Over the past three decades, the Cayman Islands have matured into one of the world’s largest international financial centers. The Cayman Islands are located in the Caribbean 460 miles south of Miami, Florida. The Cayman Islands are a British Overseas Territory and derives all of its security and political stability through its connection with Great Britain. Cayman’s legal system is British common law modified by local legislation. The government is headed by a governor, who is appointed by the Crown of England. Cayman’s official language is English and has a population of approximately 31,200.
The Cayman Islands make up one of world’s largest international financial centers, the second largest captive insurance domiciles, and is a leader in offshore mutual funds. There are over 1900 mutual funds and nearly 600 banks and trust companies. Forty-five of the world’s fifty largest banks have subsidiaries or branches in the Cayman Islands. Cayman Islands Stock Exchange (the "CSX") is one of the world’s fastest growing international stock exchanges. Cayman’s success as a financial center is built upon its high caliber of professionals, political and social stability, excellent communications, progressive legislation, and sound regulatory regime.
There are six types of companies which can be registered in the Cayman Islands. Depending on the type of activities and whether the business will take place within the Islands will determine which type of company should be utilized. If you are interested in forming a company where the activities of a company will be carried out mainly outside the Cayman Islands, then an exempt company should be considered. An exempt company can be used for investment holding within Cayman as well as outside the area. The features of an exempt company are as follows:
- Reporting Requirements
- Restrictions On Name And Activity
- Local Requirements
- Tax Treaties
- Professional Services
There are no taxes in the Cayman Islands on income, capital gains, profits, dividends, investments or capital transfers on any type of company. The company receives a twenty-year guarantee against taxation from the Cayman Islands Government, which may be extended to thirty years upon application.
An exempt company can be formed with only one shareholder and with no minimum capitalization requirements. Bearer or registered shares are permitted and shares may be issued with nominal or no par value. Details of the shareholders are not maintained on public record.
A minimum of one director is required and corporate directors are permitted. Details of the directors must be reported to the company registrar but this information is not available to the public. Directors do not have to be a shareholder or resident in the Cayman Islands, however, one statutory meeting of the directors must be held within the Islands every year. This may be done more conveniently by the appointment of proxies.
There are no requirements to file financial reports. However, an information return must be submitted to the Registrar requiring a declaration that: (1) no changes, other than those notified to the Registrar, have been made in the Memorandum of Association, (2) the provisions of the companies law have been observed, and (3) the company’s operations have been mainly outside of the Cayman Islands.
Restrictions On Name And Activity
There are restrictions on the naming of companies. The name of a new company must not resemble a name of an existing company. The following words, and their associated activities, cannot be used: Assurance, Bank, Trust, Insurance, Chartered, Company Management, Mutual Fund, or Chamber of Commerce, unless the necessary licenses under relevant laws have been obtained.
The local company law requires that a company maintain a registered office address within the Cayman Islands and must also appoint a Cayman resident as registered agent.
The Confidential Relationship (Preservation) Law makes it a criminal offense to divulge confidential information or to willfully obtain or attempt to obtain confidential information relating to a Cayman Island company. The law imposes a maximum penalty of a fine and/or a term of imprisonment of up to two years.
The Cayman Islands have no double taxation treaties with any other part of the world but have undertaken to assist foreign governments by giving them information where a Cayman Island company has been used or involved in activities, which are mutually considered as criminal.
Professional standards are high in the Cayman Islands. All major international accounting firms are represented in the Caymans and there are a number of local law firms specializing in offshore financial matters. Top banks and leading offshore mutual funds are domiciled in the Cayman Islands.