(Cayman) Exempted Companies v Exempted Limited Partnerships · PDF fileExempted Companies v...

Cayman Islands -

Exempted Companies v Exempted Limited Partnerships

Introduction

This memorandum describes certain features of Cayman Islands exempted companies and Cayman Islands exempted limited partnerships. It is intended to be a

summary only, and is not exhaustive. It is not a substitute for detailed legal advice, which can be obtained from your usual Walkers contact or any of the Walkers

partners listed at the end of this memorandum.

Exempted company Exempted limited partnership

Legislation Companies Law (2016 Revision) (the "Law"). Exempted Limited Partnership Law, 2014 (the "ELP Law").

Constitution Any one or more persons associated for any lawful purpose

may, by subscribing their names to a memorandum of

association (the "Memorandum"), and otherwise complying

with the Law in respect of registration, form an incorporated

company.

Any proposed company applying for registration under the

Law, the objects of which are to be carried out mainly

outside the Cayman Islands, may apply to be registered as

an exempted company (a "Company").

The most common form of Company is a company limited

by shares, with a share capital divided into shares having a

Under Cayman Islands law, for a partnership to exist there

must be a business carried on by two or more persons in

common with a view to profit. An exempted limited

partnership (a "Partnership") is subject to certain further

requirements in addition to these pre-requisites of

partnership.

At its inception, a Partnership requires at least one general

partner (a "GP") which satisfies one of the criteria listed in

"Residency requirements" below and at least one limited

partner (an "LP").

The terms of a Partnership are invariably set out in an


par value.

(It is permissible, though unusual, for a Company to issue

shares which have no par value. In such a case the entire

consideration paid for the shares is treated as share

capital. This has certain disadvantages, including that

dividends may not be paid out of share capital.)

In addition to the Memorandum, articles of association (the

"Articles") are invariably adopted.

exempted limited partnership agreement (the "LPA"). In

addition there are certain registration requirements which

must be met (see "Registration requirements" below).

Legal form A Company has separate legal personality.

From the date of incorporation, the subscribers of the

Memorandum, together with such other persons as may,

from time to time, become members of the Company

(also referred to in this memorandum as shareholders), shall

be a body corporate with the name contained in the

Memorandum, capable forthwith of exercising all the

functions of a natural person of full capacity irrespective of

any question of corporate benefit, and having perpetual

succession.

A Partnership is not an entity with separate legal personality,

and cannot own property in its own right. The general

statutory position is that the property of the Partnership will

be held on statutory trusts by the GP or GPs jointly under

section 16(1) of the ELP Law:

"Any rights or property of every description of the exempted

limited partnership, including all choses in action and any right

to make capital calls and receive the proceeds thereof that is

conveyed to or vested in or held on behalf of any one or more

of the general partners or which is conveyed into or vested in

the name of the exempted limited partnership shall be held or

deemed to be held by the general partner, and if more than

one then by the general partners jointly upon trust, as an asset

of the exempted limited partnership in accordance with the

terms of the partnership agreement."

Any debt or obligation incurred by a GP in the conduct of the

business of a Partnership shall be a debt or obligation of the

Partnership.

All letters, contracts, deeds, instruments or documents must

be entered into by the GP on behalf of the Partnership.


Nature of business permitted The objects of a Company will be set forth in the

Memorandum. In a majority of cases, the objects clause will

be worded very broadly using a formulation such as, "the

objects for which the Company is established are unrestricted

and the Company shall have full power and authority to

carry out any object not prohibited by any law".

A Company may not trade in the Cayman Islands with any

person, firm or corporation except in furtherance of the

business of the Company carried on outside the Cayman

Islands.

A Company that is not listed on the Cayman Islands Stock

Exchange is prohibited from making any invitation to the

public in the Cayman Islands to subscribe for any of its

securities.

Certain activities are regulated in the Cayman Islands and a

Company may be required to obtain a licence or to register

with the Cayman Islands Monetary Authority ("CIMA") if it

wishes to carry on such activities. These include banking

business, trust business, company management, insurance

business, mutual fund administration, business of a mutual

fund and securities investment business.

