Cayman Islands Exempted Company Formation: Must-Knows
- Shraddha Khattri
- Sep 19, 2023
- 3 min read
When it comes to offshore companies in the Cayman Islands, Exempted Companies take the spotlight as the most prevalent choice among foreign investors. Their distinct features perfectly align with the needs and desires of a wide range of global entrepreneurs seeking offshore opportunities.
As per the 2020 (Revised) Companies Law, an exempted company primarily conducts its business activities beyond the borders of the Cayman Islands. In terms of its legal structure, an exempted company possesses a unique legal identity that allows it to perform all the functions of an individual, irrespective of corporate interests, and it enjoys indefinite continuity.
Key features of Cayman Islands Exempted Company:
Here are the key attributes of Cayman Islands Exempted Company:
Trading Restrictions: Exempted companies are prohibited from conducting business within the Cayman Islands unless they hold a relevant license under applicable laws. Additionally, owning land in the Cayman Islands requires approval from the Financial Secretary.
Registered Office Requirement: An exempted company must maintain a registered office in the Cayman Islands, provided by an authorized service provider.
Directors, Shareholders, and Secretary: A minimum of one director and one shareholder is required.
They can be the same person, of any nationality, and need not reside in the Cayman Islands. Corporate bodies can also serve as officers.
Share Capital Flexibility: There are no strict capitalization rules. Exempted companies can issue fractional shares and classify shares into different classes with varying rights. The standard share capital is 50,000 shares at a par value of US$1.00 each. Bearer shares are not allowed.
Accounting and Auditing: While proper accounting records must be maintained, they need not be stored in the Cayman Islands. Audits and auditors are not mandatory but records must be available upon government or tax authority request.
Annual Filing: Annually, in January, companies must file a return with the Registrar, reporting any changes to the Memorandum and Articles of Association (M&A) and providing information on operations conducted outside the Cayman Islands.
Taxation Benefits: Cayman-exempted companies benefit from the Cayman Islands' tax-friendly environment. They are not subject to income, withholding, or capital gains taxes.
Private Member Registers: Member registers of exempted companies are not subject to public inspection, ensuring privacy for shareholders.
No Mandatory Annual Meetings: Exempted companies are not obligated to hold annual meetings, reducing administrative burdens.
Various Exempt Company Types: Beyond standard exempted companies, there are additional forms, including limited duration companies with a 30-year lifespan and specific shareholder requirements. Segregated portfolio companies can segregate assets and liabilities, with mandatory portfolio-based returns. Special economic zone companies can operate within designated zones, contingent upon a declaration of purpose.
Taxation:
Cayman-exempted companies are not subject to income, withholding, or capital gains taxes. The taxation regime excludes conventional direct and indirect taxes, eliminating the need for exempted companies to file complex annual returns or accounts with tax authorities. A straightforward annual return suffices.
Shareholders are also exempt from taxes on shares and dividends. Estate and inheritance taxes do not apply. Tax exemption certificates can be obtained which shields the company from present and future tax liabilities. These certificates are valid for 20 years and can be renewed.
Corporate Requirements:
Min. No. of Shareholders | 1 |
Min. No. of Directors | 1 |
Min. Share Capital | No Minimum |
Corporate Directors | Allowed |
Company Secretary | Yes |
Usual Share Capital | Standard share capital is 50,000 shares at a par value of US$1.00 each |
Bearer Shares | Not Allowed |
Production Of Accounts | Not Required |
Audit of Accounts | Not Required |
Local and Annual Requirements:
Registered Office | Yes |
Registered Agent | Yes |
Local Directors | No |
Local Shareholders | No |
Annual Return | Yes |
Economic Substance Filing | Yes |
Annual Renewal of Registered Agent & Registered Office | Yes |
Exempted Company registration process:
Should you need more information & to receive a quote for setting up a Cayman Islands Exempted Company, feel free to send us an email via team.offshorelawyer@gmail.com.
Disclaimer: While Offshore Lawyer make every effort to ensure the information on this website is current and accurate, please note that the content is intended for general reference purposes only. It is not a substitute for professional legal advice tailored to your specific situation. We recommend consulting with our customer services team for advice regarding your individual circumstances.
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