Business Environment in the Cayman Islands
The Cayman Islands is a leading global financial hub, offering a wide array of professional services such as banking, insurance, company formation, and more. Known for its solid legal and regulatory frameworks, it boasts political stability and a stable banking system, making it an attractive location for business. The Cayman Islands operates with a strong legal system governed by laws like the Companies Act and Exempted Partnership Act, providing various business structures, including LLCs, limited partnerships, and foundation companies. The jurisdiction has recently been removed from the FATF’s “grey list,” which improves its international reputation, especially regarding anti-money laundering standards.

Business Structures and Regulations
The Cayman Islands provides diverse business structures, including public companies, LLCs, partnerships, and offshore companies, each offering different benefits, such as liability protection and flexible management. Businesses are subject to registration requirements, and certain activities require specific licenses. The jurisdiction has no exchange control restrictions, allowing for free movement of money and investments. It also provides intellectual property protection and allows foreign individuals and companies to own land and property. Employment regulations are in place to ensure work permits are issued when qualified local candidates are unavailable, and businesses must comply with anti-money laundering laws to maintain their operations.

1. Introduction

1.1. Business and Investment Environment
The Cayman Islands is a globally recognized financial services center offering a broad range of professional services. These services include banking, insurance, company formation, structured finance, vessel and aircraft registration, and operations through the Cayman Islands Stock Exchange. The jurisdiction is known for its solid legal framework, stable banking system, political stability, and effective regulatory environment, which make it a prime location for business. The local currency is the Cayman Islands Dollar (KYD), which is pegged to the US Dollar at a fixed exchange rate of USD 1 = KYD 0.82.

1.2. Regulatory Framework
The Cayman Islands operates under a unified corporate law system governed by the Companies Act (2023 Revision). The Exempted Partnership Act (2021 Revision) regulates exempted limited partnerships, which must be registered with the Registrar of Exempted Limited Partnerships. Various company types exist in the Cayman Islands, including partnerships, limited liability companies (LLCs), and foundation companies, which offer a blend of features from both trusts and companies (according to Section 4 of the Foundation Companies Law of 2017). After inquiries by the FISC Subcommittee regarding the Cayman Islands’ tax system, the FATF removed the jurisdiction from its “grey list” for money laundering concerns, marking a significant step in its international reputation. This removal also included a December 2023 update by the EU Commission and the UK government, both officially de-listing the Cayman Islands from high-risk countries for Anti-Money Laundering (AML) purposes.

1.3. Other Key Information

1.3.1. Commercial Registration and Licensing
All businesses in the Cayman Islands, including companies, partnerships, and sole traders, must register and pay required fees. Some businesses may need specific licenses to carry out particular activities. In terms of mutual funds and private funds, the Cayman Islands Monetary Authority (CIMA) has updated its procedures for the deregistration of funds, including clearer rules on the timing and elimination of specific status options such as “Licence under Termination” or “Licence under Liquidation.”

1.3.2. Exchange Control
There are no exchange control restrictions in the Cayman Islands, allowing for free movement of money and investments.

1.3.3. Ownership of Land and Property
There are no restrictions on foreign companies or individuals owning land or property in the Cayman Islands.

1.3.4. Intellectual Property Protection
Both local and foreign businesses can protect their intellectual property in the Cayman Islands through various laws, including the Copyright Order (2015), Trade Marks Act (2016), Patents Act (2018), and others designed to safeguard creations and innovations.

1.3.5. Employment of Foreigners
Work permits are granted when qualified Caymanian candidates are unavailable. These permits are issued for specific periods, and businesses with 15 or more employees must submit a staffing plan. There is no limit to the number of foreign employees, but work permits are subject to certain criteria.

1.3.6. Anti-Money Laundering Law
CIMA plays a central role in ensuring compliance with anti-money laundering laws, including overseeing regulations like the Proceeds of Crime Act (2024 Revision) and the Anti-Money Laundering Regulations (2023 Revision). These laws govern financial institutions and businesses to prevent criminal activities such as money laundering. Specific financial services, including banking, insurance, mutual funds, and securities trading, are subject to AML regulations.

2. Forms of Business

2.1. Public Company
A public or joint-stock company can be formed under the Companies Act.

2.2. Limited Liability Company (LLC)
LLCs are a popular form of business in the Cayman Islands, offering liability protection for its members.

2.3. Partnerships

2.3.1. Formation
Partnerships, including limited and exempted limited partnerships, are formed under the Partnership Act (2024 Revision) and must be registered with the Registrar. Partnerships do not have separate legal personalities, meaning the partners are personally responsible for the partnership’s obligations.

2.3.2. Capital
Capital contributions are defined in the partnership agreement. Limited partners must contribute actual cash when entering into the partnership.

2.3.3. Partners
There is no maximum number of partners in a partnership, but at least one general partner and one limited partner must be present in a limited or exempted limited partnership.

2.4. Economic Interest Grouping
There is no specific legislation for economic interest groupings, but the Companies Act applies.

2.5. Holding Company
There is no separate law for holding companies; they are governed by the Companies Act.

2.6. Offshore Companies

2.6.1. Features of Offshore Companies
Exempted companies, typically formed for activities conducted outside the Cayman Islands, enjoy several advantages, such as no requirement to maintain a public register of members and more flexible rules regarding meetings and company structure.

2.6.2. Transfer by Continuation
Companies incorporated elsewhere can transfer their registration to the Cayman Islands as an exempted company, as long as they meet the necessary conditions.

2.6.3. Exempted Limited Duration Companies (LDCs)
LDCs are limited in duration, typically not exceeding 30 years. They can be structured similarly to partnerships, but with limited liability for members. They also allow for specific management structures and are wound up once their term expires.

2.6.4. Segregated Portfolio Companies (SPCs)
SPCs allow businesses to segregate assets and liabilities into individual portfolios, offering a flexible structure for investment and liability management.

2.7. Joint Venture Companies
There is no separate legislation for joint ventures, and they are governed by the Companies Act.

2.8. Public-Private Ventures
Similarly, public-private ventures are also governed by the Companies Act.

2.9. Other Forms of Companies

2.9.1. Resident, Non-Resident, and Exempted Companies
Companies in the Cayman Islands can be classified into three categories: resident, non-resident, and exempted. Exempted companies, which are often used for offshore activities, have certain advantages, including not needing to hold annual general meetings or disclose member information publicly.

2.9.1.1. Formation 

Companies can be formed by one or more people for any lawful purpose, and their registration must comply with the Companies Act.

2.9.1.2. Capital
There is no minimum capital requirement for companies incorporated in the Cayman Islands, though certain types of businesses, such as registered funds or insurers, have specific minimum equity requirements.

2.9.1.3. Members
There is no limit to the number of members a company can have, but the company must keep a register of its members, and general meetings are required annually.

2.9.2. Sole Proprietorship
A sole proprietorship must obtain an annual license for each place of business, unless exempted by the Trade and Business Licensing Act.