All exempted companies incorporated in the Cayman Islands are subject to the continuing obligations prescribed by the Companies Law. In addition, those companies which are regulated by the Cayman Islands Monetary Authority (CIMA), such as banks, mutual funds, mutual fund administrators, insurance companies, insurance managers, trust companies and others are subject to additional requirements.
This client guide is intended as a general summary of some of the ongoing obligations of Cayman Islands exempted companies. For further information about the obligations and detailed regulatory guidance please contact your usual Harneys lawyer.
All exempted companies must have a registered office in the Cayman Islands provided by a regulated service provider. Harneys Services provides this as a service to all Harneys clients. If you are not already a Harneys Services client, please visit www.harneysfid.com for more information.
The company's name must be on display at the registered office (for Harneys Services clients, this is handled automatically) and at any other place of business maintained by it.
Changes in directors or officers
The articles of association of the company (the Articles) will set out the mechanism to appoint and remove directors. To effect a resignation a letter of resignation signed by the director should normally be sent to the registered office. Appointments are made in accordance with the Articles and commonly require either a resolution of the remaining directors or the shareholders to be passed approving the appointment. Copies of any resolutions and resignation letters should be included in the minute book and the register of directors and officers must be updated and filed with the Registrar of Companies (Registrar). Changes to the board of directors must be notified to the registered office as soon as possible to avoid penalties for late filing.
The "minute book" containing the company's principal corporate documents is generally maintained at the registered office. The minute book should contain the following items, those marked with an asterisk are required to be or, by convention, are normally held at the registered office in the Cayman Islands:
- Certificate of Incorporation*;
- Memorandum and Articles of Association*;
- minutes of all directors and shareholders meetings and any documents referred to in the minutes*;
- written resolutions of the directors and shareholders*;
- annual return*;
- letters and resolutions relating to the resignations and appointments of directors and officers*;
- copies of share certificates issued and the share certificate stubs (although we tend to advise that exempted companies do not issue share certificates as this is not required by the Companies Law)*;
- share transfer forms;
- audited financial statements, if prepared;
- tax exemption certificate*;
- register of directors and officers*;
- principal or branch register of members of the company; and
- register of mortgages and charges*.
Books of account
All exempted companies must keep proper books of account but these need not be kept at the registered office. The books of account must give a true and fair view of the state of the company's affairs and explain its transactions. Accounts do not need to be audited by law unless the company conducts a regulated activity.
New shares are issued in accordance with the provisions of the Articles, and usually require approval by resolution of the directors.
If existing shares in issue are transferred, a share transfer instrument must be signed. The old share certificates (if issued) should be returned to the registered office for cancellation and if requested, new certificates issued. The directors will normally be required to approve the transfer, subject to any restrictions on transfer or other special provisions contained in the Articles.
Filings must be made with the Registrar if any of the following things takes place. The registered office provider must handle these filings as the Registrar runs a subscription-only electronic filing system. It is therefore the obligation of the company and the directors to make sure that any of these events are notified to the registered office service provider as soon as possible to avoid penalties being payable to the Registrar.
Change in directors or officers Updated register of directors and officers must be filed within 60 days
Change in the authorised share capital of the company Shareholder resolution and, if required, an updated set of memorandum and articles of association must
company Change of name of the company
Alteration of the Memorandum or Articles of Association
Change of location of the registered office
Any other shareholder special resolution
be filed within 30 days
Shareholder resolution and, if required, an updated set of memorandum and articles of association must be filed within 15 days
Shareholder resolution and the updated set of memorandum and articles of association must be filed within 15 days
Resolution should be filed immediately and the change only takes effect on filing
Within 15 days
Other filings are required in other circumstances such as a capital reduction or the winding up of the company. Filings with the Registrar are not a matter of public record.
An exempted company may, but is not required to, have a seal which is usually kept at the registered office. Where there are documents to be sealed outside the Cayman Islands the company's seal may be used or, alternatively, a copy or `facsimile' seal can be obtained for use overseas. A facsimile seal may, but is not required to, state on its face the district, territory or place where it is to be used.
Seals are relatively rare but Harneys Services can order them on request.
An exempted company (unless required by the Articles) is not obliged to hold an annual shareholders' general meeting or an annual meeting of directors. If annual meetings are held voluntarily, the Articles of the company will set out the procedure.
An annual return must be submitted to the Registrar each January together with the appropriate filing fee. Returns filed after 30 March will incur a penalty fee. If Harneys Services provides the registered office, we will sign and file the annual returns on behalf of the company.
The Companies Law provides that where the Registrar has reasonable cause to believe that a company is not carrying on business or is not in operation, the Registrar may strike the company from the register of companies. On strike-off the company is dissolved and any assets become the property of the Cayman Islands Government. Non-payment of the annual Government fee is the most common cause of striking off in this manner.
Segregated Portfolio Companies
In addition to the standard annual return and fees for all exempted companies, an exempted company registered as a segregated portfolio company must list each segregated portfolio in existence on 1 January and pay additional fees based on the number of portfolios that it has created.
Categories of Regulated Company with Additional Continuing Obligations
Companies which have registered with CIMA as "Excluded Persons" under the Securities Investment Business Law (the SIB Law) and which want to continue to maintain their registration as an Excluded Person, must make the necessary filings with CIMA and pay the annual registration fee before 31 January. Where Harneys Services provides registered office services, we will send you the relevant CIMA form for completion and signature.
Failure to make the annual filing will result in the company being removed from CIMA's list of Excluded Persons which is a breach of the SIB Law and could result in penalties for the company and its directors and officers.
Please see our Guide to the Securities Investment Business Law for further details of regulation under the SIB Law.
Mutual Fund registered with CIMA
Funds registered with CIMA must pay the applicable annual registration fee to CIMA by 15 January. If not paid by then the fund will be liable for an additional monthly penalty. In addition funds must file annual audited accounts with CIMA within six months of each financial year end and also arrange for their auditors to complete and return a report setting out certain key statistical data and other information on the fund.
For more information please see our Guide to Investment Funds in the Cayman Islands.
For more information please visit www.harneys.com/funds
Harneys, September 2016 - KY:1535061_3
Harneys is a leading international offshore law firm. We provide the world's top law firms, financial institutions and corporations with legal services relating to British Virgin Islands, Cayman Islands, Bermuda, Cyprus and Anguilla law, from more than 12 offices around the globe. For more information about Harneys please visit www.harneys.com or contact us at firstname.lastname@example.org. This Legal Guide is for general information only and not intended to be relied upon for legal advice in any specific or individual situation.