islands as needed to further any foreign
business. After filing the Memorandum and Articles of Association
and delivering the annual return each January of the year thereafter, companies with capital of CI$42,000 or less pay CI$400 per
annum; companies with more than CI$42,000 in capital pay CI$565 per annum. A non-resident company may convert to a resident company
or to an exempted company.
- Exempted Companies – These
are companies that carry on their activities outside the Cayman
Islands, such companies don’t need to hold an annual general
meeting; they can offer shares to the public in the Cayman Islands
if listed on the CSX; they report annually to the Registrar and
they don’t need to include the word ‘limited’
after their names. After registration and after delivering their
annual return each January of the year, a fee is payable based
on the level on capitalization:
Cl$42,000 or less.
Between Cl$42,000 and CI$820,000
More than CI$820,000 to CI$1.64 million
More than CI$1.64 million
An exemption allowing the holding of land may be obtained where
the company has neither issued nor is empowered to issue bearer
Transfer by Continuation - – The Companies Law (2007 Revision) permits a company with limited liability and
share capital to become a Cayman Islands exempted company provided
it is incorporated in a foreign jurisdiction whose laws permit
or don’t prohibit the relocation of the company. The company
must be continued substantially in a form that could have been
incorporated as an exempted company.
Exempted Limited Duration Companies - These
are companies that can be treated as partnerships but whose duration
must not exceed 30 years. In addition to any fees applicable under
the registration of an exempted company, an application fee of
CI$200 is required.
- Segregated Portfolio Companies -Another form
of exempted company which allows statutory segregation of assets
and liabilities between segregated portfolios (cells) established
within a company.
This type of company is usually reserved for captive insurance
companies. However, recent changes to the Companies Law extend
the benefit of establishing segregated portfolios to other areas.
The registration fee is CI$500; annual fees are the normal exempt
registration fee plus CI$2,000, and a fee of CI$300 for each
segregated portfolio, up to a maximum of CI$1,500.
- Foreign Companies - These are companies incorporated
outside the Cayman Islands that carry on business locally and
which must be registered in the Cayman Islands. On the delivery
of the prescribed documents for registration of a foreign corporation
and at each January of the year, there is a fee imposed of CI$850 per annum. A foreign company
that has a registered with the Registrar is allowed to hold land
in the Cayman Islands.
Limited partnerships can be formed by two or more people
or companies, and are governed by the Partnership Law (1997 Revision)
allows limited partnerships to be formed by offshore investors.
However, these partnerships may not do business with the public
in the Cayman Islands.
Additionally, every corporation must be licenced under the
law relevant to its industry. Further information on incorporation
and management of companies can be found at www.abacus.com.
A Cayman Islands trust may be established by either a Deed of
Settlement, in which the settlor is identified, or a Deed of Declaration
in which the trustees acknowledge their appointment as such and
receipt of the settled sum with the identity of the settlor not
being recorded in the Deed of Declaration.
The Cayman Islands Trusts Law provides for three kinds of trust:
There is no provision on the law for formal registration of an Ordinary
Trust which is the most frequently used trust structure. Cayman
legislation permits new trusts to continue for a maximum duration
of 150 years regardless of the rule against perpetuities and clarifies
the powers that can be reserved by the Settlor.
The Exempt Trust is registered with the Registrar of Trusts with
the Trust Deed entered in the Registry. The Registry is not open
to public inspection. An important advantage of Cayman Islands Exempted
Trust is that upon application to the Registrar of Trusts the trust
may be exempted for up to 50 years from the incidence of all taxes
that may at a future time be introduced in the Cayman Islands.
The Special Trust Alternative Regime enacted in 1997 and now incorporated
into The Trusts Law (2001 Revision) provides the legal basis on
which special purpose trusts may be established in the Cayman Islands.
