Your Simple Guide to Offshore Company Formation in the Cayman Islands
Setting up an offshore company in the Cayman Islands is simple, inexpensive and offers a wealth of advantages to your international business.
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In order to attract businesses and investors to its Caribbean shores, the Cayman Islands has a tax-neutral approach, meaning it generates all its revenue through indirect means such as customs duties and stamp duty on land and property transfers. It levies no taxes whatsoever on income, capital, capital gains or sales. There are no withholding taxes, no taxes on inheritance and no currency exchange controls.
This makes the Cayman Islands an extremely popular place to set up an offshore company and the “exempted company” is the category generally referred to when discussing offshore company formation in this jurisdiction.
An exempted company is one whose business is conducted mainly outside the Cayman Islands. The advantages of this type of company over ordinary (non-resident) companies are that it allows international investors to trade across international borders with ease while enjoying minimal exposure to taxes and other duties.
While offshore company registration in the Cayman Islands is not very complicated, it does require the services of a registered agent who specializes in incorporating offshore companies. Registered agents are professionals such as lawyers, offshore service providers and experts in international finance.
Exempted companies offer their shareholders and officers a large degree of anonymity. The names of shareholders of an exempted company are not required to be filed with the Registrar of Companies. The company must have a minimum of one director and one shareholder. The shareholder and director can be the same person, can be a corporate body and can be of any nationality.
A 20-year guarantee (in the form of a Tax Exemption Certificate) from the Cayman Islands government ensures that an exempted company will not be subject to taxation for 20 years from formation, even though there are presently no taxes in the Cayman Islands and no plans to introduce them.
While the names of directors and officers must be submitted to the Registrar of Companies, the Cayman Islands company formation documents do not carry the name or identity of the shareholder(s) and they are not available to the public.
Annual reporting requirements are minimal and consist only of a confirmation that operations have been carried out mainly outside of the Cayman Islands. There is no obligation to prepare annual financial statements and accounts for presentation or inspection by the government. Shareholder and directors meetings can be held at any time and location that is convenient, even by telephone.
The entity can be run from anywhere in the world.
Shares can be issued with or without par value; The minimum is US$1, but most companies of this type are set up with an authorized share capital of US$50,000 divided into 50,000 common voting shares of US$1. This is the most number of shares possible with the minimum capital duty payable to the Registrar of Companies. The minimum issued share capital is one share of no par value or one share of part value.
The Cayman Islands company registry can be completed very quickly if the paperwork and due diligence are in order. Cayman Islands law requires an agency that provides company formation services to conduct due diligence to “know the client” and know the proposed activities of any exempted company it sets up on behalf of a client.
It usually takes no more than a week to have the completed papers returned from the Registrar of Companies. There is also an express service where documents can be processed faster (even the same day) at an additional cost.
Once you feel you understand some of the requirements and advantages you should be ready to talk to a registered Cayman Islands corporate service provider for your offshore company formation. Look for a company that has established local affiliations as well as extensive knowledge of the legal requirements for company formation in the Cayman Islands. There are many to choose from and you can rest assured that the Cayman Islands’ reputation for providing well-regulated and sophisticated legal, accounting and banking services, as well as excellent political stability, is well deserved.