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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