A Partnership may be formed for any lawful purpose or

purposes to be carried out and undertaken either in or from

within the Cayman Islands or elsewhere in accordance with

the ELP Law, provided that the Partnership shall not

undertake business with the public in the Cayman Islands

other than so far as may be necessary for the carrying on of

the business of that Partnership exterior to the

Cayman Islands.

Certain activities are regulated in the Cayman Islands and a

Partnership may be required to obtain a licence or to register

with CIMA if it wishes to carry on such activities. These

include banking business, trust business, company

management, insurance business, mutual fund administration,

business of a mutual fund and securities investment business.

Registration requirements Upon the filing of:

1. the Memorandum;

2. the appropriate filings fees; and

3. a declaration from the subscriber to the effect that

the operation of the Company will be conducted

mainly outside the Cayman Islands,

A Partnership is originally formed by one or more GPs and

one or more LPs entering into the LPA. To bring the

Partnership within the ambit of the ELP Law (and therefore to

confer limited liability status on the LPs etc), a Partnership

must then be registered with the Registrar of Exempted

Limited Partnerships (the "ELP Registrar") which is achieved

by a GP filing a statement pursuant to section 9 of the ELP

Law (a "Section 9 Statement") setting forth:


a Company shall be deemed to be registered, and the

Registrar of Companies (the "Registrar") shall issue a

Certificate of Incorporation.

The Certificate of Incorporation will generally be issued

within five working days, or within two working days upon

payment of an express government fee.

1. the name of the Partnership;

2. the address of its registered office in the Cayman

Islands;

3. the general nature of the business of the

Partnership;

4. the duration of the term of the Partnership (may be

unlimited);

5. the full name and address of each GP; and

6. a declaration that the Partnership will not undertake

business with the public of the Cayman Islands other

than so far as may be necessary for carrying on of

the business of that Partnership exterior to the

Cayman Islands.

The ELP Registrar shall issue a Certificate of Registration as

soon as the registration of the Section 9 Statement and

certain ancillary documents has been effected.

The Certificate of Registration will generally be issued within

five working days, or within two working days upon payment

of an express government fee.

Name It is not necessary for a Company's name to contain words

or abbreviations such as 'Limited', 'Ltd', 'Inc', 'Corp'

etc. There are certain restricted names, for example, those

including the words 'royal', 'imperial', 'bank', 'assurance' and

'insurance'.

The name of the Partnership must contain the words 'Limited

Partnership', 'L.P.' or 'LP'.


Registered office A Company must have a registered office situated in the

Cayman Islands to which all notices and communications

may be addressed.

A Partnership must have a registered office situated in the

Cayman Islands for the service of process and to which all

notices and communications may be addressed.

Restrictions on number of

members/partners

A Company must have a minimum of one shareholder at

any time. Unless provided for in the Articles, there is no

maximum number of shareholders.

A Company must have at least one share in issue, but there

is no minimum paid-in capital

requirement. Fractional shares may be issued if the Articles

so permit.

A Partnership must at all times have a minimum of one GP

which satisfies one of the criteria listed in "Residency

Requirements" below, and one LP. Unless provided for in the

LPA, there is no maximum number of LPs or GPs.

Residency requirements There are no residency or qualification requirements for

directors or shareholders of a Company. Corporate

directors are permitted.

A Company is not required to hold board meetings or

shareholder meetings in the Cayman Islands or anywhere

else unless so required by its Articles.

A company secretary is not required.

There are no residency or qualification requirements for GPs

or LPs except that at least one GP must:

1. if an individual, be resident in the Cayman Islands;

2. if a company, be registered under the Law or

registered as a foreign company pursuant to the

Law;

3. if a partnership, be registered in accordance with

requirements of the ELP Law; or

4. be a limited partnership or limited liability

partnership established in a jurisdiction outside of

the Cayman Islands and registered as a foreign

limited partnership under the ELP Law.

A Partnership is not required to hold partner meetings in the

Cayman Islands or anywhere else unless so required by the

LPA.


Changes to registered details Certain changes to the registered details in respect of the

Company must be notified to the Registrar. The nature of

the relevant change affects the filing requirements and the

time limits for making the relevant filing.

