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1. What is the legal system in your jurisdiction based on (for example, civil law, common law or a mixture of both)?
The legal system in the Cayman Islands (Cayman) is a mixture of common law, locally enacted statutes and UK orders in council. With respect to common law, as a British Overseas Territory, Cayman treats judicial decisions made in the UK and other Commonwealth jurisdictions as persuasive in nature.
2. What are the main forms of business vehicle used in your jurisdiction? What are the advantages and disadvantages of each vehicle?
The main forms of business vehicle include:
3. What are the most common options for foreign companies establishing a business presence in your jurisdiction?
The Companies Law (Revised) (Companies Law) distinguishes between local ordinary companies, which are generally required to be majority owned by Caymanians, and exempted companies, which are not. Only local companies can carry on and compete for business within Cayman. Exempted companies, while resident in Cayman, cannot carry on their business activities in Cayman, except in furtherance of their business outside Cayman. In relatively rare circumstances, an exempted company can obtain a licence to carry on limited business activities in Cayman.
Typically, foreign investors or companies will look to establish a presence in Cayman but undertake business external to Cayman, so will incorporate an exempted company with limited liability in Cayman.
Exempted companies can be incorporated within 24 hours of the relevant documentation being filed and provide great flexibility to investors. For example, directors and officers are not required to be resident in Cayman, the register of members and minute books can be held in another jurisdiction and annual general meetings of members are not required.
Further, the incorporation process is easy to navigate and incorporation fees are relatively low.
4. How can an overseas company trade directly in your jurisdiction?
An overseas company that establishes a place of business or commences carrying on business within Cayman, must register with the Registrar of Companies (Registrar) as a foreign company under Part IX of the Companies Law.
As part of this registration process, the following documentation must be filed with the Registrar:
Overseas companies commonly register as a foreign company in Cayman to:
This article was first published in Thomson Reuters Practical Law.