Starting a company in the Cayman Islands involves a number of items; one of them is a choosing an organisation form. There are many types for different kinds of organisational forms for different business activities, some of which are flexible and allow transformation as a business develops or requires structural changes.

For better understanding, all institutions are separated into three major categories: Companies (which include Non-profit organisations), Partnerships, and Trusts. Each category has subtypes, and organisation forms serving different purposes and periods of time. However, in spite of the complexity of business form regulations, the organisation process is not very difficult; also, there are many licensed certified firms providing registration and managing services.

Any foreign investor who intends to engage in commercial activity within the Cayman Islands must obtain one or more licenses depending on the nature of the proposed business activity. Companies operating in the financial services industry must apply for the license relevant to its industry from the Cayman Islands Monetary Authority (CIMA). CIMA is responsible for processing applications, regulation and supervision of: Banks and Trust Companies Insurance Companies Fiduciary Services (Companies Management, Corporate Services, Trust Companies in of companies without a banking licence) Investment & Securities Services (Mutual Funds, Mutual Fund Administrators, Securities Investments Businesses)

Non-profit organisations

A NPO is defined under the Law as including a company or body of persons, whether incorporated or unincorporated, or a trust:

• established primarily for the promotion of charitable, philanthropic, religious, cultural, educational, social or fraternal purposes, or other activities or programmes for the public benefit or a section of the public within Cayman or elsewhere; and

• which solicits contributions from the public or a section of the public within Cayman or elsewhere.

This definition has a very wide scope, and it is obvious that it will capture a very significant number of NPOs throughout the Cayman Islands, regardless of their size and regardless of whether they have been established for minor short-term fundraising purposes or with a more wide-reaching and long-term charitable intent. Importantly, the only NPOs that are exempt from coverage under the Law are those which have a government entity as their principal regulator, or are established as a trust where the trusteeship of the trust includes a trust company licensed under the Banks and Trust Companies Law (2013 Revision).

Registrar of Non-Profit Organisations” (“Registrar”), overseas the establishment and maintenance of a register of NPOs (“the Register”). The role of the Registrar is generally to receive and process applications by NPOs for registration, and to ensure that all NPOs have appropriate internal controls in place including systems to identify criminal conduct. The Law requires all NPOs covered by it to apply to the Registrar for registration as an NPO: NPOs are prohibited from soliciting or raising contributions from the public within Cayman or elsewhere unless they are so registered. The registration process requires the “controller” of the NPO (which could be, for example, a trustee of a trust, a director of a company, or any other person who has established the NPO) to submit an application to the Registrar in a prescribed form, containing the information specified in the Schedule to the Law.

That information includes, among other things, the details of the purposes of the NPO, the identity of the controller, copies of the organisational documents (such as the trust deed or constitution of the NPO) and details of the anticipated source of contributions to the NPO. The Law provides for applications to be processed within 30 days of receipt. Transitional provisions are in place, so that NPOs currently operating in Cayman have six months to submit an application for registration. Once formally registered, certain information about the NPO will be recorded on the Register including the name, Cayman address, and telephone number of the NPO, a description of its purposes and activities, the identity of the person who owns, controls or directs the NPO, and “such other information as the Registrar deems appropriate”. The Register will be open for public inspection “on such terms as the Registrar thinks fit”: given this broad statement, we anticipate that further guidance as to public inspection of the Register will be given in due course. The Registrar may refuse to register an NPO if its activities do not fall within the definition of “non-profit organisation” under the Law, if the NPO has been established for illegal purposes or does not have a connection with Cayman, or if the information contained in the application was found by the Registrar to be “manifestly incorrect”. An NPO may also have its registration cancelled if it engages in wrongdoing or contravenes the Law. The Non-Profit Organisations (Registration Application) Regulations, 2017, which were published on 26 May 2017, (the “Regulations”) include the requisite template registration forms, a schedule of fees, an annual return form and a notification of change of details form.

