Cayman Islands Background

The major offshore banking and finance centre in the Caribbean.
Favoured jurisdiction for mutual funds.
Accepted for listings on the Hong Kong Stock Exchange.

Introduction

The Cayman Islands, which comprise three islands in the Caribbean Sea south of Cuba, are a British Dependent Territory that was originally discovered by Christopher Columbus. The financial services sector is one of the main industries in the Cayman Islands, and there is a substantial commitment to the continued development of the offshore financial services industry. The reputation and popularity of the Cayman Islands have increased significantly, particularly in Asia, as they are one of only three offshore centres approved by the Hong Kong Stock Exchange for public listings in Hong Kong. The Cayman Islands established their own Stock Exchange in 1997.

Law and Taxation

Company's law in the Cayman Islands is based on English common law. There are two types of Cayman Islands companies: the Exempted and the Non-Resident. The ongoing licence fees for a Non-Resident Company are slightly less than for an Exempted Company but they must submit a more detailed annual return and as such, have not gained great favour in Asia. The Cayman Islands received a Royal decree in 1798 that would free them from taxes forever and this decree remains in force. Exempted Company names do not have to end with the suffix 'Limited', and such companies may apply for a 20 year tax exemption certificate, further enhancing their tax exemption status. The company name may also be expressed in Chinese characters, so long as its English translation is provided.

In November 2001, a new agreement with the United States (US) for the exchange of information was signed. This provides for the exchange of information, upon request, for criminal tax evasion, civil and administrative matters relating to US federal income. The agreement applies to criminal tax evasion for taxable periods commencing 1 January 2004, and to all other tax matters for taxable periods commencing on 1 January 2006.

Corporate Requirements

Chinese names are permitted and can be included on a company's Certificate of Incorporation.

All Exempted Companies must have a registered office provided by a licensed service provider. A minimum of one shareholder and one director are required and corporate directors are permitted. The Registers of Directors, Officers and Charges shall be kept at the Registered Office. A copy of the Register of Directors and Officers must be filed with the Companies Registry but is not available for public inspection. Every Exempted Company must keep a Register of Members and the original or a copy should be kept at the Registered Office. Whilst bearer shares are permitted, in practice they are not encouraged and bearer share certificates must only be held by approved custodians. Annual returns must be lodged but these do not need to disclose details of the directors or members.

In April 2001, the Cayman Islands issued new due diligence guidelines requiring disclosure of information on all officers, members, beneficial owners and authorised signatories of Cayman Islands companies to service providers. This information is required by law for all new companies and must be provided by existing companies within a set transitional period. Such information is confidential, under the Confidential Relationship (Preservation) Law, which makes it a criminal offence to divulge confidential information or to wilfully obtain or attempt to obtain confidential information relating to a Cayman Islands company.

Local Infrastructure

The Cayman Islands are the leading financial centre in the Caribbean with over 584 licensed banks and trust companies present. All the main international accounting firms are present and there are numerous high quality law firms. Communications and transport links are excellent, with regular flights from Miami which is only one hour away.