Cayman Island, located in the Caribbean basin, is not only known for its beautiful tourist attractions, but it is also a host to one of the country’s top foreign jurisdictions. The Cayman Islands are well-known for being a jar of opportunities when it comes to business prospects.
Keep reading the blog below to know why this island is considered a place full of opportunities apart from its beautiful spots for vacation.
Exempted Company in Cayman Islands
The revised version of the Companies Laws, 2020 states “An exempted company in Cayman Islands is one that does most of its operations beyond the borders of its territories.”
If an individual or an exempted company wishes to do business within the Cayman Islands then a proper license must be in hand which has been approved by the required authorities of the border.
Features of the exempted company in Cayman Islands
As mentioned above exempted company in Cayman Islands has numerous diversified features which are as follows:
Name of the company:
- The name of the company can be placed both in English and Chinese. If the name of the company is decided in Chinese during the formation of the company, then all the documents with it including the certificate of incorporation should have a translation of the terms in English.
- Terms like Insurance, bank, mutual fund, trust, chartered and company management cannot be used for naming a company in the Cayman Islands.
- The above terms can only be used if the license required for them is in use or applied for.
- A native establishment or property is required in the Cayman Islands.
- A registered office must be filed with the Registrar and made public through public announcement.
- If you are planning to change the address of the registered office then it should be done through a formal statement.
- Within a month you should submit a verified copy of the new address with the registry.
Articles of Association:
The Articles of Association are the Cayman Islands’ corporate statutes for an exempted company.
Therefore, it has certain rules and regulations internally, they are as follows:
- Managers and officials are appointed along with their established responsibilities, procedures, and remuneration.
- Pay-out distributions
- Investors’ meetings
- Investors’ right to vote
- Details on assets, including their origin, kinds, and how they have been transmitted, reacquired, or exchanged.
Directors and Shareholders:
- A shareholder and one director are necessary and they even can be one individual, taking both the responsibilities. Furthermore, the directors are not required to be natives of the Cayman Islands and may live in any nation.
- All the necessary documents or details of a director need to be submitted to the registrar of the company. The detail of a director is considered very private and should not be open to the public.
Memorandum of Association:
The Memorandum of Association is the Cayman Islands’ company legislation for an exempted company.
- The company’s name
- The addresses of the first subscribers, as well as how many units they each possess.
- The firm’s mission
- The registered office’s address
- Certified share capital declaration verifying limited liabilities for all stakeholders.
The documents required for an exempted company in Cayman Islands are as follows:
Required documents for designated employees:
If the designated employee is a director, investor or a shareholder, then there are some of the following documents need to be submitted are:
- Photocopy of the passport
- A proper photocopy of the employee’s permanent residence
- A water or electricity bill or a bank statement (any evidence which will have the individual’s name, address, issuing date etc)
The other additional documents:
- Articles of association
- Certificate of establishment
- A photocopy of the partnership agreement (if any)
- When creating an exempted company in Cayman Islands, the director and shareholders who own more than 10% of the firm’s shares must produce a letter of recommendation from an expert with extensive financial knowledge.
- The one who is writing the letter of recommendation should know the director and shareholder for at least two years.
Procedure of Registration
The Cayman Islands provides a relatively simple and widely available online system for business formation. It requires between 1-4 working days, depending on how fast each stage is processed. The Registrar of Companies oversees the procedure.
The steps to register an exempted company in Cayman Islands are as follows:
Secure the name of your company
- When choosing a company name, you must first choose the kind of business structure that would be appropriate for your services.
- You can secure the suggested name of the company once the business structure has been determined.
- Visit the General Registry to discover whether the name is available for your company.
Complete the enrolment or the registration form
In order to complete this part of the registration state, there are some basic documents which are necessary.
Apart from these, some more records must be kept in check going forward with the registration process, they are as follows:
- Finance: The Cayman Islands requires all exempted businesses to maintain financial records. It does not have to be held in the Cayman Islands, but it should be instantly available whenever needed.
- Corporate Tax Obligations: The Cayman Islands is considered to be a tax shelter since it does not levy any taxation.
Factors to consider after registering an Exempted company in Cayman Islands
Some of the factors that need to be considered after registering an exempted company in Cayman Islands are as follows:
Reports and international laws
- If you’re a US citizen looking for new business opportunities over the border, you’ll need to be aware of several laws and restrictions that might influence your exempted company in Cayman Islands.
- There are worldwide regulations that may tax your money which is made through this form of organisation.
- Every year in the month of January, the firm must submit a return with the registrar to tell him or her of any modifications to the Memorandum of Association.
- Details on all enterprises that were managed beyond the Cayman Islands should be included in this report.
- In addition, the business must pay a yearly renewing cost in the month of January for the following year.
- Accounting and bookkeeping do not have any specific criteria.
- An exempted corporation must keep financial documents that show the revenue, spending, investments, and debts in detail.
- Despite the fact that the data are not required to be stored in the Cayman Islands, they must be made accessible to the government and tax officials upon inquiry.
- Internal audits or inspectors are not required.
The Cayman Islands exempted company is without a question the best form of legal structure for an international corporation. Exempted corporations are an excellent way of saving money and spending more, thanks to a secure political climate and minimal or no criteria.
If your company is tax-exempt, you are not required to pay federal taxes. This is because the firm’s objective isn’t to generate a profit, and its members don’t benefit from the company either.
Since there is no commercial or individual tax on income generated beyond the Cayman Islands, it has become a favourite tax shelter for the American wealthy and massive multinational firms.
Azhar Ansari is a company formation specialist with 8+ years of expertise in international business. Financial planning, risk management, and other related areas.