Cayman Islands LLC: Key Features & Matters To Be Considered
If you are searching for a legal domicile for your business, it might be overwhelming due to the many options you have. Cayman Islands Limited Liability Company (LLC) has increased in popularity in recent years for many benefits it provides. It could be the right one for your business.
A Cayman Islands LLC shares many similarities with a Delaware LLC regarding, for example, the formation, managing structure, legal status, capital structure. Still, there are some characteristics that make the LLC distinct from a Delaware LLC.
BBCIncorp makes it clear for you to better understand about the main features and significant matters of a Cayman LLC.
1. Brief introduction of Cayman LLC key features
Cayman Islands LLC is a hybrid entity which combines the limited liability of a corporation and the pass-through tax structure of a partnership or sole proprietorship.
Ownership structure. One key feature of Cayman LLC is the flexibility in ownership structure. The management is usually given to its members, but managers outside the company are also qualified to govern the company. A private internal operating agreement, known as LLC agreement, is finalized by all members to manage the appointment of the managers and internal corporate matters.
Separate legal entity. The LLC is well-known for its separate legal entity. There is no limit to the number of members in the company. The limited liability of its members are protected. They insulate from liability beyond their investment and capital contributions. The company is also not liable for its member’s debts to creditors.
Limited liability. As per the legality of Cayman LLC, its members are not personally obligated for the company’s debts or financial obligations. The liability is limited to their contribution to LLC assets by cash, property or services. Such contributions are included in the LLC record or agreed by the company’s members. However, it is possible for them to be liable for the business debts if they agree to do so.
Corporate anonymity. One thing that many businesses take into account is the company’s privacy. In the Islands, it is not required for the disclosure of business owners’ personal information. In this way, the company can keep their ownership information confidential for its business advantages.
Simple setup. Cayman Islands LLC cost for the registration is one plus point for the incorporation. The process is simple and cost-efficient. For other business entities in the Islands, the formation process is more complicated and costly compared to the LLC.
2. Cayman Islands LLC formation
The formation of Cayman LLC is similar to Delaware LLC in terms of the simplicity.
A registered office is compulsory for all LLCs in the Islands to process the formation. The office is defined as the official physical address of the company to receive official notices and communications. The office must be notified to the Registrar – a public authority which is responsible for managing the company register. A Cayman LLC that does business or affairs without a registered office will be subject to a penalty of $200 per day from the date of notice receipt.
To form a Cayman Islands LLC, at least one member is required and there is no limit to the number of members. The registration statement needs to be filed to the Registrar for the LLC formation process.
The registration statement can be filed electronically to the Registrar of Company. Or it can be physically delivered to the Registrar. In this way, the document needs to be signed by the one who is responsible for the filing process and be sent along with its duplicate.
When the filing of a registration statement is successfully completed, the company is deemed to be registered on the date of the filing; and a registration certificate will be issued after that. The registration certificate includes evidence of requirement compliance in respect of company registration.
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