The Cayman Islands Parliament has passed the Companies (Amendment) Act, 2024 (the "Amendment Act"), published on 11 March 2024, and will come into force pending a subsequent Cabinet Order. Once in force, the Amendment Act will modify the Companies Act (2023 Revision).
The amendments are a welcome improvement to Cayman Islands company law and aim to enhance the jurisdiction's adaptability to global market trends and maintain its reputation as a leader in the financial services industry.
The key changes to be brought into effect by the Amendment Act are:
- Reduction of Share Capital: Solvent companies will no longer require court approval for share capital reductions if permitted by their articles of association. This provision facilitates reductions by special resolution supported by a solvency statement, with registration requirements outlined for the submission of relevant documents to the Registrar within specified timelines. This revised procedure will streamline the process, lower costs, and enhance efficiency for companies incorporated in the Cayman Islands.
- Fractional Shares: Fractional shares may now be repurchased or redeemed, subject to the company's articles of association.
- Conversion and Re-registration: Permitting the conversion of limited liability companies ("LLCs") or foundation companies into exempted companies, Cayman's most common corporate vehicle, This is similar to the provisions which already exist for conversions from exempted companies to LLCs. Conversions do not alter the legal entity's continuity or affect property, appointments, resolutions, or legal proceedings. Additionally, the re-registration of exempted companies as ordinary resident companies is allowed for entities seeking to conduct business within the Cayman Islands.
- Continuation by Bodies Corporate: Bodies corporate from jurisdictions outside the Cayman Islands, regardless of share capital, can now apply for registration as exempted companies limited by shares under the Companies Act. This expands flexibility, as previously only bodies corporate with share capital could continue into the Cayman Islands as exempted companies.
These amendments signify a positive evolution of Cayman Islands company law, reflecting a commitment to meeting the evolving needs of the industry.
Expected Implementation
The Amendment Act is anticipated to come into force gradually, with updates provided as specific provisions take effect.
We recommend that those with corporate vehicles incorporated in the Cayman Islands prepare to update their articles of association in order to take full advantage of these changes as soon as the Amendment Act provisions come into force.
The Companies (Amendment) Act, 2024 can be viewed in full on the CI Gov website.
Originally published 14 March 2024
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