Knowledge

A complete guide to the processes involved in incorporating, licensing and registering businesses in the Cayman Islands, for local Caymanian owners, expatriate owners or overseas investors.

Why do businesses relocate to the Cayman Islands?
People and businesses choose to relocate to the Cayman Islands for many reasons – quality of life, its excellence as an international financial centre, outstanding professional service providers, and Cayman’s innovative approaches to supporting and growing new and existing businesses.

Whilst it is important to take applicable onshore advice as to any possible tax implications, there are several reasons why Cayman is an attractive place to do business. These include:

• Ease and speed of incorporation
• Well-developed Companies Law based on English law, but with greater flexibility and less red tape than under the equivalent UK legislation
• No taxation in the Cayman Islands on income or gains and, indeed, no direct taxation at all
• No exchange controls
• Sophisticated professional infrastructure including world-renowned banks, trust companies, law firms, accountancy firms, company management firms, and IT service providers
• Stable political regime due to a democratically elected local government and status as a British Overseas Territory

Work with a lawyer
Consulting a Cayman Islands-based lawyer is important when establishing a business presence here to ensure due process is followed.

The requirements for each business are different and there are an array of laws and regulations that address, inter alia: Trade and Business Licences; Local Companies (Control) Law Licences; Business Staffing Plans; Work Permits; Residency Certificates; Labour; Pensions; Economic Substance; and Beneficial Ownership.

Incorporation, licensing, and registering a business in the Cayman Islands
When incorporating and registering companies in the Cayman Islands, a distinction is made between ordinary resident companies which carry on business within the Islands (often referred to as “Local Companies”) and exempted companies, which mainly carry on business outside the jurisdiction.

Subject to a few exceptions, local companies may carry on business in the Cayman Islands subject to being granted a Trade & Business Licence (“T&B Licence”). Where there is foreign ownership and control, the provisions of The Local Companies (Control) Law (2019 Revision) (“LCCL”) may be applicable unless at least 60% of the shares are beneficially owned by Caymanians and at least 60% of the directors are Caymanian. If not, Local Companies must also apply for and obtain an LCCL Licence.

Depending on the type of business, applicants may need to submit a variety of other licence and registration applications to the requisite boards in areas such as healthcare; tourism; music and dancing; and liquor.

What are the licensing requirements for Cayman Islands real estate owners?
Pursuant to the Trade & Business Licensing Directions 2016, a T&B Licence is not required in respect of the owner or beneficial owner of more than two units of property (not including their own residence) who wishes to enter into rental or lease arrangements in respect of those units of property.

Whether the owner is Caymanian or non-Caymanian, and whether the properties are held personally or through a company, a T&B Licence is required once the owner or beneficial owner exceeds that permitted limit.

For non-Caymanian owners or beneficial owners exceeding the permitted limit, an LCCL Licence will also be required, regardless of who manages the properties.

What are the application requirements for incorporating and licensing a company?
Applications for both T&B and LCCL Licences are submitted to the Trade & Business Licensing Board (“Board”), together with various forms and due diligence documentation relating to the company and its individual directors and shareholders (Note: documents differ depending on an individual’s immigration status and existing connection to the Islands).

When applying for an LCCL Licence, the process is more complex and requires a tailored approach as there are a series of criteria prescribed by the LCCL that the Board must consider when determining an application. Additionally, both approvals of LCCL Licences and requests to waive certain prerequisites are at the discretion of the Board and Cabinet.

For further information on how to incorporate, licence, and register a company in the Cayman Islands, please contact Daniel Altneu.

Author - Daniel Altneu, Senior Associate, Cayman Islands.

This article first appeared on the Dart Real Estate website, March 2020.