A special trust or STAR trust may now be created in the Cayman
Islands for a specific purpose or for the benefit of an identifiable
group or class of beneficiary as well as for a specific purpose,
provided that the purposes are lawful and not contrary to public
The Banks and Trust Companies Law 1995 introduced licensing for
companies providing trust services; the Law was amended in 2001
and 2003. Trust company licensing are now as follows:
- Trust company licences, covering the conduct of trust business
within and outside of the Islands are unlikely to be but subject to conditions
imposed by the Authority.
- Restricted Trust licences, covering the conduct of trust business
with the restriction that the licencee shall not undertake trust
business for persons other than those listed in any undertaking
accompanying the application for the licence;
- Nominee (Trust) licences, covering trust business under a Trust
licence to a licencee, which is wholly-owned subsidiary of another
licencee and where the sole purpose of that subsidiary is to act
as its nominee.
Trust company Licences require a minimum net worth of US$400,000;
Restricted Trust company Licences Nominee (Trust) Licences require
a minimum net worth of only US$20,000. The parent of a Nominee Trust
company must provide a guarantee of not less than US$200,000. Licencees
do not need to be Cayman Island’s companies; but foreign licencees
will probably have to provide a head office guarantee. All applications
include considerable amounts of administrative and financial information.
Companies holding any type of trust licence must have a place business
in the Islands, approved by CIMA, which will be its principal office
in the Island; and must have two individuals or a body corporate,
approved by CIMA, resident or incorporated in the Island, as its
agent. Any trust licencee incorporated in Cayman Islands must submit
annual audited accounts to CIMA.
Cayman Islands banks require to be licenced under the Banks and
Trust Companies Law 1995, as amended in 2001 and 2003. Banking licences
are Class A, Class B restricted or Class B unrestricted:
- Class A licences permit full domestic and offshore banking;
- Unrestricted Class B Trust Licences permit full offshore banking
with an unlimited number of customers and require a minimum net
worth of US$400,000;
- Restricted Class B licences require a minimum net worth of only
US$20,000 per annum, but a list must be provided to the Inspector of Financial
Services of the clients with which the bank intends to do business,
and the list cannot change without further notification to the
Inspector. Licencees do not need to be Cayman Islands companies;
but foreign licencees will probably have to provide a head office
guarantee. All applications include considerable amounts of administrative
and financial information.
Continuing supervision is exercised by CIMA. Quarterly returns
and audited annual statements must be lodged. Share transfers, and
changes to directors and officers must be authorized. Banks with
unrestricted licences are required to adhere to the Basle Convention
Banking confidentiality is well-established in the Cayman Islands
through common law, and is also enshrined both in Banks and
Trust Companies Law 1995 and in the Confidential Relationships (Preservation)
Law 1995. Banking staff and government officials face civil and
criminal sanctions if information is disclosed without authorization.
A number of laws permit the enforcement of foreign judgments or
the disclosure of information in response to a Court Order, but
normally in the context of criminal activity and drug use or dealing.
Despite mutual assistance treaties, the Cayman Islands rarely co-operate with fiscal investigation, and are reluctant to respond to requests for assistance in fiscal matters.
The Proceeds of Criminal Conduct Law, originally passed in 1999,
was strengthened in 2000, and requires depositors to provide banks
with due diligence documentation comprising of a passport or driving licence,
proof of their address, and an outline of their banking activities.
Cayman Islands insurance companies are regulated by CIMA under
the Influence Law 1979 as amended, most recently in 2004. The following
types of licence are available:
- A Class ‘A’ Insurer’s licence permits a local
or an external insurer to carry on insurance business generally
in or from within the Islands; an external insurer may also be licenced as an approved
external insurer under Class ‘A’ by having its
principal or registered office in a place outside the Islands
where the legislation for the regulation and supervision of insurers
is acceptable to the Authority.
- An Unrestricted Class ‘B’ Insurer’s licence
permits an exempted insurer to carry in insurance business other
than domestic business from within the Islands.
- A Restricted Class ‘B’ Insurer’s Licence permits
an exempted insurer to accept insurance business, other than
domestic business, from its member or members or such other persons
as may be specifically approved by the CIMA.
