The Benefits and Types of Cayman Islands Companies

Incorporating a Cayman Islands company is a straightforward process and, depending on the type of company and business you plan to run, can offer advantages and benefits not available anywhere else.

Let’s get one thing out of the way very quickly. Despite the popular tabloid fiction that the Cayman Islands is a lawless offshore hidey-hole for stashing ill-gotten gains, it is, in fact, a British Overseas Territory that works hard to offer companies and individuals around the world a low-regulation, tax-neutral business environment while still meeting stringent international tax guidelines and money-laundering regulations.

While other so-called tax havens suffer from a bad reputation and are often blacklisted, the Cayman Islands puts considerable effort into following international tax regulations and reporting, which successfully keeps the territory off EU and OECD blacklists.‍

Company formation in the Cayman Islands allows owners a high degree of flexibility in operations and business opportunities, as well as low overheads, administration costs, and regulatory requirements.

Apart from zero taxation, built-in advantages include an incorporation procedure that can be completed at low cost in four days or less and exemption from the typical administration requirements in other jurisdictions such as annual shareholder meetings and annual audits.

There is also a high degree of privacy from public scrutiny of shareholder and director information, while this information is made available to foreign governments under international tax agreements when illegal activities are being investigated.

Depending on the business to be run, there are a number of company types that can be incorporated at the Cayman Islands company registry. They fall into two broad types — those who can conduct business in the Cayman Islands and those who cannot.

The first type includes the Ordinary Resident Company, a business type that carries out its business activities in the Cayman Islands. An Ordinary Resident Company must have a registered office in the Cayman Islands and meet certain annual reporting requirements. It must have at least one shareholder of record, and its Register of Members is open to public scrutiny.

The second type includes the Exempted Company and its variations. Their basic requirement is that they make their money offshore, not locally in the Cayman Islands. The differences between them are subtle but are designed to allow flexibility and ease of doing business under a number of scenarios. The Register of Members of an Exempted Company is not open to public scrutiny, and no annual general meeting or audit is required.

An Exempted Company can only enter into local contracts when they are necessary for conducting its overseas business. This type of Cayman Islands company incorporation can secure tax-free status from the Cayman Islands government for 20 years, guaranteed and renewable.

A variation on the Exempted Company is the Limited Duration Exempted Company. The difference is that it has a 30-year lifespan before it is automatically dissolved.

Another variation is the Segregated Portfolio Exempted Company, able to separate its assets and liabilities into independent portfolios from each other and the company’s general assets according to shareholder requirements.

An Exempted Limited Partnership is similar to a Limited Liability Company, offering protection to members of the company from personal liability for company debts or liabilities. Its government-issued tax-free guarantee is valid for 30 years.

The Ordinary Non-Resident Company, as its name suggests, is similar in structure to the Ordinary Resident Company but is granted non-resident status and does not conduct business in the Cayman Islands. It is required to have a registered office with a Cayman Islands Monetary Authority licensed service provider. This structure is used as an alternative to the Exempted Company and can be converted to one at any time with a simple application.

The above is a simplified overview of the major types of companies available for incorporation in the Cayman Islands and is not exhaustive. Speak to a professional firm licensed for this purpose before taking any decision regarding types of company, their purposes, advantages, and their formation.