Types of companies in Cayman Islands

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, Exempted Company and Exempted Limited Duration Company.

The Companies Law, true to its English origins, permits companies limited by shares, companies limited by guarantee, and unlimited companies; but in practice only companies limited by shares are used. Incorporation and registration of limited companies takes a day, and it can be less. Shelf companies are available but are unusual.There is a Registrar of Companies, and registration involves submission of the Memorandum of Association; for companies limited by shares the Articles of Association can follow - 'Table A' applies if no Articles are registered.There needs to be one shareholder of record (of any nationality); there are no rules regarding minimum capital, par value etc. There is no statutory requirement for audit or for annual filing of accounts. All companies must maintain registered offices in Cayman.

Ordinary Resident Company
An ordinary resident company is usually formed for the purposes of carrying on local business. In addition to the Companies Law, it is subject to the terms of the Local Companies (Control) Law 1995 which requires licensing, and the annual submission of a list of shareholders. Only registered, and not bearer, shares are allowed. An annual general meeting must be held, and a register of members must be kept at the registered office, open to public inspection. The name of the company must end in Ltd or Limited. The list of shareholders of the company must be filed with the Registrar of Companies in January each year; the Immigration Board should also receive a similar list showing those shares beneficially owned by Caymanians. Registration fees are payable on incorporation and annually: CI$150 for capital not exceeding CI$42,000, CI$250 otherwise.

Ordinary Non-Resident Company
An ordinary non-resident company is subject to the same rules as a resident company, but under the terms of the Local Companies (Control) Law 1995, must not conduct any business within the islands. This form or that of the exempt company is the usual choice for offshore operations. The Financial Secretary will grant a certificate of non-residence if he is satisfied that the company does not and does not intend to trade onshore. The company is then relieved of the licensing requirement and the need to provide lists of shareholders to the Immigration Department. An annual list must still be provided to the Registrar, but it is quite usual to appoint proxies. The normal minimum capital requirement is CI$40,000, and the minimum capital duty levied on incorporation of a nonresident company and annually thereafter is CI$400. There are no restrictions on the location of general meetings or of directors or the secretary, if there is one, except that one shareholders' meeting must be held in Cayman each year.

Records of members, directors, mortgages and charges must be kept. Financial records must be maintained although no audit is necessary and there are no filing requirements. Ordinary non-resident companies can apply to convert to exempted companies.

Exempt Company
The differences between a non-resident company and an exempted company are as follows:
• An exempted Caymans company does not have to use Ltd or Limited in its name;
• it may issue bearer shares in addition to registered shares;
• it has to hold one directors' meeting a year in Cayman (but may use proxies); it does not have to hold a shareholders' meeting in Cayman;
• it need not file a list of shareholders annually, and does not even have to keep such a list;
• it may obtain a Certificate of Tax Exemption (ie against any future Cayman taxation)
An exempted company (or limited duration exempted company) is the normal form of choice for collective investment vehicles. Incorporation fees depend on capital as follows:
• CI$410 for capital less than CI$42,000
• CI$574 for capital up to CI$1.7m, CI$1,435 thereafter

Limited Duration Exempt Company
Limited duration exempted companies are like exempted companies except that:
• the Memorandum of Association must limit the life of the company to 30 years or less;
• certain events are specified which automatically precipitate its voluntary winding-up and dissolution;
• it must at all times have not fewer than two members;
• the Articles may provide that no shares may be transferred without the agreement

Foreign Company
Foreign companies are companies incorporated outside the Cayman Islands which establish a place of business, or carry on business in Cayman (which includes the sale by or on behalf of the company of its shares or debentures). Under the Companies Law a foreign company must register, providing the following information:
• a copy of its incoporation documentation in English;
• the names and addresses of its directors; and
• the name of a person in Cayman who can accept service on the company's behalf.
There is a fee of CI$850 on registration, and CI$500 annually thereafter.
A company can also transfer its domicile to the Cayman Islands 'by way of continuance' which obviates the need to incorporate afresh. The reverse process is also possible.

Limited Partnership
Cayman Islands partnership law is based on English law, with recent amendments. Limited Partnerships are formed under the Partnership Law 1995. One or more general partners have unlimited liability and are responsible for management; limited partners are liable only to the extent of their contributions.
To form a limited partnership a declaration must be filed with the Registrar of Limited Partnerships which describes all the partners and gives other information; this declaration is also published in the Cayman Gazette.

Exempted Limited Partnership
A limited partnership may become an exempted limited partnership, or one can be formed de novo, by filing a statement with the Registrar. Unlike the Limited Partnership declaration, this does not need to include the names of the limited partners or the amounts of their contributions.
An exempted limited partnership must not do business with the public in Cayman. An exempted limited partnership may obtain a 50-year Certificate of Tax Exemption (ie against any future Caymans taxation).
                                               
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