Introduction

The Cayman Islands has consistently been viewed as an attractive jurisdiction for an extensive range of international investment opportunities. Cayman provides a combination of a world-class infrastructure, a stable and pro-investment government, a well-established financial services sector and close proximity to the major US markets to form an appealing package for potential investors. The enactment of the Special Economic Zones Law (the "SEZ law") provides a further medium for potential investors to benefit from the advantages on offer when setting up a business in the Cayman Islands. The SEZ law applies solely to exempted companies and exempted limited partnerships and presents a unique investment opportunity, as the only such zone in the Caribbean, and allows for benefits which were previously unavailable when establishing a business in the Cayman Islands.

What is a Special Economic Zone?

A Special Economic Zone ("SEZ") is a designated area within a jurisdiction which benefits from special economic rights and concessions, provided for by law, which is conducive to potential foreign investment.

Sectors for Investment

Cayman Enterprise City ("CEC") proposes five specific sectors for potential investors:

  1. Internet   and   Technology   Park   -   for   potential   software,   hardware,   internet   &   E-commerce, telecommunications & networking and IT services.
  2. Media and Marketing Park - for potential new media, music & film, leisure & entertainment, broadcasting & information agencies, publishing & marketing services.
  3. Biotechnology  Park  -  for  potential       bioinformatics,  green  (agricultural)  biotechnology,  red  (medical) biotechnology, white (industrial) biotechnology, bioengineering.
  4. Commodities and Derivatives Park - for potential trading & brokerage, clearing services & operations, settlement & custody, financial & collateral management, market data & analysis.
  5. Education and Training Park - for potential universities & online universities, management development centres, education service providers, academic and student support services, specialised vocational educators.

CEC is proactive in working with potential special economic zone companies to determine how the company can fit in the SEZ under one of the sectors for investment listed above.

For more information on whether the nature of a proposed special economic company fits within the SEZ, we are happy to liaise with CEC on your behalf.

Special Economic Zone Companies

According to the Companies Law (2013 Revision) (the "Companies Law"), any entity that is an existing or newly incorporated exempted company may apply to the Registrar of Companies in the Cayman Islands (the "Registrar") to be registered as a special economic zone company. These are specific types of entities that are subject to the Companies Law. The significant feature of these types of company is that although they may have a physical presence on the Islands, the company's activities are restricted to offshore enterprises.

Setting up in Cayman Enterprise City

Initial Contact with CEC

Walkers can liaise with the Business Development Team from CEC which will prepare a proposal to set up in the SEZ, including the following documents:

  1. the CEC License Agreement; and
  2. a CEC Corporate Application Form.

These  are  to  be  signed  and  returned  to  the  Business  Development  Team,  together  with  any  security  deposit associated with the product chosen.

Authorisation

A representative of the Business Development Team from CEC will then send an authorisation letter which entitles the recipient to form a special economic zone company within the SEZ. Once this letter is given, we can assist with incorporation of the SEZ Company.

Incorporation

Under the Companies Law, where the company was not already registered as an exempted company prior to an application:

  1. The memorandum and articles of association of the company must specify that the business of the company includes special economic zone business.
  2. The name of the company must include the words "Special Economic Zone Company" or the letters "SEZC".
  3. Upon delivery of the memorandum and articles of association to the Registrar, the Registrar will issue a certificate of incorporation confirming the date of incorporation and that the company is registered as a special economic zone company.

For further information on setting up an exempted company, please refer to our Firm Memo entitled Cayman Islands

– Exempted Companies.

Where the company was already registered as an exempted company prior to the application:

  1. The  Registrar  has  been  supplied  with  a  copy  of  the  special  resolutions  of  the  company  altering  its memorandum and articles of association to carry on special economic business.
  2. The Registrar has been supplied with a copy of the special resolutions of the company changing its name to a name that includes the words "Special Economic Zone Company" or the letters "SEZC".
  3. Upon receipt by the Registrar of the special resolutions above, the Registrar will issue a certificate stating that the company is registered as a special economic zone company and stating the date of the registration.

Post-Incorporation

Once the relevant certificate has been received by the Registrar confirming that the special economic zone company has been incorporated, the following documents will be sent by us to a representative of the Business Development Team at CEC:

  1. the certificate of incorporation of the special economic zone company;
  2. the memorandum and articles of association of the company;
  3. the statutory registers of the company (directors, officers and members); and
  4. any due diligence required by the CEC – including a certified true copy of the passport of every director of the company.

Once received, CEC will prepare and complete the necessary application forms to be submitted to the Special Economic Zone Authority ("SEZA"). These are reviewed by the company and returned to the CEC to be filed with SEZA.

Any application to SEZA will be processed within five business days. Upon receipt of the application SEZA will either grant or refuse to grant the trade certificate and will notify the applicant with any reasons for refusal in writing. Upon receipt of any trade certificate, CEC will send the company a CEC welcome pack which includes:

  1. the Trade Certificate (the licence to operate the company in the SEZ);
  2. the Zone Employment Certificates (the five Year Work/Residency Visas for any staff who relocate to Cayman); and
  3. use of all the business centre facilities within the CEC.

One Zone Employment Certificate should be completed per non-Caymanian employee and should be accompanied by the following documents, either as originals or certified copies:

  1. a police clearance certificate issued in the previous country of residence of the employee;
  2. all necessary medical requirements and the immigration Medical Questionnaire;
  3. one face-on and one profile, passport size photo; and
  4. a cover letter, on the letterhead of the company explaining the necessity of the employee in the operation of the company.

Once completed and the documentation listed above is compiled, CEC submits the Zone Employment Certificate applications to SEZA which processes them within five business days.