The benefits of the Cayman LLC are likely to inspire jealousy among a few of the current owners of Cayman exempted companies. The Limited Liability Companies Bill of 2015 contains a provision, Part 10, Clause 56, that is designed to manage these situations. The Bill outlines the process for exempted companies to convert into limited liability companies. Exempted companies are required to pass a special resolution calling for re-registration as an LLC. They must file an application and pay the necessary LLC registration fee. Once approved, the business will be regarded under law as an LLC, and will be bound by the terms of the LLC operating agreement. Conversion is reasonably straightforward and should not be considered an obstacle for exempted companies looking for greater flexibility.
The Bill contains no similar provision for conversion of exempted limited partnerships to LLCs. The separate status of the LLC requires partnerships to form completely new legal entities. Members of an existing partnership face higher burdens involving the termination of that partnership before they can reorganize as an LLC.
The Basics of Cayman LLC Formation
In its most basic form, a Cayman LLC is easy to create. As long as the business meets basic qualifications and is formed for a legal purpose, the LLC will be created by following these steps:
- Pay the necessary registration fee to the Registrar.
- File a registration statement with the Registrar, signed by or on behalf of any person forming the company.
- Deliver a copy of the registration statement, or submit one by permitted electronic means, in duplicate to the Registrar.
- The registration statement itself must contain several elements:
- The name of the LLC and its dual foreign name and translated name, if it has one.
- The Cayman Islands address of the LLC’s registered office (necessary for the service of process and the receipt of notices and communications under Cayman Islands law).
- The term for which the LLC is formed, if it is not intended to last an unlimited duration.
- A declaration that the LLC will not do business with the public on the Cayman Islands, beyond that which is necessary for the LLC to do business outside the Islands.
After completing the simple steps outlined above, the Registrar should issue a certificate of registration acknowledging the date of filing. That certificate operates as proof, under Cayman Islands law, that the LLC has been properly formed and registered.
There are a number of requirements necessary to maintain the LLC after its initial formation. The filing of a yearly return, the payment of ongoing fees and the maintenance of an accurate register of members are just a few of the duties listed to maintain the LLC in good standing.
If you’d like assistance, please contact Virtual Paralegal Services.