Cayman Islands Company Formation – Q&A

  • Industry research suggests that China will soon rank first in the world as a source of new offshore incorporations. Traditionally, which regions of the world has your jurisdiction been most popular for? What types of business activity is most suitable for incorporating in the Cayman Islands?

The demand for incorporation of Cayman Islands companies from Chinese clients continues to increase yearly. Chinese clients appreciate the flexibility, asset security, ease of operation, maintenance and control afforded by Cayman Islands companies, as well as the highly competitive fees charged. Chinese clients also appreciate that the Cayman Islands offers a sophisticated business environment with a full range of services including banks, trust companies, lawyers, accountants, insurance managers, mutual fund managers and administrators, and all the expected support services. The Cayman Islands is one of the premier offshore jurisdictions attracting clients from all over the world but particularly the United States, China, and other parts of Asia.

Offshore corporate structures in the Cayman Islands are ideal for international finance transactions and/or investments for many reasons, including: incorporation with name written in Chinese characters; incorporation within one business day of documents being filed; no requirement for directors to be resident in the Cayman Islands; register of shareholders and minute books can be held in another jurisdiction; no requirement for shareholders’ annual general meeting; maximum confidentiality – with no requirement to publicly file register of shareholders or accounting information; no taxes on distributions or on capital gain; no withholding taxes on dividend or other distribution; no gift, estate or inheritance taxes; no foreign exchange restrictions.

  • What is the single most important advantage your jurisdiction provides for Chinese clients?

Cayman Islands corporate structures allows Chinese clients to maximise the flexibility and other benefits of utilizing such structures in international finance transactions and/or investments: the ability to structure group businesses with a holding company to maximise investment and tax efficiency, effect IPOs, merge or consolidate with another Cayman Islands company or a company from another jurisdiction that permits mergers or consolidations with a foreign entity, to effect de-listings, and take-private transactions, and generally achieve efficient tax structuring of businesses; the ability to use Cayman Islands corporate structures to facilitate tax efficient wealth management and succession planning.

It has been suggested that price remains a major factor for consideration for clients when choosing offshore corporate services. Do you agree with this statement, and how do you think this will change in the years to come? Are you noticing a shift in emphasis on price to an emphasis on the quality of offshore structures? What other factors should someone looking to incorporate in the Cayman Islands consider when choosing a provider?

Price is always a major factor of consideration for clients when choosing offshore corporate services and will continue to be the case. However, other factors that clients take into account which puts the Cayman Islands a huge distance ahead of its offshore competitors in the Caribbean include (i) the high level of professionalism and responsiveness, (ii) the high degree of commercial confidentiality, (iii) tax neutrality, and (iv) a sophisticated business environment with a full range of services including banks, trust companies, lawyers, accountants, insurance managers, mutual fund managers and administrators, and all the expected support services. For clients who are seeking to incorporate offshore companies for IPOs, or investment funds and/or other investment transactions, the Cayman Islands still remain the offshore jurisdiction of choice.

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