Amendments of the Memorandum or Articles, or the name

of the Company, may only be made by special resolution of

the voting shareholders. The change is effective upon

passing of the special resolution, but must be filed with the

Registrar within fifteen days. The Registrar nonetheless may

reject a change of name and direct that a new name be

chosen.

A Company may increase, consolidate or sub-divide its

share capital. Increases of authorised share capital may only

be made by ordinary resolution of the voting

shareholders. The change is effective upon passing of the

ordinary resolution, but must be filed with the Registrar

within 30 days.

A Company may only reduce its issued share capital if

authorised by its Articles, with the approval of a special

resolution of its voting shareholders and with the

confirmation of the court.

A Company may hold shares in treasury.

Changes to the identity, names and addresses of the

directors and officers of the Company must be filed with the

Registrar within 60 days.

If any change is made or occurs in any matter specified in the

Partnership's Section 9 Statement (see above), a GP must file

with the Registrar a statement pursuant to section 10 of the

ELP Law (a "Section 10 Statement") specifying the nature of

the change. The Section 10 Statement must ordinarily be

filed within 60 days of such change.

A Section 10 Statement in respect of any arrangement or

transaction consequent upon which any person will cease to

be a GP, shall, within fifteen days of such arrangement or

transaction, be filed with the Registrar and, until such

statement is so filed, the arrangement or transaction shall, for

the purposes of the ELP Law and the LPA, be deemed to be of

no effect.

Amendment of constitution Amendments of the Memorandum or Articles, or the name

of the Company, may only be made by special resolution of

the voting shareholders.

Provisions governing the amendment of the LPA are

invariably contained in the LPA itself.

Notwithstanding any term in the LPA to the contrary, any


A resolution is a special resolution when:

1. it has been passed by a majority of not less than

two‑thirds (or such greater number as may be

specified in the Articles) of such members as, being

entitled to do so, vote in person or, where proxies

are allowed, by proxy at a general meeting of

which notice specifying the intention to propose

the resolution as a special resolution has been duly

given; or

2. if so authorised by the Articles, it has been

approved in writing by all of the members entitled

to vote at a general meeting of the Company.

term of the LPA may be amended orally by the partners.

Powers and liabilities of

GPs/directors

The Articles will invariably provide that the business of the

Company shall be managed by the directors. Shareholders

do not generally participate in the management of the

Company's business.

Directors owe fiduciary duties to the Company. These

duties include:

1. duty of loyalty/duty to act in best interests of the

Company;

2. duty to act for a proper purpose;

3. duty not to fetter director's discretion;

4. duty to avoid conflicts;

5. duty not to make secret profits from the director's

All letters, contracts, deeds, instruments or documents

whatsoever shall be entered into by the GP on behalf of the

Partnership. An LP who takes part in the conduct of the

business may lose its limited liability status, as described

below in the section headed "Liability of LPs".

In the event that the assets of the Partnership are inadequate,

the GP(s) shall be liable for all of the debts and obligations of

the Partnership.

A GP has a statutory duty to act at all times in good faith and,

subject to any express provisions of the LPA to the contrary,

in the interests of the Partnership.

Any debt or obligation incurred by a GP in the conduct of the

business of the Partnership shall be a debt or obligation of

the Partnership.

Please see our memorandum "Duties and Liabilities of General

Partners".


position as director;

6. duty to act fairly as between different shareholders;

and

7. duty to act with skill and care.

These duties are owed to the Company itself, and not

generally to individual shareholders. In the event of a

breach of duty, the directors may be personally liable to

account to the Company. Please see our memorandum

"Duties and Liabilities of Directors".

Books and records A Company shall cause to be kept a register of its members

containing the names and addresses of the members of the

Company, the shares held by each member, the amount

paid, or agreed to be considered as paid, on the shares of

each member, the date on which the name of any person

was entered on the register as a member, and the date on

which any person ceased to be a member.

The Register of Members is not open to public inspection

and there is no statutory right for any person

(including members or creditors) to review it. Cayman

corporate services providers must, however, collect

beneficial ownership information on all companies, and

such information is available to certain domestic and

international governmental authorities. This register need

not be kept in the Cayman Islands.