- Insurance Agent’s Licence;
- Insurance Broker’s Licence;
- Insurance Sub-Agent’s Licence;
- Insurance Manager’s Licence; and
- Principal Representative (Insurance)’s Licence.
No insurer’s licence other than a Restricted Class ‘B’
licence will be granted to any person whose net worth; (a) in the
case of an insurer effecting general business, but not long term
business, is less than one hundred thousand dollars; (b) in the
case of an insurer effecting long term business but not general
business, is less than two hundred thousand dollars; and (c) in
the case of an insurer effecting long term business and general
business, is less than three hundred thousand dollars.
The licensing process begins once a company’s name has been
approved and an application incorporating a business plan and details
of beneficial ownership is made to CIMA. Capital may be provided
either by shares or loans.
Insurers must maintain full and proper records at a fully-staffed
office in the Cayman Islands; alternatively, a local manager can
be appointed to administer the business. The manager must also be
licenced under insurance law. It is usually necessary to appoint
Cayman Islands auditors; audited annual accounts must be submitted
to the superintendent within six months of the end of the accounting
There are many other detailed regulations; and CIMA has substantial
powers to inspect and to apply sanctions when necessary.
Cayman Islands mutual funds are regulated under the Mutual Funds
Law 1996, and as regards listing they fall under the Stock Exchange
Company Law 1996. The Mutual Fund Law requires mutual funds to be
licenced, or to be administered by a licenced mutual funds administrator. The following funds are exempt from licensing:
- A fund listed on a recognized stock exchange;
- A fund with a minimum purchasable aggregate equity interest of
- A fund with no more than 15 investors holding voting equity
- A closed-end fund.
A mutual fund administrator must be licenced; he must have a registered
office in the Cayman Islands, must be competent, and have a net
worth of at least CI$400,000.
Mutual funds must be audited annually, and the financial statements
must be filled with CIMA within six months of the end of an accounting
period. The auditor must be resident in the Cayman Islands and approved
There are no restrictions on the investment policy of funds in
the Cayman Islands, whether listed or not.
For listing on the Stock Exchange, certain other originating jurisdictions
are ‘approved’: Bermuda, Canada, all EU member states,
Guernsey, Hong Kong, Isle of Man, Japan, Jersey, Malaysia, Singapore,
Switzerland, and the USA. For funds which have primary listing on
recognized stock exchanges, a secondary listing may be acquired
in the Cayman Islands quite simply. The services of a listing agent
are not mandatory.
Funds to be listed must appoint a custodian who is a separate legal
entity from the fund, its operators or its administrators, but may
be an associate of any of them. Also, the fund must have an independent
There are some shareholder disclosure requirements; and information
is required about the fund’s main broker and the regulatory
regime applying, in particular for segregation of fund assets. In
order to be listed, a fund must have at least 25% of listed securities
in public hands, or restrict trading to professional investors.
There are detailed rules specifying the contents of the Listing
Listing is possible both for open and closed-end funds; funds may
take various corporate forms, including: investing, unit trust and
partnership. In Cayman Island terms, the entities that may be used
include the exempted company, the ordinary non-resident company,
the exempted trust, and the exempted limited partnership.
In September 2002, the Cayman Islands Government introduced a new
law requiring licensing for anyone conducting securities investment
business except where an exemption is available.
The Securities Investment Business Law, 2001 (the “SIB Law”)
was passed in March 2002 and came into force in 2003. The aim of
the SIB Law is to regulate the business of securities investment in
the Cayman Islands and provide an appropriate structure for the
regulation of securities brokers, including market makers, arrangers,
investment advisors and investment managers.
The fundamental objective of the SIB Law is to define activity that
requires a licence and then to ensure that such activity is undertaken
by fair and proper persons in accordance with accepted supervisory
standards of conduct for securities and investment businesses. CIMA
is directly responsible for the licensing, supervision and enforcement
of such licences.
In November 2003, CIMA introduced further mutual fund regulations
in order to make funds domiciled in the jurisdiction which appeared to be more attractive
to Japanese fund distributors.