This publication has been prepared for the assistance of those who are considering the operation of companies in the Cayman Islands ("Cayman"). It deals in broad terms with the requirements of Cayman law and is not intended to be exhaustive but merely to provide brief details and information which we hope will be of use to our clients. We recommend that our clients and prospective clients seek legal advice in Cayman on their specific proposals before taking steps to implement them.
Before proceeding with the incorporation of a company in Cayman, persons are advised to consult their tax, legal and other professional advisers in their respective jurisdictions.
Persons considering establishing companies to carry on insurance or mutual fund business should request separate publications prepared by this Firm on these topics.
1. INTRODUCTION
The Cayman Islands Companies Act (the "Act") imposes continuing obligations on all types of companies. Those companies which carry on business as trust companies, banks, company managers, insurance companies, insurance managers, mutual fund administrators and most mutual funds are subject to additional regulation governing those activities, details of which are available on request.
2. CORPORATE RECORDS
The Act prescribes certain documents and records that a company must maintain.
2.1. Register of Members
Every company must keep a Register of Members containing the names and addresses of the members of the company, the number and category of shares held by each member, the amount paid or agreed to be paid on the shares, whether each category of shares carries voting rights (including the right to vote at general meetings and/or the right to appoint or remove directors) under the articles of association and, if so, whether such voting rights are conditional, the date on which each person became a member and the date on which each member ceases to be a member.
The issuance of bearer shares is prohibited by virtue of the Companies (Amendment) (No. 3) Act, 2020 (the "Amendment Act") and any bearer shares issued prior to the commencement of the Amendment Act are deemed void.
A company in default of complying with the requirement to maintain a Register of Members shall incur a penalty of CI$5,000 / US$6,098. Any director or manager of the company who knowingly and wilfully authorises or permits such default shall also incur the same penalty.
An exempted company may, but is not required to, maintain one or more branch registers of such category or categories of members as the exempted company may determine. A branch register is deemed to be part of the exempted company's register of members and, as such, must be kept in the same manner in which a principal register is required to be kept. In addition, a copy of each branch register must be kept with the principal register.
An exempted company in default of the requirement to maintain a copy of the branch register or the requirement to make changes to the branch register will be liable to pay a CI$5,000 / US$6,098 penalty. Any director or manager of the company who knowingly and wilfully authorises or permits such default shall also incur the CI$5,000 / US$6,098 penalty.
A company must make available, at its registered office, the Register of Members and any branch register as may be required by service of an order or notice by the Tax Information Authority. A failure to comply with an order or notice of the Tax Information Authority without reasonable excuse will result in a penalty of CI$500 / US$610 and a further penalty of CI$100 / US$122 for every day during which the non-compliance continues.
2.2. Register of Directors and Officers
Every company must keep a Register of Directors and Officers containing the names and addresses of its directors, including alternate directors, and officers. A copy of the Register of Directors and Officers must be sent to the Registrar within sixty (60) days of the first appointment of any director or officer of the company.
Notification of any change to the Register of Directors and Officers must be sent to the Registrar within thirty (30) days of the change taking place.
A company in default of complying with the above requirements shall incur a penalty of CI$500 / US$610. In addition, if the Registrar is satisfied that a breach has been knowingly and wilfully authorized or permitted, a company shall incur a CI$1,000 / US$1,220 penalty and every director and officer shall incur a penalty of CI$1,000 / US$1,220 as well as a further penalty of CI$100 / US$122 for every day during which the default continues.
The Registrar will make available the names of the current directors and, if applicable, alternate directors for inspection by any person upon payment of a fee of CI$50/US$61.
2.3. Register or Mortgages and Charges
Every limited company must keep a Register of Mortgages and Charges at its registered office. The Register of Mortgages and Charges must include a short description of the property mortgage or charged, the amount of the charge created and the names of the mortgagees or persons entitled to such charge.
Any director, manager or other office of the company who knowingly and wilfully authorizes or permits the omission of such entry, shall incur a penalty of CI$100 / US$122.
The Register of Mortgages and Charges must be open to inspection by any creditor or member of the company at all reasonable times. If such inspection is refused, any officer of the company refusing the same, and every director and manager of the company authorising or knowingly and wilfully permitting such refusal shall incur a penalty of CI$4 / US$5 for every day during which such refusal continues and a Judge sitting in chambers may compel an immediate inspection of the register.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
