In this two part article, we look at how to migrate existing companies in and out of the Cayman Islands. Elsewhere we look at how to migrate a Cayman registered company to another jurisdiction, but here we concentrate on how to move an existing company, one which is already registered in another jurisdiction, and have it registered in the Cayman Islands.
Who can move?
Any body corporate which is already incorporated, registered or exists under the laws of any jurisdiction other than the Cayman Islands, and which has limited liability and a share capital. The company may apply to the Registrar of Companies in the Cayman Islands (“the Registrar”) to be registered by way of continuation as an exempted company limited by shares under the Cayman Islands Companies Law.
How do you apply?
The company making the application (“the Registrant”) needs to comply with a long list of requirements. These include that:
- the transfer is bona fide and not fraudulent;
- the company is solvent and will notify its secured creditors of the transfer;
- it has the ability to transfer out of its existing jurisdiction and has obtained all necessary consents and complied with its own constitution;
- it is the type of company that can be registered in the Cayman Islands;
- its name is acceptable to the Registrar, or will be changed to one which is;
- the company’s business will operate outside the Islands (unless it has a valid licence to operate within the Islands);
- it will cease to exist in its current jurisdiction; and that
- it tells the Registrar its proposed new address in Cayman, and delivers the relevant documents and pays the relevant fee.
Many requirements are satisfied by a Director of the Registrant filing a declaration or affidavit to the effect that after due enquiry he or she is satisfied that the requirements have been met. That affidavit also needs to include a statement of the current assets and liabilities of the company. A director who makes a declaration without reasonable grounds commits an offence, and on summary conviction can be sentenced to five years imprisonment and a $15,000 fine. Provided the Registrar is not aware of any other reasons why not, then the Registrant will be registered.
A Registrant may instead apply to be provisionally registered by way of continuation as an exempted company limited by shares. The Registrar shall provisionally register a registrant if the registrant complies with certain of the requirements above, and pays a fee of $1,500. A provisionally registered Registrant has 60 days to provide details of any changes in the information required and each year following, needs to provide a further such declaration and pay a fee of $1,000 to the Registrar. If it fails to do so by 30th June in any year then it will no longer be provisionally registered.
What happens once your company is registered?
The Registrar issues a certificate under his hand and seal of office that the Registrant is registered by way of continuation as an exempted company. The certificate specifies the date of registration and the Registrant's details are entered into the register. From the date of registration the Registrant continues as a body corporate as if it had been incorporated and registered as an exempted company under and subject to the Cayman Islands Companies Law.
What stays the same?
What does not happen is that the company does not become a new legal entity and the new registration does not prejudice or affect the identity or continuity of the Registrant in its previous form. There is no change to the property owned by the Registrant company and the registration does not affect any appointment, resolution or act done under powers the company had conferred on it by its incorporation in its former jurisdiction. Registration does not make defective any process, such as litigation, which was commenced by or against the registrant before its registration.
A Registrant has 90 days to pass a special resolution to make any necessary changes or amendments to its charter documents to ensure that these comply with such of those requirements of the Cayman Islands Companies Law as relate to an exempted company. Alternatively, and if theRegistrar so directs, the Registrant may apply to the Court for an order approving the changes. The Court may approve them and, if it chooses, it may also make any consequential Orders as it thinks fit. The changes to charter documents must then be filed with the Registrar (together with the special resolution or court order) for registration. The changes take effect as if they formed part of the company’s charter documents and the Registrar's certificate of registration is to be taken as conclusive evidence that the Registrant’s charter documents comply with the requirements of the Cayman Island’s Companies Law.
The Registrar then gives notice in the Gazette of the registration, with details of where the Registrant was previously registered and any previous name.
Welcome to the Cayman Islands
Although the process is relatively straightforward the best way to migrate a company is to use the services of a tried and trusted local adviser who has experience of the process and who works well with the local officers. For example, we recommend that before the Registrant registers, any required revisions to the Registrant’s charter documents to make them comply with Cayman law are made so that the revised charter documents can be adopted immediately upon registration. This avoids any uncertainty as to what aspects of the charter documents apply upon registration should any of the existing terms conflict with Cayman law. At Solomon Harris we pride ourselves on our ability to provide timely, efficient and cost-effective corporate services, and would be happy to advise you on all aspects of migrating a company to the Cayman Islands. Our dedicated corporate services provider, Solaris Corporate Services Ltd, which is regulated by the Cayman Islands Monetary Authority, provides corporate and registered office services for Cayman Islands companies, funds and partnerships.
Related article: How to Migrate a company out of the Cayman Islands