The process to register a branch with the Cayman Registrar of Companies is straightforward and the branch, once registered, is required to maintain a local registered agent and pay annual fees to the Cayman Islands Government to maintain its registration. A company that intends to conduct the majority of their business outside of the Cayman Islands would register as an exempted company.
The key elements of an exempted company are that it is not required to keep a register of members open for public inspection or hold an annual general meeting in the country, it can alter its Memorandum and Articles of Association without restriction (but must notify the Registrar of Companies of any changes), it can offer shares to the public in the Islands if listed on the Cayman Islands Stock Exchange (CSX), and finally it may issue shares with nominal or no par value. The company is treated in law as a legal person able to enter into contracts and own property as well as incur liabilities. An individual who is a shareholder in a company, has a liability to the company, limited to the amount unpaid on the shares the individual owns and cannot be liable for the liabilities of the company itself. The company may distribute profits to shareholders by paying dividends and a shareholder can only get their investment in the company back by selling or redeeming the shares they have. Company formation and operation is governed by the Companies Law (Revised).
The laws of the Cayman Islands also allow for the formation and the registration of Limited Liability Companies. A Limited Liability Company (LLC) is a unique vehicle that blends key features of a Cayman Islands Exempted Limited Partnership with those of a Cayman Islands exempted company.
Most notably, a LLC is not the typical company vehicle with liability of shareholders limited by shares or by guarantee, but by reference to members’ capital accounts and capital commitments, with freedom of contract among members determining the internal workings of the company similar to an Exempted Limited Partnership. Yet, unlike an Exempted Limited Partnership, a LLC will be a corporate body with a separate legal personality and its members enjoying limited liability. A LLC is therefore a hybrid between an exempted company and an Exempted Limited Partnership, developed to meet the demands of various global client bases that wish to operate a vehicle which offers the greatly increased flexibility of partnership capital accounting capability but within a corporate vehicle with separate legal personality.
This hybrid approach is useful in a variety of investment spaces (such as investment funds, joint ventures and holding vehicles for a variety of assets including ships) where some investors and service providers find the share capital accounting structure of a company somewhat cumbersome for certain transactions.