In addition to being a great destination for beautiful beaches, the Cayman Islands are also a global financial centre (the fifth largest banking sector in the world), with a number of major banks, leading global financial institutions, accountancy practices and offshore law firms.
Most interestingly perhaps is the huge number of registered companies in this Caribbean island According to the Cayman Islands General Registry, as of September 2018, there were more than 100,000 registered companies in the Cayman Islands (more than twice the islands’ population), and most of them (84.3%) are Exempted Companies with limited liability, which means the owners are living overseas and doing business outside of the Cayman Islands.
Exempted Companies are by far the Cayman’s most popular offshore company, and offer a range of compelling benefits for international startups. We’ll dive into the benefits here:
Benefits to incorporating in the Cayman Islands
The incorporation of a Cayman Islands Exempted Company is easy, fast, confidential, and above all is tax efficient. The Caymans have become a popular tax haven among entrepreneurs, and they are being constantly listed among the top ten world's largest tax havens.
Here are the main benefits to incorporating in the Cayman Islands as an Exempted Company:
Stability: First, generally speaking, the Cayman Islands have enjoyed economic, legal and political stability throughout its history, and have a very stable jurisdiction and developed legal system, and a leading economy due to its advanced banking system with hundreds of banks and international financial institutions.
Legal System: As a British Overseas Territory, both Caymanian Law and their Court system are based on English common law. All documents and legislation are in English as it’s their official language.
Speed and ease of Incorporation: The incorporation takes a day only. There is no minimum capital requirement that needs to be invested at the time of incorporation, and the company can be incorporated with one shareholder and one director, which can be either a corporate entity or individual, and can reside anywhere in the world. The major requirement for opening a company in the Cayman Islands is to have a registered office and a registered agent in the Caymans, but don’t worry - there are plenty of service providers that will offer you an address and a dedicated agent for a very low cost. Finally, there are no requirements for annual reporting to the registrar, accounting or auditing.
Tax Treatment: Perhaps the most well-known aspect of registering in the Cayman Islands is the favourable tax climate. There is no corporation, capital gains, income, payroll, property, withholding, or any other tax on money earned outside of its territory. It’s no wonder the Caymans have become a popular tax haven among entrepreneurs.
And while many other tax havens suffer from a bad reputation and are often blacklisted, unlike them the Cayman Islands follows international tax regulations, which has kept them absent (until now…) from the blacklisted tax haven lists of the EU and the OECD.
Confidentiality and Privacy: Not only do the Caymans provide a tax-efficient business environment, but they also offer a high degree of investor protection. This is possible because there are no mandatory requirements to submit financial records, nor to disclose the names of the Directors, officers, and shareholders, creating a maximum level of confidentiality and anonymity to investors.
Raising investment as a Cayman Islands Exempted Company
Despite the wealth of benefits, and a commensurately increasing interest from startups, there are very few startup-friendly law firms with experience in Cayman Island companies that can offer the type of cost-efficient legal assistance needed to raise investment.
As a result, while the cost of the incorporation and running a Cayman Islands Exempted Company is low, many UK startups decide against incorporating in the Caymans, to avoid high fees down the line when doing their funding round. All this has now changed.
Due to popular demand, SeedLegals is delighted to introduce Cayman Islands funding agreements, giving Exempted Companies the same legal transparency, flexibility and cost efficiency for their funding rounds as UK companies.
To get started, create your company account on SeedLegals, set your jurisdiction to the Cayman Islands, and you’re good to go! All your future investment agreements will be created in Caymanian Law. It’s as simple as that!
Questions of feature requests? Book in a free demo with me to discuss your fundraise.