Cayman Islands: Guide To Liquidation Of Companies In The Cayman Islands


This document sets out the procedures for winding up a Cayman Islands registered company. It is intended for information purposes only. For individual requirements and advice contact Dillon Eustace, Cayman Islands.

Dillon Eustace opened it's new office in the Cayman Islands in 2012. Dillon Eustace has a well established and highly regarded Litigation and Dispute Resolution department representing both domestic and international corporations, organizations and individuals. Our clients include some of the leading global banks, financial institutions, product manufacturers, insurers, airlines and public companies. We have gained a reputation for high quality services and results in a variety of practice areas including Financial Services Litigation, Insolvency and Corporate Recovery. The Cayman office is an integral part of the much larger Litigation Department in Dublin.

There are numerous companies registered in the Cayman Islands. It is a domicile of choice for hedge funds and various trusts and is one of the largest financial services centres in the global economy. The growth in hedge funds and ancillary services such as fund administration, audit and legal services is accompanied by a growing demand for litigation services. Liquidations, voluntary and involuntary, are an integral part of litigation services offered by law firms in Cayman Islands. The Cayman Islands Monetary Authority ("CIMA") regulates off-shore companies under its remit in the Cayman Islands and has a statutory role which on occasion results in liquidation of a company for regulatory reasons.

Cayman is a convenient venue for liquidations due to it's specially designated Financial Services Division in the Grand Court and the efficiency and expediency of the English common law. Cayman Islands has a reputation for high quality financial services and insolvency and litigation services supported by a stable, efficient and consistent legal system.

Voluntary Liquidation

Director's Meeting

A board meeting is convened at which the directors discuss the reasons for proposed liquidation and voting on a resolution to convene an EGM for the company to consider and vote on the special resolution to commence voluntary liquidation. The company must be solvent for the 12 months following the director's resolution for a voluntary liquidation to proceed.

Declaration of Solvency

All the company's directors must sign a Declaration of Solvency that the company can pay its debts with interest over 12 months following the appointment of a liquidator. The directors should convene a meeting to consider the proposal and have reasonable grounds for arriving at the decision and making the Declaration. The Declaration must be signed by each director within 28 days of the appointment of the liquidator. If it is not signed within the 28 days of commencement of liquidation there is a statutory requirement for the liquidator to apply to court for an order that the liquidation be subject to court supervision. The requirements of the Declaration of Solvency are set out in section 124(2) of the Companies Law (2010 Revision). It is an offence to make the Declaration without having reasonable grounds for so doing. The penalty on conviction is a fine of $10,000 or imprisonment for up to 2 years or both. If the liquidator at any time during the liquidation forms the view that the company is or is likely to become insolvent, he is legally obliged to put the liquidation under court supervision.

EGM of the company

An EGM is convened at which the shareholders resolve to wind up the company. Arrangements are then put in train for voting on the resolution, appointment of liquidator, remuneration, provision of indemnity for liquidator and other matters arising on liquidation. Following the members resolution to wind up the company, it is formally in liquidation and directors no longer have control.

Formal Appointment of Liquidator

Notice of the appointment of a liquidator, with signed consent to act and Declaration of Solvency is filed with the Registrar of Companies and a statutory advertisement is placed in the Cayman Islands Gazette of the appointment of the liquidator. A second notice is placed in the Gazette notifying creditors of the company to submit claims to the liquidator by a specified date which should allow 21 days from the date of publication and stating the date of the final meeting of the company.

Company in Liquidation

Creditors claims are dealt with as appropriate by the liquidator. The liquidator prepares an account of the liquidation up to the date of the final meeting of the company notified in the second advertisement of the Gazette. A final meeting of the company is held at which liquidator's accounts are approved by the shareholders. Dissolution of the company follows thereafter through notification to the Registrar of Companies.

Timing of Liquidation Process

The voluntary liquidation of a company with no significant complications where the liquidator is furnished with all information from the outset generally takes 3-4 months to complete.


Fees for uncomplicated voluntary liquidations can vary between liquidators from US$4,000 to US$8,000. If issues arise the fees would increase from there. Disbursements for Government charges approximate to US$1,250. If the liquidation continues after the calendar year's end the company would be liable for an annual fee of $750 approximately.

Advantages of Voluntary Liquidation

  • Appointment of independent liquidator is a comfort for stakeholders that the windup will be dealt with objectively and transparently.
  • The liquidator is legally bound to wind up the company in an orderly manner. (Companies Winding up Rules 2010)
  • Creditors are notified by advertisement to file claims.
  • Company assets are properly realised.
  • Limitation on any future claims by winding up the affairs of the company.
  • Closure of company. The alternative to liquidation is striking off which does not bring closure to the company's affairs. (See below.)

Striking a Company off the Register

The directors may alternatively invite the Registrar to strike the company off the Register pursuant to section 156 of the Companies Law. One or more of the directors must file an affidavit with the Registrar with a letter stating that the company is no longer active and has no assets or liabilities. The application and affidavit should be approved by resolution of the directors. The company is dissolved once it is struck off.

Voluntary Liquidation and Strikeoff– Comparisons

  • A strikeoff is used generally for a company which has not traded. If the company is struck off any member or creditor may apply to the court (section 159 Companies Law) for the restoration of the company to the Register.
  • Striking off does not affect individual liabilities of directors, managers officers or members of the company struck off. Liabilities may continue following the strike off.
  • Property owned by a company struck off is vested in the Financial Secretary for the Cayman Islands and may be disposed of by the Governor in Council. By comparison, in a liquidation any remaining balance is distributed amongst shareholders of the company being liquidated.

Involuntary Liquidation ( Section 92 Companies Law 2009 Revision )

Involuntary or compulsory winding up is by way of petition to the Grand Court by the company itself, a creditor or contributor including a contingent or prospective creditor or the Cayman Islands Monetary Authority if it is a CIMA registered company, seeking the wind up on grounds :

  • Where the company passed a special resolution to that effect.
  • Where the company has suspended business or not commenced business for a whole year.
  • Where the date for winding up the companies affairs in the articles of association has expired.
  • Where a company is unable to pay its debts.
  • Where the Court is of opinion that it is just and equitable that the company be wound up.

Relevant Laws

The Companies Law (2009 Revision) (2010 Revision); Companies Winding up Rules, 2010.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions