Registering a company in the Cayman Islands is an optimized process due to its attractive legal infrastructure and tax benefits. The legal system of the Cayman Islands is based on British law, and English is the official business language. The Cayman Islands stand out among other Caribbean regions for their high standard of living. Additionally, the islands boast a well-planned and managed logistics system.
In this publication, we’ll explore the appeal of registering a company in the Cayman Islands, the features of the legislative environment, and the legal structures available for foreigners looking to establish a business there.
Advantages of registering companies in the Cayman Islands
The Cayman Islands have become a significant hub for trade and finance. With their strategic location in the Caribbean, they occupy a favorable position at the crossroads of American and European markets. Registering a firm in the Cayman Islands provides businesses with seamless access to North and South America. Strong ties to Europe greatly facilitate and optimize intercontinental operations, making the Caymans an attractive location for international business.
Another reason entrepreneurs and corporations are keen on starting businesses in the Cayman Islands is the tax preferences. One of the main advantages is the absence of direct corporate taxes, significantly reducing the tax burden for companies. Moreover, there are no capital gains or wealth taxes, making it an optimal choice for those looking to protect their assets. Local authorities encourage research and development activities, as well as other endeavors that contribute to the creation of intellectual assets.
Local authorities have simplified the conditions for those wishing to open a business in the Cayman Islands. Specifically, there’s no requirement to hold annual meetings, which reduces administrative costs and simplifies business operations, and there are no residency restrictions for directors or shareholders, allowing entrepreneurs to flexibly structure their management.
How to open a company in the Cayman Islands?
Before registering a company in the Cayman Islands, you need to decide on the structure. The available company structures in the Caymans include:
- Exempted Company.
- Limited Liability Company (LLC).
- Exempted Limited Partnership (ELP).
The subsequent steps for registering a company in the Cayman Islands are as follows:
- Register the company name.
- Prepare a complete set of documents in accordance with the requirements applicable to the specific legal form.
- Submit the registration form and necessary documents to the Registrar of Companies.
- Pay the registration fees.
Obtaining a Certificate of Incorporation is just one of the first steps toward launching a business. Several steps typically follow the receipt of the certificate:
- Obtaining licenses and permits. Depending on the type of activity, appropriate licenses or permits may be required for the business to operate.
- Opening an account in the Cayman Islands. To manage financial activities, the company needs to open a corporate bank account, facilitating financial management by allowing clear tracking of income and expenses and managing operating funds.
- Tax registration. You will need to register with the tax authority and obtain the relevant tax identification numbers.
Regarding documentation, the following must be in place:
- Memorandum and Articles of Association.
- Information about directors, officers, and shareholders.
- Personal documents for all authorized persons, including proof of residence, a bank reference, and a professional recommendation.
The average registration fee for a company in the Cayman Islands ranges from a few thousand USD, including registration, opening a local bank account, and government fees. The registration period in this jurisdiction is typically a few days, provided that all documentation and forms are properly prepared and submitted in full. International Wealth experts will gladly help you compile an application document package if you would like to set up a company in the Caymans.
Registering a company in the Cayman Islands as a non-resident
As mentioned earlier, several legal forms of companies are available to foreigners on the islands. Here’s a closer look at each of them.
Exempted Company. One of the most popular and frequently used corporate structures is the exempted company. This option is for firms wishing to conduct business outside the Cayman Islands, as it is designed to serve enterprises primarily engaged in international activities.
The main features of an exempted company include:
- Registering an exempted company in the Cayman Islands allows for a range of commercial operations both on and off the islands.
- It requires one shareholder and one director, who can be of any nationality and reside on any continent.
- Shareholder liability is limited to the value of their shares. This means that the debts and obligations of the company do not affect the personal assets of the shareholders.
- It is a tax-efficient structure for conducting international business since such companies are not required to pay direct taxes like income tax or capital gains tax.
- Exempted companies are not required to submit annual reports or audited financial statements to the government, reducing administrative workload and costs.
It’s worth noting that most founders located outside the Cayman Islands often opt for the exempted company structure due to its tax status and operational flexibility. The exempted company remains the preferred structure for offshore enterprises.
Limited Liability Company (LLC). Registering a Cayman LLC is popular among business entities looking to expand their global presence while ensuring legal protection with limited liability. An LLC in the Cayman Islands offers several significant advantages, one of which is the separate legal status that limits the liability of participants to the amount invested in the business. This means that the personal assets of individual participants are protected from the company’s financial obligations and debts.
Cayman LLC registration allows for full foreign participation. The founders of an LLC must go through the registration process with the Registrar of Companies on the islands. Another characteristic of an LLC is the absence of minimum capital requirements for registration. The name of the LLC must include the abbreviation “LLC” or “Limited Liability Company.”
LLCs are required to maintain accurate accounting records. However, compared to some other jurisdictions, LLCs are not obligated to provide financial statements or undergo audits.
Exempted Limited Partnership (ELP). Another option available for foreign entrepreneurs is to register a firm in the Cayman Islands as an ELP. This type of legal entity has two or more participants, specifically a general partner who bears full responsibility for managing and conducting the partnership’s activities, and a limited partner whose liability is limited to their contribution to the partnership.
ELPs in the Cayman Islands are often used as investment vehicles, particularly in private equity and venture capital funds, providing a flexible basis for numerous investment strategies. For this reason, ELPs are an optimal structure for managing investment portfolios.
Legislation mandates that each ELP must have a registered office in the Caymans. Neither the ELP itself nor its partners are subject to direct taxes on the islands. ELPs offer flexibility in establishing investment mechanisms or business agreements, as they can be created for a specific period or indefinitely. The partnership agreement can be modified to meet the specific requirements and goals of the interested partners.
You can choose the company type that suits your purposes best of all.
