With its white-sand beaches, beautiful weather year-round, and high standard of living, it’s hard to think of a more appealing offshore jurisdiction than the Cayman Islands. But for those who don’t want to uproot and move away from their homes, businesses and investors can enjoy all the benefits of a company formation in the Cayman Islands from the comfort of their home countries.
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What are the perks of company formation in the Cayman Islands?
There is a vast array of advantages to incorporating in the Cayman Islands, particularly in the investment management, legal and financial service sectors, to name just a few:
- Cayman is a zero-tax jurisdiction. There is no corporate, property, capital gains, payroll or withholding taxes
- There is no sales tax on goods and services, nor do residents pay income taxes
- The Cayman Islands is an ideal jurisdiction for corporations to base subsidiary businesses to shield some or all their income from taxation
- Unlike in other jurisdictions, a single person can assume the role of director and/or shareholder in the Cayman Islands. This person can be of any nationality, and there is no need for them to reside in the Cayman Islands
- There is no minimum capital requirement for company formation in the Cayman Islands
- There are no annual auditing requirements for an offshore Cayman Islands Company
- The territory is widely used as a listing entity in major stock exchanges around the world
- It’s easy to find Cayman Islands lawyers and legal experts who reside in other countries, even as far away as Asia
- The island is a well-known jurisdiction to use for establishing corporate bank accounts
Company formation in the Cayman Islands: What type of company can be set up there?
There are five main types of companies that foreign businesses and corporations can incorporate in the Cayman Islands. According to the Cayman Islands General Registry, each type has its own set of advantages, rules and limitations. So before beginning the process of company formation in the Cayman Islands, it’s incumbent upon each foreign entity to carefully consider what type of company best suits their business.
1. Limited liability company – In cases where company activities are to be carried out primarily abroad, a foreign entity can register as an LLC. Executives, managers, and shareholders cannot be held personally liable for the company’s debts or liabilities.
2. Resident company – An ordinary resident company carries on business within the Cayman Islands. The company must have a physical office presence and register their past and present members. A resident company must also report annually to the Registrar.
3. Non-resident company – A non-resident company is one that does not intend to conduct business within the Cayman Islands. Companies, however, are permitted to buy and sell shares of foreign corporations and exempted companies. This company can only do business on the island through a partnership with a local entity.
4. Overseas company – An overseas company (or foreign company) is a company incorporated outside the Cayman Islands. These firms can register as an overseas company and are then entitled to hold land and/or conduct business in the Cayman Islands, or to act as a partner of a Cayman exempted limited partnership.
5. Exempt company – This type of company formation in the Cayman Islands is suitable for companies whose business activities are mainly carried out outside of the Cayman Islands (i.e., offshore). An exempt company is not required to register its members for public inspection, nor is the entity required to hold annual general meetings in the Cayman Islands.
Company formation in the Cayman Islands: A 4-step guide
There are multiple types of companies, and each has its own process to incorporation or registering in the Cayman Islands. But there are some general steps that are similar for any process of company formation in the Cayman Islands. What follows is a general guideline:
Step 1: Reserve/register company name
For entities incorporated offshore, a company must simply register its legal, trademarked name with the Cayman Islands General Registry. Foreign firms that register as resident companies must run a search with the General Registry to ensure their company name is available for use.
Step 2: Collect necessary documents, submit application
The documents needed to apply for any kind of incorporation will likely include:
- A Memorandum of Association
- Articles of Association
- Approval from the Cayman Islands Monetary Authority
- Proof that accounting records are in good order
The incorporation application is processed on average between 6 to 10 working days.
Step 3: Pay incorporation fees
The cost of company formation in the Cayman Islands runs between $2,000 to $3,000. Companies of all kinds must pay an annual renewal fee of $5,000 to $6,000 USD.
Step 4: Open a corporate bank account
Opening a corporate bank account in the Cayman Islands requires filling out a detailed application form as well as providing company information such as: your new Certification of Incorporation, a written request to open a new account on company letterhead explaining the need for such an account, and a reference from a Caymanian or overseas bank. Some banks require the identification and references for the principal shareholders who own 10 percent or more in shareholdings, as well as the directors and officers responsible for managing the account.
Biz Latin Hub can help you with company formation in the Cayman Islands
At Biz Latin Hub, we provide integrated market entry and back-office services throughout Latin America and the Caribbean, with offices in Bogota and Cartagena, as well as over a dozen other major cities in the region. We also have trusted partners in many other markets.
Our unrivalled reach means we are ideally placed to support multi-jurisdiction market entries and cross border operations.
As well as knowledge about company formation in the Cayman Islands, our portfolio of services includes hiring & PEO, accounting & taxation, company formation, bank account opening, and corporate legal services.
Contact us today to find out more about how we can assist you in finding top talent, or otherwise do business in Latin America and the Caribbean. If this article on company formation in the Cayman Islands was of interest to you, check out the rest of our coverage of the region. Or read about our team and expert authors.