Once registered, the Law compels the controller of an NPO to keep proper financial statements with respect to all sums of money received and expended, all sales and purchases of property, all sums of money raised through fundraising and all non-monetary transactions. If the NPO has a gross annual income in excess of US$250,000 and remits 30% or more of that income overseas, it must also have its financial statements reviewed by a qualified accountant in accordance with international standards. Annual returns, in the form specified in the Regulations, must be filed for all NPOs. Inquiries and Penalties

Consistent with the focus on the proper oversight of NPO activities, Part 4 of the Law empowers the Attorney General to institute inquiries into the activities of non-profit organisations, including the value and source or application of money received or disbursed. An inquiry may also be commenced for the purpose of investigating any NPO suspected of having committed an offence under the Terrorism Law (2017 Revision) or the Proceeds of Crime Law (2017 Revision). There are a number of administrative penalties which will apply to any NPO that convenes the Law. A controller who fails, without reasonable cause, to comply with the provisions for registration or the provisions regarding the preparation of financial statements and annual returns or any other lawful request by the Registrar is liable to incur a range of penalties specified in the Regulations.

It should be noted that starting a non-profit organisation in Cayman Islands probably will not provide any additional benefits compare to any other form of institutions / business activity.

Currently, there are 19 registered non-profit organisations (NPOs) in Cayman Islands, including churches, philanthropy and charity organisations, sport associations, and government agencies.

Source

• The Non-profit Organisations Law 2017, The Non-profit Organisations (Registration Application) Regulations, 2017

• New Legislation for Non-Profit Organisations in the Cayman Islands, Brief

• List of registered NPOS in Cayman Islands

For-profit organisations

Companies incorporated in the Cayman Islands fall into two principal categories: companies formed to trade primarily in the Cayman Islands, and companies incorporated for the purpose of conducting business outside the Cayman Islands.

Incorporation

Basic information required for incorporation is a set of Memorandum and Articles of Association subscribed by the proposed shareholders and accompanied by the relevant incorporation fee and revenue stamps. Where an application is in respect of an exempted company, an affidavit duly signed and notarized must be enclosed.

The Memorandum of Association sets forth the objects of the company (which can be restricted or, more commonly, allow the company to carry out any object not prohibited by law), the name of the company, type of company (whether resident, non-resident, or exempted), the authorized capital and type of shares, names and addresses of the subscribers, the date of execution of Memorandum, and registered office.

The Articles of Association regulate the internal operations of the company, such as how meetings are called, and powers of directors and officers.

There are a number of restrictions on the naming of companies. The name of a new company must not resemble that of an existing company, must not contain words suggesting royal patronage or such words as “bank”, “trust”, “insurance”, “assurance”, “chartered”, “company management”, “mutual fund”, or “Chamber of Commerce” unless the necessary licenses under relevant laws have been obtained. It is recommended to check the availability and acceptance of a name with the Registrar in advance of preparation of the Memorandum of Association, and to reserve a name for a company to be formed later.

There are well-established mechanisms for co-operation with law enforcement agencies, both locally and overseas, to assure the highest standards of probity throughout Cayman’s financial industry. Within this framework, protection of the legitimate interests of clients is safeguarded. The Registrar is able to release on enquiry the name, type of company, the date of registration, the address of its registered office, and the status of the company. Except where assistance to law enforcement agencies to combat illicit activity is mandated or authorized, disclosure of information by government officials, professional agents, attorneys and accountants and their staffs is prohibited.

Companies

All companies must be registered with the Registrar of Companies. Companies can be formed with one shareholder and with no minimum capitalisation requirements (except for Exempted Limited Duration Companies). Client privacy is protected by the fact that the Registrar can only release the name and type of company, its date of registration, the address of the registered office and the company’s status. Disclosing any other information is prohibited except where assistance to law enforcement agencies is required. Businesses that intend to operate in the jurisdiction are typically incorporated as a ‘Resident Company’. Resident Companies are companies carrying on business in the Cayman Islands, which must report annually to the Registrar and which can hold land. As an alternative, companies that are incorporated outside of the Cayman Islands that wish to carry on business locally can register as a ‘Foreign Company.’

