WHAT TYPES OF COMPANIES ARE THERE AND WHAT ARE THEIR FUNCTIONS?

There are two types of companies that can be formed in the Cayman Islands: an ordinary company and an exempt company. Each has its own benefits, as set forth below:

Ordinary Company

Ordinary companies are formed by filing a Memorandum of Association (Charter) with the Cayman Registrar of Companies. A company must state the name and address of their registered office, the company's objectives and the proposed authorised share capital. The company can also choose to draft its own Articles of Association (bylaws).

An ordinary company must have at least one director and is required to hold at least one annual shareholder meeting. It must also file an annual report with the Registrar of Companies, listing shareholders, officers, and any amendments to the day-to day operations of the organization.

Exempted Company

To form an exempted company, much of the same procedure is followed, however, the company must also include a director's declaration ensuring that they will not trade goods or services within the Cayman Islands for any reason other than the maintenance of an administrative office or local bank and brokerage accounts. An exempted company is the most common vehicle used for establishing a fund in the Cayman Islands.

WHAT ARE THE ADVANTAGES OF AN EXEMPTED COMPANY?

An exempted company:
i) is entitled to obtain a guarantee from the Cayman Government exempting it from any taxes which could be introduced by future legislation for a period of up to 20 years;
ii) need not hold any shareholder meetings; and
iii) need not include "limited" or "Ltd." in its name

WHAT ACTIVITIES CAN A COMPANY PERFORM?

Many of the companies incorporated in the Cayman Islands are investment holdings or dealing companies holding quoted or unquoted investments throughout the world. Some companies act as sales distributors invoicing goods from one country to another either for themselves or as brokers on behalf of other organizations.

Other companies are incorporated in the Cayman Islands as subsidiaries on behalf of foreign parent companies who perform specific tasks. Other organizations, particularly entertainment based companies, are incorporated to exploit copyrights, performing rights or patents. Our professionals assist in incorporating companies and provide management and consultancy services for businesses in countries outside of the Cayman Islands.

Additionally, other companies are formed to operate offshore hedge funds, pool investors funds and spread risk. The use of an open ended multi-shareholder investment company in this way can avoid the controlled foreign corporation rules of many countries and allow capital gains to be accumulated tax free. Many companies are also formed to avoid foreign estate taxes on foreign investments.

ARE A COMPANY'S ASSETS PROTECTED?

Just about any type of income-earning asset can be acquired by a Cayman corporation with immediate advantages. The following are examples of income-earning assets which can be held by a Cayman Corporation thus avoiding heavy taxation in other territories:

Fixed-term Deposits
Listed Stocks and Securities
Stock in Private Companies
Real Estate and Commissions
Patents, Royalty Agreements and Contract Rights
Seagoing Vessels and Aircraft

Once these assets are acquired by a Cayman corporation, income received from them is usually received tax-free. In addition, since the corporation is a continuing entity, the assets transferred to the Cayman corporation would not be subject to death duties.

Beneficial owners of Cayman companies are, however, advised to obtain legal advice in their own countries concerning their personal reporting requirements and liability.

CAN YOU REGISTER A FOREIGN CORPORATION IN THE CAYMAN ISLANDS?

A foreign corporation may register an office to carry on business from the Cayman Islands.

DOES RBR PROVIDE REGISTRATION AND MANAGEMENT SERVICES?

RBR is able to arrange the registration of a Cayman company within 48 hours of receiving instructions. Upon completion of registration and filing with the appropriate authorities, the company will be able to transact business immediately. Our inclusive registration service provides Memorandum and Articles of Association (Charter and bylaws), company seal, nameplate, minute book, statutory records and all such incorporation formalities. We can arrange for full or partial management facilities through the services of locally licensed management companies.

Full details of fees and costs for registration and management are contained in our current fee schedule.

WHAT IS AN INDEPENDENT DIRECTOR?

Certain prescribed relationships of a director to a corporation will preclude a director from being considered independent for purposes of serving on any of that organization's committees. Any director who has a material relationship which could, in the view of a regulatory body, be reasonably expected to interfere with the exercise of independent judgment would preclude that person from being considered an independent director.