The Cayman Islands offers investors of all types the chance to own a company in a leading financial centre. Known for its tax-neutral approach, strong regulations, and stable government, this jurisdiction attracts businesses for good reasons: it has no corporate tax, income tax, capital gains tax, or withholding tax.
For businesses aiming to enhance their global strategy, the Cayman Islands essentially offers an extensive smorgasbord of company structures, reflecting its status as a leading financial centre. From new ventures to global corporations, the Cayman Islands’ corporate menu caters to all appetites, serving up options that match the needs of diverse investors.
While some might think setting up a Cayman Islands company is difficult, it can be quite simple with the right support. Accordingly, investors of all kinds should, and can benefit from this top-tier jurisdiction. This article will open up your investment opportunities by looking at the different company types available, helping you choose the best option for your business goals in the Cayman Islands.
The Main Types of Company Structures in The Cayman Islands
1. Cayman Islands Ordinary/Resident Company
The Ordinary Company, also known as the Resident Company, is a fundamental option in the Cayman Islands’ corporate structure offerings, and is usually established by Cayman Island citizens. This type is designed for businesses intending to operate within the Cayman Islands.
Key features of the Ordinary Company include:
- Simple Incorporation: Only one shareholder and one director are required.
- Local Presence: A registered office in the Cayman Islands is mandatory.
- Regulatory Compliance: Annual reporting to the Registrar of Companies is necessary.
- Public Register: The company must maintain a register of past and present members, open for public inspection at its registered office.
For foreign investors, it is important to note that the Ordinary Company is primarily suited for conducting business within the Cayman Islands. This structure allows for local operations, contract signing, and growth within the Cayman market. Additional licenses may be required for specific activities like banking or insurance.
Summary – Who This Company Structure is For
The Ordinary Company is best suited for businesses planning to operate primarily within the Cayman Islands. It is not typically the ideal choice for foreign investors seeking a holding entity for overseas investments or as part of a global tax strategy. For those purposes, other company types offered in the Cayman Islands may be more appropriate.
2. Cayman Islands Ordinary Non-Resident Company
The Ordinary Non-Resident Company is a variation of the Ordinary Company that caters specifically to foreign investors. This structure offers a unique balance between local incorporation and international operations.
Key Features of the Ordinary Non-Resident Company Include:
- Similar incorporation requirements to the Ordinary Company
- Special certificate confirming it will not conduct business in the Cayman Islands
- Maintains a register of past and present members at its registered office, open for public inspection
- Can be used to hold shares in foreign companies
For foreign investors, the Ordinary Non-Resident Company provides a Cayman Islands presence without intending to conduct local business. This structure is particularly useful for holding investments or shares in companies outside the Cayman Islands.
While it shares many similarities with the Ordinary Company, the key distinction lies in its restriction from carrying out business within the Cayman Islands. This limitation is offset by the potential tax advantages and the prestige of a Cayman Islands company.
It is worth noting that this company type can be converted to other structures if business needs change.
Summary – Who This Company Structure is For
The Ordinary Non-Resident Company is ideal for foreign investors who want a Cayman Islands company primarily for holding overseas investments or shares in foreign companies. It suits those who need a local presence but do not intend to conduct business within the Cayman Islands itself.
3. Cayman Islands Exempt Company
The Cayman Islands Exempt Company is the most popular choice for foreign investors. It is designed for conducting business primarily outside the Cayman Islands while benefiting from the jurisdiction’s favourable environment.
Key Features of the Exempt Company Include:
- All business operations should be conducted overseas, except business related to promoting the company
- Can be incorporated with just one shareholder and one director
- Not required to keep a register of members open for public inspection
- No requirement to hold annual general meetings in the Cayman Islands
- Can alter its Memorandum and Articles of Association with notification to the Registrar
- May issue shares with nominal or no par value
- Can express its capital in any currency or multiple currencies
- Lighter annual return requirements, including a declaration of compliance with the Companies Law
- Not required to include “Limited” or “Ltd.” in its name
For foreign investors, the Exempt Company offers flexibility and privacy. While it cannot conduct local business, except to further its offshore activities, it can engage in a wide range of international operations.
Summary – Who This Company Structure is For
The Cayman Islands Exempt Company is ideal for foreign investors seeking to operate internationally while leveraging the Cayman Islands’ benefits. It is suited for investment holding companies, intellectual property holdings, and international trading entities.
This structure offers a balance of flexibility, privacy, and regulatory compliance that appeals to global businesses looking to conduct operations primarily outside the Cayman Islands.
4. Cayman Islands Limited Duration Company
The Limited Duration Company (LDC) is a specialised form of Exempt Company in the Cayman Islands. It offers unique features that cater to specific investor needs.
Key features of the Limited Duration Company include:
- Shares many characteristics with the Exempt Company
- Must have at least two members
- Company’s duration is limited, not exceeding 30 years
- Can be automatically dissolved upon the expiration of a fixed term or the occurrence of a specified event
- Offers flexibility in structuring and winding up
For foreign investors, the LDC provides an attractive option for time-bound projects or investments. Its predefined lifespan can be particularly useful for joint ventures, investment funds with a specific timeline, or tax planning strategies in certain jurisdictions.
The LDC combines the benefits of an Exempt Company, such as tax neutrality and flexibility, with the added advantage of a built-in dissolution mechanism. This can simplify exit strategies and potentially offer tax benefits in the investors’ home countries.
It is important to note that the LDC must comply with all relevant Cayman Islands regulations, including those related to beneficial ownership and annual reporting.