Resident Companies

These are, for the most part, companies carrying on business within the Cayman Islands. A company conducting banking and or trust business must obtain a license under the Banks and Trust Companies Law. Companies administering mutual funds are licensed under the Mutual Funds Law. Companies engaging in the insurance business must obtain a license under the Insurance Law, and those wishing to operate in company management must obtain a license under the Companies Management Law.

Resident companies must maintain at their registered office, open for public inspection, a register of their past and present members. They must also report annually to the Registrar, giving the names and addresses of members, directors and the amounts of paid-up capital. This type of company is also allowed to hold land as defined under the Companies Law.

A company wishing to trade within the Cayman Islands, e.g., in retail trading, real estate, hotel or restaurant operation, maintenance services or local shipping, must obtain a license under the Trade and Business Licensing Law, and if less than 60 percent of the equity is Caymanian-owned, the Trade and Business Licensing Board will have to be convinced of the need for the company’s services.

Between 1st January and 31st March of each year after the year of registration a resident company must submit an annual return to the Registrar of Companies, giving the names and addresses of members, directors and amounts of paid-up capital and to pay an annual fee along with the return form. Resident companies must maintain at their registered office, open for public inspection, a register of their past and present members. Changes to the following must be filed with the Registrar of Companies:

• Share Capital
• Memorandum & Articles
• Registered Office
• Name
• Directors & Officers
• Shareholders/members

Exempted Company

Where the proposed activities of a company are to be carried out mainly outside of the Cayman Islands - offshore - the registrants can apply for registration as an exempted company.

Features of such companies include the following:

• An exempted company is not required to keep a register of members open for public inspection (a requirement for resident and non-resident companies).
• An exempted company is not required to hold an annual general meeting in the islands (which resident and non-resident companies must).
• An exempted company may alter its Memorandum and Articles of Association without restriction, but must notify the Registrar of any changes.
• An exempted company may offer shares to the public in Cayman if listed on the Cayman Islands Stock Exchange (CSX).
• An exempted company may issue shares with nominal or no par value.

The annual return to the Registrar requires a declaration that:

• no changes, other than those notified to the Registrar, have been made in the Memorandum of Association;
• the provisions of the Companies Law have been observed
• the company’s operations have been mainly outside the Cayman Islands; and
• all bearer shares are kept by an approved custodian.

An exempted company is not required to include the word “Limited” or the abbreviation “Ltd.” after its name. The Registrar must give one month’s notice before taking action to strike off an exempted company. An exempted company may express its capital in any currency or in multiple currencies. To register, the name of the company must be acceptable to the Registrar under the provisions of section 30 of the Companies Law. The company must file with the Registrar a declaration that the operations of the registrant will be conducted mainly outside the Cayman Islands.

The Companies Law permits the registration of a company with limited liability and share capital which is incorporated in a foreign jurisdiction whose laws permit or do not prohibit the relocation of the company to become a Cayman Islands exempted company. The company must be constituted in a form or substantially a form which could have been incorporated as an exempted company limited by shares. The application must be accompanied by an undertaking that notice of the transfer has been or will be given within 21 days to the secured creditors of the registrant. If the company is required to be licensed under any law, e.g., the Banks and Trust Companies Law, the Insurance Law, or the Companies Management Law, then it is prohibited from carrying on its business in or from within the Cayman Islands unless it has obtained the requisite license.

Exempted Limited Duration

This form of exempted company, while preserving the limited liability to its members if desired, offers the possibility in certain jurisdictions of advantageous treatment as a partnership. An LDC continues until the terminal time or event specified in its Memorandum of Association. However, its duration must not exceed 30 years and it must have at least two members.