The Register of Members shall be prima facie evidence of

any matters by the Law directed or authorised to be

inserted therein.

A Company shall keep at its registered office a register of all

The GP is required to maintain a Register of Partnership

Interests ("Register") at the registered office of the

Partnership, setting forth the name and address of each

limited partner, the date on which a person became a limited

partner and the date on which a person ceased to be a

limited partner. The Register is required to be updated within

21 business days of any change. A GP who defaults in

complying with the duty to update the Register is guilty of an

offence and liable on summary conviction to pay a fine,

and shall indemnify any person who thereby suffers any loss.

The Register may be inspected by all LPs subject to any

express or implied term of the LPA, and may also be

inspected by any other person with the consent of the GP.

Section 30 of the ELP Law requires the GP to maintain a

separate record of contributions with the following

information:

1. the amount and date of the capital contribution(s) of

each LP; and


mortgages and charges specifically affecting property of the

Company, and shall enter in such register in respect of each

mortgage or charge a short description of the property

mortgaged or charged, the amount of charge created and

the names of the mortgagees or persons entitled to such

charge. It is an offence for the Company not to make such

an entry, but failure so to do does not invalidate the

mortgage or charge. The Register of Mortgages and

Charges shall be open to inspection by any creditor or

member of the Company at all reasonable times.

A Company shall keep at its registered office a register

containing the names and addresses of its directors and

officers, and shall send to the Registrar a copy of such

register. The Register of Directors and Officers is not open

to public inspection.

A Company shall cause to be kept proper books of account,

giving a true and fair view of the state of the Company's

affairs and to explain its transactions, with respect to:

1. all sums of money received and expended by the

Company and the matters in respect of which the

receipt and expenditure takes place;

2. all sales and purchases of goods by the Company;

and

3. the assets and liabilities of the Company.

Such books of account are to be maintained for a minimum

period of five years from the date on which they were

prepared. Any Company that knowingly and wilfully fails to

comply with the foregoing shall be subject to a penalty.

A Company shall cause minutes of all resolutions and

2. the amount and date of any payment representing a

return of the whole or any part of the contribution of

any LP.

Any person may have access to the register of contributions

with the consent of the GP.

The GP must maintain a register of security interests granted

by LPs, in written or electronic form, at the registered office of

the Partnership. The register of security interests should set

out the identity of the grantor, the identity of the grantee, the

partnership interest or part thereof subject to the security

interest and the date on which notice of the security interest

was validly served on the GP.

The register of security interests shall be open to inspection

by any person during all usual business hours.

Subject to any express or implied term of the LPA to the

contrary, each LP may demand and shall receive from a GP

true and full information regarding the state of the business

and financial condition of the Partnership.

The LPA is not filed in any public registry and is not open to

public inspection.


proceedings of its members and of its directors to be duly

kept in writing.

The only publicly available information in respect of a

Company is its name, company number, date of

incorporation, registered office, its status as an exempted

company and whether the Company is active or has been

struck off. The Memorandum and Articles are not publicly

available.

Liability of LPs/shareholders No contribution shall be required from any member

exceeding the amount, if any, unpaid on the shares in

respect of which he is liable.

As most Companies issue shares that are fully paid upon

issue, the effect of this provision is that no further sums are

payable by the holders of such shares once they have paid

for their shares in full.

There are certain rare cases where a court will permit the

limited liability status of a Company to be pierced, such as

where no corporate governance formalities have been

observed and a shareholder has treated the Company as its

alter ego for the purpose of evading a personal liability.

An LP shall not take part in the conduct of the business of the

Partnership. If the LP takes part in the conduct of the

business of a Partnership in its dealings with persons who are

not partners, that LP shall be liable, in the event of the

insolvency of the Partnership, for all debts and obligations of

that Partnership incurred during that period in which he

conducted himself as a GP provided always that the LP shall

be liable only to a person who transacts business with the

Partnership during such period with actual knowledge of such

participation and who then reasonably believed such LP to be

a GP.