Summary – Who This Company Structure is For:
The Limited Duration Company is ideal for foreign investors engaged in time-sensitive projects, joint ventures with predetermined lifespans, or specific investment structures that benefit from automatic dissolution. It is particularly suited for those seeking the advantages of an Exempt Company but with a predefined end date, offering clarity in business planning and potential tax benefits.
5. Cayman Islands Foreign/Overseas Company
A Foreign Company, also known as an Overseas Company in the Cayman Islands, is an entity incorporated outside the jurisdiction that wishes to establish a presence or conduct business within the Cayman Islands.
Key features of the Foreign Company include:
- Must register with the Registrar of Companies to hold land or carry on business in the Cayman Islands
Can act as the general partner of a Cayman Islands Exempted Limited Partnership
Must submit specific documents for registration, including:- Certified copy of formation or incorporation certificate
- Certificate of good standing from home jurisdiction
- Certified copy of charter, by-laws, or other constitutive documents
- List of directors with specified details
- Name and address of a local representative for service of process
For foreign investors, registering as a Foreign Company allows extension of operations into the Cayman Islands while maintaining the original corporate structure. This can be valuable for businesses seeking a physical presence, land ownership, or participation in local partnerships.
Summary – Who This Company Structure is For:
The Foreign Company registration suits businesses already incorporated elsewhere that need to conduct specific operations within the Cayman Islands. It is ideal for companies requiring a local presence, land ownership rights, or involvement in Cayman partnerships while preserving their existing structure and accessing the Cayman Islands’ business benefits.
6. Special Economic Zone Company (SEZCo)
The Special Economic Zone Company (SEZCo) is a unique corporate structure in the Cayman Islands, designed to operate within Cayman Enterprise City (CEC), the designated special economic zone.
Key features of the SEZCo include:
- Must carry on business mainly outside the Cayman Islands
- Can be a new entity or a re-registered existing exempt company
- Exempt from various local licensing requirements
- Employees granted five-year work/residency visas
- Protected intellectual property rights
- Exempt from direct and indirect taxes, certain import duties, and work permit requirements
- Fast-track incorporation process (within 10 days)
SEZCos can operate in seven specialised business parks:
- Cayman Internet Park
- Cayman Science and Technology Park
- Cayman Media Park
- Cayman Commodities & Derivatives Park
- Cayman Outsource Park
- Cayman International Academic Park
- Cayman Maritime and Aviation Services Park
For foreign investors, SEZCos offer a streamlined way to establish a physical presence in the Cayman Islands. The structure provides flexibility, tax benefits, and access to modern office facilities within CEC.
Summary – Who This Company Structure is For:
SEZCos offer a straightforward and cost-effective solution for foreign businesses in technology, science, media, commodities, education, maritime, and aviation sectors seeking to establish a physical presence in the Cayman Islands.
This structure not only provides a quick setup process, tax advantages, and flexible operations within a specialised economic zone, but also enables eligible businesses and their employees to access the benefits of working and living in the Cayman Islands.
7. Other Company Types
- Foundation Company: A flexible structure that combines features of both companies and foundations. Ideal for wealth management, charitable purposes, or holding assets. Suits philanthropists, family offices, and those seeking alternatives to trusts.
- Limited Liability Company (LLC): Similar to US LLCs, offering flexibility in management structure and limited liability for members. Much like Singapore’s VCC, it is suitable for joint ventures, investment vehicles, and businesses seeking operational flexibility.
- Segregated Portfolio Company: An exempted company that can create separate portfolios with assets and liabilities segregated from other portfolios. Popular for investment funds and insurance companies, allowing multiple strategies or policies under one corporate umbrella.
- Unlimited Company: A company where shareholders have unlimited liability for the company’s debts. Rarely used but can be beneficial in specific structuring scenarios, particularly for certain tax planning strategies in other jurisdictions.
How to Choose the Right Cayman Islands Company Type
Selecting the optimal company structure in the Cayman Islands requires careful consideration of various factors:
- Business objectives: Consider your long-term goals and operational needs.
- Tax implications: Evaluate the tax consequences in your home jurisdiction and any other relevant countries.
- Regulatory requirements: Understand the compliance obligations for each company type.
- Operational flexibility: Assess which structure offers the most suitable management and decision-making processes.
- Capital requirements: Consider the initial and ongoing capital needs of your business.
- Investor preferences: If applicable, factor in the preferences of potential investors or partners.
- Exit strategy: Consider how different structures might impact future sales or restructuring plans.
Obviously, there is a lot of complexity involved in this process, so the most common approach is to seek guidance from legal and financial experts with on-the-ground experience in the Cayman Islands, like InCorp.
They provide tailored advice based on your specific circumstances and help navigate the nuances of each company type, ensuring you make an informed decision that aligns with your business goals.
Where to Next With InCorp
The Cayman Islands offers a myriad of company structures, each tailored to meet specific business needs and investor preferences. From Exempt Companies to Special Economic Zone Companies, the jurisdiction provides flexible, tax-efficient options for global businesses.
As you consider establishing a presence in this premier financial centre, it is important to make informed decisions that align with your long-term objectives. For expert guidance on navigating the Cayman Islands’ corporate terrain, contact InCorp today.
Our team of experienced professionals can provide tailored advice, ensuring you select the optimal structure for your business and streamline the incorporation process.
FAQs about Types of Companies in the Cayman Islands
- Consider factors such as business objectives, tax implications, regulatory requirements, and operational flexibility. Consulting with experts like InCorp can help in making the right choice.
- SEZCo is a company structure that operates within Cayman Enterprise City, offering tax benefits, streamlined setup, and specialised business environments.
- Foreign businesses can establish a presence by registering as a Foreign Company or setting up a Special Economic Zone Company in Cayman Enterprise City.
Let our experts handle your offshore company setup!
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