Upon its duration expiring, it is deemed to have automatically commenced voluntary winding up and dissolution. It may, however, be wound up earlier voluntarily if the members pass a special resolution to that effect. Compulsory liquidation remains available to creditors of the LDC and also for its members in the circumstances applicable to other companies incorporated under the Companies Law. Special features applicable to an LDC are:

• The Articles of Association of an LDC may provide that the transfer of any share of a member requires the unanimous resolution of all other members.
• The Articles of Association of an LDC may provide that the management of the company is vested in the members who are then to be considered as the directors of the company. However, those members can delegate management to a board of directors.

The name of the company must end with “Limited Duration Company” or “LDC”. The registration fee is CI$200, plus the normal exempted company registration fee. The annual fee is the same as that for exempted companies.

Non-resident Company

The non-resident company is an alternative to the exempted company.

Such companies must maintain at their registered office, open for public inspection, a register of their past and present members. They must also report annually to the Registrar, giving the names and addresses of members, directors and the amount of paid-up capital. The company may deal in shares of exempted companies, foreign corporations and partnerships, but may only carry on such other business in the Cayman Islands as is necessary for the furtherance of its foreign business. Application for nonresident status should be addressed to the Minister of Finance through the Registrar of Companies and must state that the company does not intend to carry on business within the Cayman Islands.

Non-resident companies may convert to Resident Companies or to Exempted Companies.

Segregated Portfolio Company

The Segregated Portfolio Company (SPC) is a form of exempted company. The Law provides for an exempted company, a company by way of continuation and an exempted limited duration company to re-register as a segregated portfolio company. This company is required to include in its name either “Segregated Portfolio Company” or “SPC”. An SPC allows for the segregation of the assets and liabilities of individual portfolios - Known in some parts of the world as “cells” - from the general assets of the overall company as well as from other portfolios. Each portfolio, however, is not seen as separate legal entity. The registration is CI$500, plus the normal exempted company registration fee. The annual fee is CI$2000, plus the normal exempted company annual fee. An annual fee of $300 is required for each portfolio up to a maximum of $1, 500. Upon filing its annual returns the segregated portfolio company must furnish to the Registrar a notice containing the name of each segregated portfolio it has created.

Foreign Company

A foreign company is a company incorporated outside the Cayman Islands. Registration as a foreign company in the Cayman Islands is necessary to enable non-Cayman Islands companies to hold land or carry on business in the Cayman Islands, or to act as the general partner of a Cayman Islands Exempted Limited Partnership.

Such a company must be registered in Cayman, and for this the Registrar must be supplied with:

• A certified copy of the foreign company’s certificate of formation or incorporation, or the equivalent document issued by the relevant authority as evidence of its formation.
• A certificate of good standing issued by the relevant authority or, if the relevant Authority does not issue a certificate of good standing, a declaration signed by a director of the foreign company that the foreign company is in good standing with the relevant authority.
• A certified copy of any charter, by-laws or memorandum or articles of association or other constitutional document of the foreign company
• A list and specified details of the directors.
• The name and address of a person resident in the Islands who is authorized to accept service of process and any notice(s) on behalf of the company.
• The requisite fee.

Special Economic Zone Company

A special economic zone company is a type of exempt company that is authorised to carry on business in a special economic zone pursuant to any Law in force in the Islands. The Companies Law permits the re-registration of existing exempt companies, companies registered by way of continuation and non-resident companies as special economic zone companies. The memorandum of association of such companies is required to state the intention of carrying on special economic zone business. The name of the company must include “special economic zone company” or “SEZC.”

Fees - Companies

According to the Cayman Islands General Registry price list, companies must pay registration fees and annual fees, the amount depends on on type of company (resident company, non-resident company, exempted company, exempted limited duration company, segregated portfolio company, foreign company, SEZC) and amount of capital. The full list of registration fees, annual fees, other fees and penalties for each kind of company can be found here.

Partnerships

Limited partnerships, which can be formed by two or more people or companies, are governed by the Partnership Law (2002 Revision), which requires them to be registered with the Registrar of Limited Partnerships.

