5 th Floor Genesis Building Genesis Close PO Box 446 Grand Cayman, KY Cayman Islands. GUIDE Cayman Islands Offshore & Local Companies

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1 5 th Floor Genesis Building Genesis Close PO Box 446 Grand Cayman, KY Cayman Islands GUIDE Cayman Islands Offshore & Local Companies

2 Table of Contents Introduction 2 Overview 3 Local Companies 4 Offshore Companies 5 Incorporation 6 Additional Corporate Services & Contact Information 7 1 P a g e

3 Introduction This guide has been created to assist those natural or corporate persons who are considering the formation of a company in the Cayman Islands. The reader will find in this short document all of the basic information a prospective client may need in order to understand the advantages, procedural steps and costs associated with forming a Cayman Islands company. The following information is provided as a courtesy to our prospective clients, it is not intended to be, and is not, a substitute for legal advice. Before proceeding to incorporate a company in the Cayman Islands, it is suggested that persons consult professional advisors in their home jurisdictions to assess the fiscal and legal implications of formation offshore. This guide has been prepared on the grounds of the law and practice as at the date referred to below. SMCS LTD June P a g e

4 Overview The Cayman Islands is one of the world s major offshore financial centers. It is the fifth largest banking center in the world. The Islands boast the highest standard of living in the Caribbean and are situated in the western Caribbean, south of Cuba and northwest of Jamaica. The Cayman Islands Dollar (KYD) is pegged to the US dollar at 1KYD=.80 USD. Advantages No taxes on income, capital gains, profits, dividends, investments or capital transfers Minimal annual reporting requirements No general meetings Shareholders identities are not filed with Registrar of Companies Register of directors not open to public Only one (1) shareholder required Corporate directors and shareholders permitted Shares can be issued without par value Express incorporation available Sample Incorporation Fees for Offshore (i.e. Exempt) Companies Please refer to the attached fee schedule 3 P a g e

5 OFFSHORE COMPANIES Exempted Companies The most common type of Cayman Company used for offshore activities is the Exempted Company. The service(s) it provides is to be carried on outside of the Islands. It cannot trade in the Islands with any firm, corporation or person unless furthering its business offshore. It is widely used in structuring international transactions and predominantly holding offshore assets. Common uses of an exempted company include: Non-Resident Companies A Non-Resident company is a company which does not, and does not intend to carry out business within the Islands, in respect of which the Financial Secretary of the Cayman Islands has designated the company as non-resident. The company is issued a certificate of designation as evidence that the company is exempt from the obligations in regards to licensing under the Local Companies Control Law, which is applicable to other companies. Operating as an investment fund Acting as the General Partner of a limited partnership Operating as a captive insurance company Providing the holding company for international groups The minimum number of shareholders is one (1). The details of shareholders of the companies are confidential even when filing the Annual Return as required. Details of the company s directors and officers are also confidential, but must be provided to the local Registrar of Companies. Exempted Companies must maintain their registered office in the Cayman Islands. An exempted company is allowed to apply under The Tax Concessions Law (1995 Revision) for an undertaking that no law passed in the Islands after the date of the undertaking enforcing that any tax to be levied on profits, income, gains or appreciations will apply to the company or its operations, and that no tax to be levied on profits, income, gains or appreciations. The undertaking, in practice, is normally given for twenty (20) years. Such company cannot indirectly or directly own land in the Islands without the permission of the Financial Secretary. 4 P a g e

6 LOCAL COMPANIES The guidance on this page is only applicable to companies that wish to carry out business within the islands. General In order to carry on business locally, the company must qualify under one of the following categories: a) It is a trust company, bank, insurance company or manager, mutual fund administrator, or companies manager licensed under the respective statute; b) It is providing a service under a franchise granted by the Government; c) At least 60% of the total voting rights in the company are exercisable by Caymanians, at least 60% of the shares are beneficially owned by Caymanians and at least 60% of the directors are Caymanian; d) The company is granted a license under the the Local Companies (Control) Law, (the LCCL ) Local Companies Control Law When applying for an LCCL License an application form must be submitted along with the required processing and licensing fees. The License is generally granted for a maximum period of twelve years and requires an annual license fee to be paid. The application for a Trade and Business Licensing Law License ( TBLL License ) should be submitted at the same time. 5 P a g e 60% Caymanian Owned Companies The majority of local companies with a street front presence on the Islands are able to do business since they are mostly owned and controlled by Caymanians. For such companies it is not necessary to obtain a LCCL License although any non-caymanians who are to be employed by such a company are required to obtain a work permit. Failure to comply with the 60% Caymanian requirement can result in the imposition of serious penalties. Companies with Foreign Control To protect Caymanians, the Local Companies (Control) Law (as Revised) deals with persons or entities executing such operations on the island; confirming that the investor is suitable the development of the islands as it seeks to retain the economic resources of the islands under the control of Caymanians. The investor will need to show an adequacy of resources, as well as an unblemished character if it is his intent to take a managerial interest in the company. Additionally, professional/technical qualifications will need to be provided as it is necessary to satisfy the Board that there is not already an availability of such services on the island. Business may be carried out in the Islands by a company with Foreign Control if: a) It is licensed under the LCCL, as well as the TBLL and, is carrying on business in accordance with the terms and conditions levied in such license b) It is a company operating under a franchise granted by the government; or c) It is licensed under the Banks and Trust Companies Law

7 Incorporation A company cannot be formed until we have received the relevant funds and due diligence documentation. For the convenience of our prospective clients, the procedure has been broken down into 4 easy steps: Please complete our incorporation form STEP 1 INCORPORATION FORM This includes basic information to help us better understand your needs (for example, the chosen name of the company, its objectives, shareholders, directors, etc.) STEP 2 DUE DILIGENCE The Cayman Islands is a well regulated jurisdiction. Samson & McGrath Corporate Services Ltd is licenced by the Cayman Islands Monetary Authority. We are required to obtain and retain within our offices, background details on all of our clientele. Such mandatory information includes: o Certified copy of passport from all directors and members o Proof of address; we accept: utility bills (no older than 3 months), Bank account (no older than 3 months) or a certified copy of driving license o Bank Reference: Should confirm your good relationship with the bank o Professional Reference: From a respected professional such as a lawyer, accountant, doctor or business partner. Should confirm the professional and good relationship. STEP 3 WIRE OF FUNDS Once we have approved the due diligence material you have provided, we will notify you that we are ready to receive funds to cover the government fees and associated services that you have requested. We will send you our payment details at this stage. STEP 4 6 P a g e RECEIVE YOUR COMPANY

8 Additional Corporate Services Apart from standard company formation you may be interested in our other services and products. These are: Ship registration Aircraft registration Nominee shareholders Nominee directors Notarisation Apostilisation Certificate of Good Standing Certificate of Incumbency Standard Power of Attorney Change of Name Corporate Seal Mail forwarding per item Company search Contact us If you have any queries or require more information on any of our products and services please contact us and we will be more than happy to assist you. Phone: (345) / Fax: (345) Address: 5th Floor Genesis Building, Genesis Close, P.O. Box 446, Grand Cayman KY1-1106, Cayman Islands 7 P a g e