The ELP Law specifically provides that an LP does not take

part in the conduct of the business of a Partnership by:

1. holding an office or interest in, or having a

contractual relationship with, a GP or being a

contractor for or an agent or employee of the

Partnership or of a GP or acting as a director, officer

or shareholder of a corporate GP;

2. consulting with and advising a GP or consenting or

withholding consent to any action proposed, in the

manner contemplated by the LPA with respect to the


business of the Partnership;

3. investigating, reviewing, approving or being advised

as to the accounts or business affairs of the

Partnership or exercising any right conferred by the

ELP Law;

4. acting as surety or guarantor for the Partnership

either generally or in respect of specific obligations;

5. approving or disapproving an amendment to the

LPA;

6. calling, requesting, attending or participating in any

meeting of the partners;

7. taking any action that results in the winding up or

the dissolution of the Partnership;

8. taking any action required or permitted by the LPA

or by law to bring, pursue, settle or terminate any

action or proceedings brought pursuant to

section 33(2);

9. appointing a person to serve on any board or

committee of the Partnership, a GP or an LP or

removing a person therefrom; or

10. serving on any board or committee of the

Partnership, a GP, the LPs or the partners, or by

appointing, electing or otherwise participating in the

choice of a representative or any other person to

serve on any board or committee, or by acting as a

member of any board or committee either directly or


by or through any representative or other person,

including giving advice or consenting, or refusing to

consent, to any action proposed by the GP on behalf

of the Partnership and exercising any powers or

authorities or performing any obligations as a

member of that board or committee in the manner

contemplated by the LPA;

11. serving on the board of directors or a committee of,

consulting with or advising or being an officer,

director, shareholder, partner, member, manager,

trustee, agent or employee of, or by being a

fiduciary or contractor for, any person in which the

Partnership has an interest or any person providing

management, consultation, custody or other services

or other products for, to or on behalf of, or

otherwise having a business or other relationship

with, the Partnership or a GP of the Partnership; or

12. voting as an LP on:

(a) the dissolution and winding up of the

Partnership;

(b) the purchase, sale, exchange, lease,

mortgage, pledge or other acquisition or

transfer of any asset or assets by or of the

Partnership;

(c) the incurrence or renewal of indebtedness

by the Partnership;

(d) a change in the nature of the business of


the Partnership;

(e) the admission, removal or withdrawal of a

GP or LP and the continuation of business

of the Partnership thereafter; or

(f) transactions in which one or more of the

GPs have an actual or potential conflict of

interest with one or more of the LPs.

The ELP Law specifies that the possession of powers not

included on this list does not imply that an LP is necessarily

taking part in the business of the Partnership.

Transfers of interests The transferability of shares will be set forth in the

Articles. The shares of the Company shall be non-

negotiable and shall be transferred only on the books of the

Company. Commonly, shares may only be transferred with

the prior consent of the directors of the Company.

There is no Cayman Islands stamp duty payable on the

transfer of shares.

Subject to the ELP Law and the provisions of the LPA, a

partnership interest is assignable in whole or in part.

Subject to the terms of the LPA, no LP may transfer the whole

or part of their limited partnership interest ("LP Interest")

except with the written consent of the GP. Any transferee of a

LP Interest will, to the extent of such transfer, become a LP

with the rights and subject to the obligations of the transferor

in accordance with the LPA and the ELP Law in respect of the

LP Interest or part thereof transferred. Subject to the terms of

the LPA, no LP may grant any security interest in the whole or

part of their LP Interest except with the written consent of the

GP.

Distributions A Company may make distributions by way of dividend

provided that there are no restrictions (either express or

implied) in its Memorandum or Articles. A Company may

only make distributions by way of dividend out of profits or

(provided that immediately following the date that the

The GP shall not, on winding up or otherwise, pay any LP a

return of any part of his contribution to the Partnership out of

the capital of the Partnership unless immediately following

such payment, the Partnership is solvent. A LP who receives a

payment representing a return of any part of his contribution


dividend is proposed to be paid the Company is able to pay

its debts as they fall due in the ordinary course of business)

out of its share premium account.

to the Partnership within six months before an insolvency of

the Partnership shall be liable to repay such payment with

simple interest at the rate of ten percent per annum or

otherwise as may be specified in the LPA to the extent that

such contribution or part thereof is necessary to discharge a

debt or obligation of the Partnership incurred during the

period that the contribution represented an asset of the

Partnership.

