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 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 LDCˇs with certain additions and exceptions
which are summarised below:-
| (1) |
The LDC must include at the end
of its name limited duration company or ˉLDCˇ. |
| (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 ˉlimited duration companyˇ or ˉLDCˇ
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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