Establishing a Business
The Cayman Islands has a well-regulated and internationally respected, tax-neutral, offshore business environment that is both dynamic and responsive — there are over 100,000 active registered companies here.
So, establishing a business in the Cayman Islands has never been easier! Enhancing this business friendly environment even further was the Government’s move to tighten the country’s copyright legislation in June 2016, which provided more protection on patents and the rights of persons and companies involved in creative pursuits — film, art, music, digital media etc.
As diverse businesses — from film and finance to tech development — move to Cayman to take advantage of our Special Economic Zone, Cayman’s improved legislation will provide even more confidence to international clients, heightening the profile of the jurisdiction.
As a sophisticated, leading financial centre, Cayman also benefits from a stable government and a well-developed Common Law system based on English law. With a proliferation of world class corporate and service companies, it is not surprising that leading corporations choose to operate in the country.
Read on to learn about how to set up a business in the Cayman Islands.
A business in the Cayman Islands can be run as a sole trader operation, a partnership or a limited company. It is also possible for a foreign company to register a branch in the Cayman Islands in order for the foreign company to operate locally.
An overseas company which i) establishes a place of business; ii) commences carrying on business within the Cayman Islands (even “offshore” business); or iii) proposes to own real estate situated in the Cayman Islands, must register as a “foreign company” (essentially register a branch) under Part IX of the Companies Law.
A registered Cayman Islands branch will not have a separate legal personality from the main company headquartered overseas. In many cases, this is desirable for group operations which are required to maintain tax residency in a certain jurisdiction, but wish to have a Cayman Islands presence from which to conduct certain business of the group.
In the case of a bank, trust company, insurance company, management company, mutual fund, mutual fund administrator or any entity carrying on securities investment business, a licence to conduct such business will be required from Cayman Islands Monetary Authority even though such business is actually conducted outside the Cayman Islands.
Care should therefore be taken to ensure that the ‘off Island’ activities of the foreign company do not inadvertently create a requirement for local licensing. A Cayman Islands branch is able to secure a Trade & Business Licence and, if necessary, an LCCL licence to comply with the necessary legal requirements to set up a physical presence in the Cayman Islands.
This is your funds and business investment guide in the Cayman Islands. But before you read on, you may also want to check out Cayman Resident’s section on Cayman’s Financial Performance that details the latest statistics on investment funds.
Common investment fund vehicles used in the Cayman Islands to operate mutual funds include the exempted company, the segregated portfolio company, the unit trust and the exempted limited partnership. The exempted company may redeem or purchase its own shares and may therefore operate as an open-ended corporate fund.
Closed-ended corporate funds can also be established using the exempted company and it is a relatively straightforward procedure to convert from one to the other. The segregated portfolio company can also be established as a “Segregated Portfolio Company” (“SPC”) with protected cells or portfolios.
The SPC makes it possible to provide a means for different groups to protect their assets when carrying on business through a single legal entity. The unit trust is usually established under a trust deed with the investors’ interest held as trust units.
The exempted and limited partnership provides a second unincorporated vehicle and it can be formed as easily as the exempted company or the trust unit. An attorney can provide more information on structuring a fund in the Cayman Islands and can advise on the necessity for a license/regulation and assist in compliance with the formalities.
The Cayman Islands Government recently enacted the Special Economic Zone (SEZ) Law in an effort to encourage further economic growth and attract additional international investment. Cayman’s first SEZ is Cayman Enterprise City (CEC) which is a knowledge and technology focused special economic zone located in Grand Cayman.
The intellectual property legislation in the Cayman Islands is being modernised in order to provide better protection of the rights of persons involved in creative endeavours. By improving copyright, trade mark, patent and design rights legislation, Government also is improving the local commerce framework.
Copyright protection has been significantly updated with the commencement of The Copyright Order (Cayman Islands) 2015.
As of 30 June 2016, the categories of original creations that are protected in Cayman will be expanded to cover music, film, art, and other creative fields in every format – including digital.
Very soon, the Ministry of Commerce plans to present the Trade Marks Bill, an amendment to the current patents law, and new design rights legislation to the Legislative Assembly for approval by local lawmakers.
The Trade Marks Bill will allow persons and companies to locally register their brands and company logos. Local registration would also remove the exclusive rights to the use of certain words which were registered in the UK, for example the word ‘Cayman’.
The amendment to the current patents legislation will allow patent holders – persons who create inventions such as machines, drugs, soaps, and genetic engineering procedures – to continue registering their rights in the UK and extending them to the Cayman Islands.
A completely new design rights bill will allow design rights – the physical appearance of an industrial or handicraft item or a part of it – registered in the UK to be extended to Cayman.