Dissolution A Company may be wound up voluntarily:

1. when the period, if any, fixed for the duration of

the Company by the Articles expires, or whenever

the event, if any, occurs, upon the occurrence of

which it is provided by its Memorandum and

Articles that the Company is to be dissolved, and

the Company has, by special resolution of its

members, adopted a special resolution requiring

the Company to be wound up voluntarily; or

2. if the Company has, by ordinary resolution of its

members, adopted an ordinary resolution

requiring the Company to be wound up voluntarily

on the basis that it is unable to pay its debts as

they fall due.

The winding up of a Company will occur automatically,

however, to the extent that the necessary procedures have

not been followed, the passing of the fixed duration or the

occurrence of a certain event is grounds for a petition to the

court by a creditor or member on the basis that the

Company did not wind itself up as required.

Upon the commencement of the winding up a liquidator is

A Partnership shall be required to be wound up and dissolved

at the time or upon the occurrence of any event specified in

the LPA and dissolved in accordance with the terms of the

LPA and the ELP Law. The GP must make a number of filings

within 28 days of the commencement of the winding up of

the Partnership.

A Partnership shall not be dissolved by an act of the partners

or otherwise until a notice of dissolution signed by a GP or

liquidator has been filed with the Registrar on completion of

the winding up of the Partnership.

Subject to any express or implied term of the LPA to the

contrary, upon the ninetieth day following notification by the

GP or its representative to the LPs of the death,

commencement of liquidation or bankruptcy proceedings,

withdrawal, removal or making of a winding up or dissolution

order of the sole or last GP, the Partnership shall forthwith be

dissolved and required to be wound up in accordance with

the LPA or such orders as the court may decree pursuant to

the above. Notwithstanding the foregoing, if within 90 days

of the date of such notice, a majority of LPs (or such other

threshold set out in the LPA) elect one or more new GPs, the

business of the Partnership shall not be required to be wound

up but may be assumed and continued as provided for in the


appointed (although, it should be noted that the

appointment of a voluntary liquidator shall only take effect

upon the filing of his consent to act with the

Registrar). There are no restrictions on who may act as

liquidator on a solvent winding up, but the need to comply

with certain duties and procedures under Cayman Islands

law means that generally a professional in the

Cayman Islands is appointed. However, where the court

appoints the liquidator, the liquidator is required to be a

qualified insolvency practitioner under the Insolvency

Practitioner's Regulations 2008. The liquidator steps into

the shoes of the directors and is responsible for gathering in

the assets of the Company, satisfying its liabilities and then

distributing the remaining amounts to the shareholders in

accordance with the Articles. Within 28 days of the

commencement of a voluntary winding up, the liquidator, or

in the absence of a liquidator, the directors shall make

certain statutory filings with the Registrar including a notice

of winding up, the liquidators consent to act and (where the

supervision of the court is not being sought) a declaration

of solvency (signed by all the directors). In the case of a

Company carrying on a regulated business (ie a mutual

fund) notice of the winding up must be served on

CIMA. The notice of the winding up is required to be

published in the Cayman Islands in the Gazette. Any

liquidator or director who fails to comply with such filing

requirements is liable to a fine of US$10,000.

It should be noted that the directors' declaration of solvency

is required to be in a prescribed form and state that a full

enquiry has been made into the Company's affairs and that

to the best of the directors' knowledge and belief, the

Company will be able to pay its debts in full together with

interest at the prescribed rate within a period not exceeding

LPA or any subsequent agreement.

Alternatively, where the ELP Registrar has reasonable cause to

believe that a Partnership is not carrying on business or is not

in operation (including upon the submission of the GP), he

may strike the Partnership off the register and the Partnership

shall thereupon be dissolved.

