Cayman Island Company Formation
Legal form:
The Companies Law 1961 (as amended, chiefly in 1990 and 1995) is based on English law and is the main law governing companies in Cayman. There are four company types which are commonly registered in Cayman under the Companies Law: Ordinary Resident Company, Ordinary Non-Resident Company, Exempt Company and Exempt Limited Duration Company. The most popular form of offshore operations in Cayman Islands used by international investors is exempt company. A Cayman Islands Exempt company has all the powers of a natural person. An Exempt Company cannot trade within the Cayman Islands and own real estate in the Cayman Islands. It also cannot undertake the business of banking, insurance business or mutual fund business; it cannot solicit funds from the public unless licensed.
There is no requirement to utilize a suffix to denote limited liability, although normally companies are incorporated to include the suffixes Limited, Incorporated, Corporation or their abbreviations. The following names to be used, require licensing: Bank, Insurance, Assurance, Re-Insurance, Trust, Trustee, Savings, Royal, Asset management, Fund Management, Investment Fund, Building Society, Municipal, Chartered. Names denoting any connection to local, state or national Governments are generally prohibited. Names can be expressed in any language using the Latin alphabet, if the Registrar of Company receives a translation thereof. The corporate documents will however be in English.
In order to incorporate exempt company in Cayman, the Memorandum and Articles of Association must be submitted to the Registrar of Companies, together with a sworn statement from the directors declaring that the business activities of the proposed company will be undertaken mainly outside the Cayman Islands. The names and addresses of the proposed first directors must be disclosed to the Registrar.
The share capital: There is no specific minimum capital requirement. The minimum is US$ 1, but it is normal to incorporate with an authorized share capital of US$ 50,000 divided in to 50,000 common voting shares of US$ 1 each, this being the maximum for the minimum capital duty payable to the Registrar of Companies. The minimum issued share capital is one share of no par value or one share of par value. Registered shares of par or no par value, bearer shares, preference shares, redeemable shares and voting or non-voting shares are permitted.
An exempt company must have at least one director, which can either be an individual or a body corporate. Directors can be of any nationality or residence, and need not also be shareholders. Directors' register is not available for public inspection.
Registered office and secretary: Every Cayman Islands company must have Registered Office there. The Cayman Islands Companies Ordinance does not make any specific reference to a requirement for a company secretary, however, it is customary to have company secretary, who can be an individual or a body corporate.
Audit and financial returns: There is no requirement to file audited accounts for exempt companies, however, the company is required to keep financial records, which should reflect the financial position of a company.
Meetings: An exempt company has to hold one director's meeting a year in Cayman (but may use proxies). Shareholders meetings may be held outside Cayman, by telephone or other electronic means. Alternatively, directors and shareholders may vote by proxy.