Types of Companies Available from Cayman Islands
Ordinary Companies
An ordinary company incorporated in Cayman Islands must have at least one shareholder of record and at least one director. An annual general meeting must be held each calendar year. A Cayman ordinary company must file an annual return detailing its shareholders, with the Registrar of Companies. The Register of Members is maintained at the registered office and is open to inspection by any person.
Ordinary Non-Resident Companies
The provisions are the same for ordinary companies except that the company must be designated a non-resident company by certificate issued by the financial secretary, provided that he is of the opinion that it does not, and does not intend to, carry on business within the islands. Ordinary nonresident companies may be converted to exempted companies.
Cayman Islands Exempt Companies
An exempted company is incorporated in the same way as an ordinary company and must have at least one director. An exempted company may not carry on business in the Cayman Islands except in furtherance of its business abroad, and may not make any invitation to the public in the Cayman Islands to subscribe for any of its shares or debentures and it may not own land in the Cayman Islands unless given specific permission by the financial secretary. Some of the benefits of an exempted company are as follows:
| (1) |
An Cayman exempted company does not have to file an annual return detailing its shareholders with the Registrar of Companies; |
| (2) |
A Cayman exempted companyˇs register of members is not open to inspection. |
| (3) |
A Cayman exempted company does not have to hold an annual general meeting. |
| (4) |
A Cayman exempted company may obtain an undertaking against the imposition of any future taxation that is usually given for 20 years in the first instance and is renewable. |
| (5) |
A Cayman exempted company may register by way of continuation in another jurisdiction and be de-registered in the Cayman Islands. |
| (6) |
A Cayman exempted company may register as a limited duration company. A limited duration company must have two shareholders of record and has a maximum life of 30 years. |
Limited Duration Companies
A limited duration company ("LDC") is broadly similar to the limited liability company in the United States. The LDC combines the benefit of limited liability and the convenience of administration of a corporate entity with the possibility of a transparency or flow-through for tax and other purposes in foreign jurisdiction such as treatment as a partnership for United Federal Income Tax purposes. The overall regime of the Companies Law regulating exempted companies applies to LDC’s with certain additions and exceptions which are summarised below:-
| (1) |
The LDC must include at the end of its name limited duration company or "LDC". |
| (2) |
It must at all times (like a partnership) have two members (shareholders). |
| (3) |
Its Memorandum and Articles of Association must limit the duration of the LDC to 30 years or less. |
| (4) |
The Articles of Association may provide that transfer of shares or other membership interest are prohibited or that transfers require the unanimous approval of all the other members (shareholders) and that the management of the LDC is vested in the members, or proportionally according to their shares or interest or in such other manner as the Articles of Association of the LDC may specify. In substance, this means that the members (shareholders) are the directors of the LDC. In such a case the Articles of Association may, nevertheless, also permit the delegation of the management to a board of directors. |
| (5) |
A Cayman exempted company may register by way of continuation in another jurisdiction and be de-registered in the Cayman Islands. |
| (6) |
An LDC may cease to be an LDC by deleting from its name the word "limited duration company" or "LDC" or changing its Memorandum of Association so that its duration exceeds or may exceed 30 years. |
The Companies Law permits the use of the basic exempted company as an alternative to the LDC, in circumstances where a company with a fixed life is required, but where the maximum 30-year duration of the LDC is unattractive.
Foreign Companies
A foreign company is a company that is incorporated outside the Cayman Islands, and establishes a place of business or commences carrying on business within the Cayman Islands. A foreign company who wishes to own land in the Cayman Islands must register as a foreign company under Part IX of the Companies Law.
A foreign corporation must state the name of the foreign company and the country which it was incorporated on all letterhead, bills, notices, advertisements and any other official publications such as a prospectus inviting subscriptions for its shares. It must also exhibit on every place where it carries on business in the Cayman Islands the name of the foreign corporation and the country which the foreign corporation is incorporated. Also, if the liability of the members of the foreign company is limited, it must publish this on all letterhead, bills, notices, advertisements and any other official publications.
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