The Cayman Islands is still a favorite for individuals and businesses seeking to expand their operations offshore and attempt to avoid the high corporate tax rate of many other industrialized countries.
Establishing a company in the Cayman Islands is relatively simple, as opposed to some of the harsher regulations required to form entities in other countries.
The following is a short summary of the different types of entities that can be formed in the Cayman Islands, followed by a summary of FATCA (Foreign Account Tax Compliance Act), which is a key issue for any offshore business registered in the Cayman Islands that has formed accounts and the subject to US tax (because it is owned by a US Taxpayer)
Cayman Business Formation
Ordinary Non-Resident Company: In order for a company to form an Ordinary Company in the Cayman Islands, requires one shareholder and one director and they have to have at least one annual meeting; the company name must have the letters, LTD. following the name. One benefit of the ordinary nonresident company is that liability shareholders is limited to the shares have been assigned. Shareholders do not need to be residents of the Cayman and there is no minimum capital requirement. It usually takes less than a week to register this type of company in the Cayman Islands — there are major restrictions for operating within the Cayman Islands.
Ordinary Company: The ordinary company is very similar to the nonresident company, except there are no major restrictions for operating within the Cayman Islands.
Exempted Company: The exempted company is popular for individuals who are seeking to operate primarily outside of the Cayman Islands. The company is not required to keep a public register of members, not required to hold an annual meeting, can be listed on the Cayman Islands Stock exchange, can issue shares of minimum value, is not required to use the word limited, but is not limited to using local currency.
Limited Duration Company: This form of entity is similar to a limited liability company that is common in many jurisdictions. The shareholders are generally limited to the capital to invest in the company and the duration of the company cannot exceed 30- years.