Limited Partnerships

Limited Partnerships are governed by the Partnership Law, which requires them to be registered with the Registrar of Limited Partnerships.

Registration is affected by the filing with the Registrar and the gazetting of a declaration by all the general partners, giving the name of the partnership, the nature and principal place of business, names and addresses of all partners, and the amount of capital provided by each limited partner.

A limited partnership may be established by two or more persons or entities for the transaction of any mercantile, mechanical, land holding and development, agricultural or manufacturing business or any business for the development of tourism. It must consist of one or more general partners, who are liable for all debts and obligations, and one or more limited partners, who are not liable for more than the actual cash they contribute. A company may be a general or limited partner. To operate a business in the Cayman Islands a partnership requires a license under the Local Companies (Control) Law. Such licenses are granted by the Trade and Business Licensing Board, which has discretionary powers unless the business is 60 percent Caymanian-owned.

Exempted Limited Partnerships

The Exempted Limited Partnership Law makes it possible to form limited partnerships for offshore investors with the minimum of delay. Such a partnership may not undertake business with the public in the Cayman Islands, other than as necessary for the carrying on of business outside Cayman.

There is no inheritance, income or capital gains tax, or estate duty which applies to partnerships, including an exempted limited partnership or a partner thereof. A partner may be a general or limited partner as well as a corporation with or without limited liability.

The Registrar is required to maintain a record for each partnership, which is to be kept open to public inspection. A statement containing the following particulars must also be filed to affect registration:

• A name which must include “Limited Partnership” or “LP”.
• The nature and principal place of business of the partnership.
• The term of the partnership.
• The name and address of each general partner.
• A declaration that the partnership will not undertake business with the public in the Cayman Islands except so far as may be necessary for the carrying on of its business outside the Cayman Islands.

Fees - Partnerships

According to the Cayman Islands General Registry schedule, limited partnerships and exempted limited partnerships must pay registration fees, annual fees, and other fees. The full list of fees for partnerships can be found at their website.

Trusts

Exempted Trusts

Trust law in the Cayman Islands is based on English law, subject to some statutory modifications. There are no restrictions on the accumulation of income. Trust deeds can allow for fixed or discretionary interests.

There are no taxes on trust in the Cayman Islands. There are three types of trusts - the ordinary trust; the exempted trust and the alternative regime, STAR.

Trust law provisions relating to exempted trusts require that a trust deed be delivered to the Registrar of Trusts. The filed trust documents are open to inspection by the trustee and any other person authorized by the trust, but they are not open for public inspection.

All rights and remedies with respect to a discretionary trust are vested in the Registrar of Trusts and not the beneficiaries. The Special Trusts (Alternative Regime) Law (“STAR”) complements the preexisting traditional trust framework and is Cayman’s response to the popular demand for non-charitable purpose trusts. STAR permits the creation of trusts for any object, whether persons, purposes or both, provided they are lawful and not contrary to public policy. Features of STAR trusts include the following:

• STAR applies to a trust only if this intent is specifically mentioned in the trust instrument.
• STAR is highly flexible, allowing for trusts of all kinds to be created.
• Enforcers must be designated.
• One of the trustees must be a Cayman licensed trust company.
• STAR trusts are exempt from the rule against perpetuities.
• STAR trusts must not include land in the Cayman Islands.

Fees - Trusts

According to the Cayman Islands General Registry schedule, exempted trusts and the Special Trusts (Alternative REgime) lam must pay registration fees, annual fees, certificate fees and filing fees. The full list of fees for partnerships can be found at their website.

Source

• Cayman Islands General Registry: Companies

• Cayman Islands General Registry: Partnerships

• Cayman Islands General Registry: Trusts

• Cayman Islands Government, Department of Commerce & Investment

• Companies Law (2013 Revision)

• Non-profit Organizations Legislation

• Ogier’s summary on foundation a company on Cayman Islands