The GP, any LP or any creditor of the Partnership that objects

to the Partnership being struck off, on grounds that the

Partnership was carrying on business, in operation or

otherwise at the time that it was struck off , may apply to the

court to have it restored to the Register of Partnerships. The

application to restore the Partnership to the Register of

Partnerships must be made within two years of the strike off

date. If the two year period has elapsed, approval may be

sought from the Government of the Cayman Islands to allow

the restoration (as long as restoration is sought within ten

years from the date the Partnership was struck off the

Register of Partnerships).


twelve months from the commencement of the winding

up. Directors should bear in mind the forward looking

nature of this test as the future solvency of the Company

(including all actual and contingent liabilities) must also be

considered. All directors are required to sign the solvency

statement and must have reasonable grounds for the

statements made. To the extent that a statement is made

without reasonable gourds, each director is liable to a fine

of US$10,000 or imprisonment for two years, or both.

Once the above process is complete, a final shareholders'

meeting is held and the liquidator's accounts are

approved. The liquidators make their final return to the

Registrar informing the Registrar that the liquidation has

been completed. Three months after the liquidators have

submitted their final return, the Company is deemed to be

dissolved and, from that point on, ceases to exist.

Alternatively, where the Registrar has reasonable cause to

believe that a Company is not carrying on business or is not

in operation (including upon the submission of a director of

the Company), he may strike the Company off the register

and the Company shall thereupon be dissolved. If a

Company or any member or creditor thereof feels aggrieved

by the Company having been struck off the register in

accordance with the Law, the court on the application of

such Company, member or creditor made within two years

or such longer period not exceeding ten years as the

Governor may allow of the date on which the Company was

so struck off, may, if satisfied that the Company was, at the

time of the striking off thereof, carrying on business or in

operation, or otherwise, that it is just that the Company be

restored to the register, order the name of the Company to

be restored to the register. Any property vested in or

belonging to any Company struck off the register under the


Law shall thereupon vest in the Financial Secretary and shall

be subject to disposition by the Governor, or to retention

for the benefit of the Cayman Islands.

Winding up is therefore a more final form of terminating a

Company than striking it off.

Tax status and annual return A Company may apply for an undertaking from the

Governor to the effect that, for a period of 20 years from

the date of such undertaking (extendable by a further

ten years):

1. no law which is thereafter enacted in the Cayman

Islands imposing any tax to be levied on the

profits, income, gains or appreciations shall apply

to the Company or its operations;

2. no such tax nor any tax in the nature of estate duty

or inheritance tax will be payable by the Company:

(a) on or in respect of the shares, debentures

or other obligations of the Company; or

(b) by way of the withholding in whole or in

part of any relevant payment.

An annual fee payable on or before 31 January of between

US$854 and US$3,132 (depending on the Company's

authorised share capital) is payable to the Registrar. An

annual return must also be filed on or before 31 January in

every year.

For a Company that is not regulated or licensed under any

other law, no financial statements need to be filed with any

Cayman Islands governmental agency, and no annual audit

A Partnership may apply for an undertaking from the

Governor that no law enacted in Cayman imposing any tax to

be levied on profits or income or gains or appreciations shall

apply to the Partnership or to any partner in respect of the

Partnership. The Undertaking will be for a maximum of

50 years and will also cover estate duty or inheritance tax.

An annual fee payable on or before 31 January of

approximately US$1,463 is payable to the ELP

Registrar. An annual return must also be filed on or before

31 January in every year.

For a Partnership that is not regulated or licensed under any

other law, no financial statements need to be filed with any

Cayman Islands governmental agency, and no annual audit is

required.


is required.

Updated: 20 March 2017

For further information please refer to your usual contact or:

Cayman Islands - Rob Jackson, Partner | [email protected] | +1 345 914 4281

Cayman Islands - Rolf Lindsay, Partner | [email protected] | +345 914 6307

Dubai - Daniel Wood, Partner | [email protected] | +971 4 363 7912

Hong Kong - Paul Aherne, Partner | [email protected] | +852 2596 3308

London - Jasmine Amaria, Partner | [email protected] | +44 (0)20 7220 4975

Singapore - Tom Granger, Partner | [email protected] | +65 6603 1694

The information contained in this memorandum is necessarily brief and general in nature and does not constitute legal or taxation advice. Appropriate legal or other professional advice

should be sought for any specific matter. Walkers works in exclusive association with Taylors in Bermuda, a full service commercial law firm providing advice on all aspects of Bermuda law.

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