So you’re ready to pull the trigger on forming a Cayman Islands offshore company. Before you do so you should be aware of the legal requirements for the formation of your business so that you are operating within the laws of this Caribbean nation. Your new business (AD)venture awaits.
What Types of Businesses Can I Legally Set Up In The Cayman Islands?
Someone looking to set up a business in the Cayman Islands has several different options. Foreign entities have the option of establishing a limited company, a partnership or operating solo as an individual. If a company not from the islands wants to operate in the local Caymanian economy they can go that route as well by registering a branch with CI Government (subject to their approval of course). Solo operators have an unlimited liability with parties doing business with them whilst, by comparison, companies with shareholders are limited in their liability conducting business with outside parties.
If you are a small business/solo operator you will likely be subject to a much simpler company formation process but if you are a large company the formation of your offshore entity could likely be extremely complicated so it is best to rely on local professionals when forming your Cayman Islands base of operations. Fees for company formation will largely depend on the size, scale and scope of the business you want to do in Cayman. Additionally, if you don’t want to be personally exposed to the debts or obligations of your new company, the formation of a limited liability company could be advantageous for you. In general, sole operators will be on the line for everything whilst forming a company or partnership will limit your personal exposure. Again, it is best to discuss this with a qualified professional or attorney to see what type of company fits your personal/corporate needs.
Forming a Branch or Doing Business Directly on the Island
Maybe you want to form a branch of your company here in the Cayman Islands. Or, perhaps you want to do business directly on the island (open a bar, restaurant or shop for example). These things, too, can be accomplished. If you want to form a branch of your company ‘XYZ’ you simply need to register your branch with the Cayman Registrar of Companies, pay annual fees to the CI Government and keep a minimum of one “registered agent of company ‘XYZ’”. If you fail to maintain the fees, however, your branch could and likely will be dissolved. Lets say for instance you want to open a scuba dive operation, beach bar or charter boat company on the island – well that is a bit different. It largely depends on what type of business you want to operate but, in general, you will need some form of trade and business license to operate on the island. In broad brushstrokes, your company will need to be at least sixty percent owned by Caymanians as foreigners can generally only hold a maximum 40% stake. That is the first step before you can even get a trade and business license. In certain specific cases, however, you can own more of the company you wish to form but that requires a LCCL (Local Companies Control Law License) and that will have to be approved by that governing bodies’ Board of Directors. That board will take a litany of things into consideration if you apply for this license and these things will include what your business will bring to and benefit the Cayman Islands as well has how many Caymanian people it will employ and if it will directly compete with already pre-established locally owned businesses. Along these lines, if you want to set up shop in Cayman but do business predominantly overseas (i.e. not in direct competition with local businesses) then you will likely not have to apply for an LCCL. Each instance is different – so you will want to consult local professionals. In general, though, you will still need a Trade & Business license and keep up with fees and industry requirements.
Can I Bank, Set Up A Trust Or Hire Expat Employees?
Yes. You can do all of these things. If you want to form a bank, management company or a trust you will likely not have to have an LCCL or a trade and business license. You will, however, need to get a license from the Cayman Islands Monetary Authority and meet their requirements and guidelines. You can also hire expatriates to work in your business provided you advertise the job locally for a specified period of time and make every attempt to find a comparable, qualified Caymanian to fill the role before you look overseas for employees. Those specific rules can be found by contacting the Cayman Islands Government.
Forming a company in the Cayman Islands is a relatively straightforward process. There can be unknowns but by in large – it is an entirely feasible thing for foreign companies and individuals to accomplish. New companies are forming every day, when will you start yours?