Companies and E-Commerce

Companies in the Cayman Islands are formed in much the same way as they are in England. A Memorandum of Association must be filed with the Registrar of Companies, stating the name, the registered office, the objects and the authorised share capital. Articles of Association must also be filed providing for the rules pertaining to the relationship between shareholders and the management of the Company.

The categories of companies that may be formed in the Cayman Islands include ordinary companies, exempted companies, limited duration companies, limited life companies and segregated portfolio companies:

• Ordinary Companies are generally formed by those wishing to conduct business within the Cayman Islands as there are specific requirements with regard to the need for local participation in such companies.
• Exempted Companies are the most common and are utilised by those wishing to conduct business outside the Cayman Islands. An exempted company may obtain an undertaking from the Government that if direct taxation were ever to be introduced in the Cayman Islands, the company would be exempt for a period of 20 years. There are no restrictions on the nationality of the directors or shareholders of an exempted company and an exempted company is not required to hold an annual shareholders meeting.
• Limited Duration Companies and limited life companies were created as an equivalent of the US limited liability company but are not used very often these days as a result of changes in US tax rules which generally enable an exempted company to be used instead.
• Segregated Portfolio Companies were first developed for the Cayman Islands insurance industry but can now be used generally to provide a structure whereby separate cells can be created within a single corporate vehicle which are legally-ring fenced from each other so far as concerns third party creditors.

Particular advantages of registering a company in the Cayman Islands include, ease and speed of incorporation, a well developed Companies law based on English law but with greater flexibility and less red-tape than under the equivalent UK legislation, no taxation in the Cayman Islands on income or gains and indeed no direct taxation at all, an absence of exchange controls, a sophisticated professional infrastructure and a stable political regime.

Cayman Exempted Companies are frequently utilised by large corporates and institutions to structure transactions in an efficient and cost effective way because of the Cayman Islands’ tax neutral and proportionate regulatory environment. Such companies may facilitate a wide variety of commercial objectives including, providing legitimate tax deferral on foreign source trading income, serving a treasury function, holding intangibles such as intellectual property rights, enabling an international joint venture, operating as an investment fund or captive insurance company or providing the offshore vehicle in a securitisation or other structured finance transaction.

Under Cayman Islands law it is also possible for a foreign company to be registered to carry on business in the Cayman Islands and even to redomicile itself as a Cayman company.

Company Registration and Management

Solomon Harris is able to arrange the registration of a Cayman company within 24 hours of receiving instructions and the necessary due diligence and the company is able to transact business immediately upon receipt of the Certificate of Incorporation (usually 3-4 working days later or 24 hours later if an express fee is paid). The inclusive registration service provides Memorandum and Articles of Association, minute book, statutory records and deals with all incorporation formalities. The firm can arrange for a full or partial management service through the services of our affiliated management company, International Management Services Limited.

Full details of fees and costs for registration and management are contained in our current schedules. The Application form and the due diligence requirements may be sent to the attention of any attorney in this department, for the formation and/or management of a Cayman company.

E-Commerce

E-commerce is the marketing, ordering and sale of goods and services over the internet. E-commerce transactions may be business to customer or business to business. The range of goods and services that can be bought or sold by e-commerce would appear to be without limit. The potential size of the market is enormous. It has been estimated that potential revenues from e-commerce are over US$1 Trillion.

E-commerce offers sellers of goods and services significant benefits when compared with conventional selling methods, the most significant of which are cost saving, greater flexibility and access to a truly global market place. For e-commerce businesses offering digitised products and services (such as computer software which the purchaser can download through the internet) virtually no physical presence is necessary. Even for e-commerce businesses which are offering tangible goods (such as books, electrical goods etc) the "physical portion" of the business e.g. warehousing and delivery, can be readily outsourced.

The lack of a requirement for "bricks and mortar" makes the Cayman Islands an ideal location for those looking to establish e-commerce businesses. Within our own firm we have seen huge interest in this area, not only from entrepreneurs considering business start ups which are ideally suited for e-commerce but also from established onshore businesses looking to exploit their existing range of goods or services through a parallel e-commerce operation.