Features of a Cayman Islands Offshore Company

Are the Cayman Islands considered to be a secure and reputable jurisdiction for the formation of offshore companies and if so, what are the features of a Cayman Islands offshore company?

These are the questions that this article will cover for anyone contemplating the formation of an international business corporation for the purposes of trade, privacy, asset or personal protection or cross border taxation and business planning for example.

The Cayman Islands lie south of Florida in the Caribbean Sea and are a British Overseas Territory which immediately makes the jurisdiction of interest to many seeking a secure, well regulated and respected offshore tax haven. 

The legal and financial services on the islands are sophisticated and based on the British systems and standards and what’s more, because of the Cayman Islands’ strong ties with Great Britain the jurisdiction is considered politically stable as well as protected and safe.

One of the features of the Cayman Islands is that they are truly tax free – there are no income taxes, capital gains taxes, estate, inheritance or gift taxes for individuals, for trusts or for companies for example - and the haven has no double taxation agreements in place with any other nation.

A locally established international business company is not referred to officially as a Cayman Islands Offshore Company, rather the term is ‘Cayman Islands Exempted Company’ and once established such a company is granted a twenty or thirty year exemption from any taxes that the Government may introduce during that period.

Bearer shares are permitted if lodged with a local ‘authorised custodian,’ or one can elect for registered shares because shareholders’ details remain private.  In terms of directors there must be a minimum of one, corporate directors are allowed and directors need not be resident locally and directors’ details are held by the company registrar but are not available for public scrutiny.

The one downside of the Cayman Islands as a jurisdiction for offshore company formation and incorporation is the existence of a ‘Mutual Legal Assistance Treaty’ – this is a treaty that states that the Cayman Islands will assist the law enforcement agencies and governments of other nations by giving them information where a Cayman Islands Exempted Company has been used or involved in criminal activities.

Theoretically anyone using a company for legitimate reasons has nothing to concern themselves about with regard to this treaty - but in reality many who are using an offshore company as part of an overall asset protection and personal privacy plan to secure themselves against creditors for example, may find the existence of this treaty worrisome because in theory a creditor could simply allege the company is being used for criminal activities which could result in an investigation and in details of the shareholders and directors as well as the activities and assets of the company being made public.  Anyone concerned about such issues can simply choose an alternative offshore location.

However, for those less concerned about such an unlikely possibility occurring, the knowledge that this treaty exists can give some solid peace of mind to the offshore company owners because it means the Cayman Islands are a much more internationally respected jurisdiction as a result.

Our strategic business partners can establish offshore companies and bank accounts for the majority of our readers in the majority of jurisdictions in the world – additionally they are best placed to advise on the most suitable offshore solution for readers on a case by case basis.  If you want access to their advice and solutions complete our offshore advice form today.