The Cayman Islands has consistently been viewed as an attractive jurisdiction for an extensive range of international investment opportunities. Cayman provides a combination of a world-class infrastructure, a stable and pro-investment government, a well-established financial services sector and close proximity to the major US markets to form an appealing package for potential investors. The existence of a special economic zone further to the Special Economic Zones Law (as amended) (the "SEZ law") provides a further medium for potential investors to benefit from the advantages on offer when establishing a business in the Cayman Islands. The SEZ law applies solely to exempted companies and exempted limited partnerships and presents a unique investment opportunity, as the only such zone in the Caribbean.
What is a Special Economic Zone?
A Special Economic Zone ("SEZ") is a designated area within a jurisdiction which benefits from special economic rights and concessions, provided for by law, which is conducive to potential foreign investment.
Sectors for Investment
Cayman Enterprise City ("CEC") comprises six specific sectors for potential investors:
- Internet Park - for information technology and software businesses involved in telecommunications, computer programming and data processing.
- Science and Technology Park - for businesses specialized in natural sciences, specifically focused on biotechnology, development of biomedical devices, development of pharmaceuticals and environmental technology.
- Media Park - for electronic media and integrated media-related businesses including electronic publishing and the development of digital libraries and catalogues and music, film, TV, new media, leisure and entertainment, news, programming, broadcasting, advertising and marketing, market research, and information service businesses.
- Commodities and Derivatives Park - for businesses that are primarily involved in the production of commodities, derivatives, futures and options; and the buying and selling of commodities, derivatives, futures and options products, including commodities contracts, futures commodity contracts and commodity options.
- International Academic Park - for higher education institutions with a focus on the areas of technology underlying the other parks, that is, information technology, biotechnology, environmental technology, and integrated media and new media technology. This park also includes higher education institutions related to the Cayman Maritime Services Park.
- Maritime Services Park - for maritime services businesses such as ship owners, shipbrokers, technology companies and start-ups engaged in innovative maritime research and development, crew salaries and benefits processing companies and other specialised services to maritime sector businesses.
CEC is proactive in working with potential special economic zone companies to determine how the company can fit in the SEZ under one of the sectors for investment listed above.
For more information on whether the nature of a proposed special economic company fits within the SEZ, we are happy to liaise with CEC on your behalf.
Special Economic Zone Companies
According to the Companies Law (2013 Revision) (the "Companies Law"), any entity that is an existing or newly incorporated exempted company may apply to the Registrar of Companies in the Cayman Islands (the "Registrar") to be registered as a special economic zone company. These are specific types of entities that are subject to the Companies Law. The significant feature of these types of company is that although they may have a physical presence on the Islands, the company's activities are restricted to offshore enterprises.
Setting up in Cayman Enterprise City
Initial Contact with CEC
Walkers can liaise with the Business Development Team from CEC which will prepare a proposal to set up in the SEZ, including the following documents:
- the CEC License Agreement; and
- a CEC Corporate Application Form.
These are to be signed and returned to the Business Development Team, together with any security deposit associated with the product chosen.
Walkers will liaise with the Business Development Team from CEC and our client to submit an application for an in-principle approval for the SEZ Company. Once this approval has been given, we can assist with the incorporation of the SEZ Company.
Under the Companies Law, where the company was not already registered as an exempted company prior to an application:
- The memorandum and articles of association of the company must specify that the business of the company includes special economic zone business.
- The name of the company must include the words "Special Economic Zone Company" or the letters "SEZC".
- Upon delivery of the memorandum and articles of association to the Registrar, the Registrar will issue a certificate of incorporation confirming the date of incorporation and that the company is registered as a special economic zone company.
For further information on setting up an exempted company, please refer to our Firm Memo entitled Cayman Islands – Exempted Companies.
Where the company was already registered as an exempted company prior to the application:
- The Registrar has been supplied with a copy of the special resolutions of the company altering its memorandum and articles of association to carry on special economic business.
- The Registrar has been supplied with a copy of the special resolutions of the company changing its name to a name that includes the words "Special Economic Zone Company" or the letters "SEZC".
- Upon receipt by the Registrar of the special resolutions above, the Registrar will issue a certificate stating that the company is registered as a special economic zone company and stating the date of the registration.
Once the relevant certificate has been received by the Registrar confirming that the special economic zone company has been incorporated, the following documents will be sent by us to a representative of the Business Development Team at CEC:
- the certificate of incorporation of the special economic zone company;
- the memorandum and articles of association of the company;
- the statutory registers of the company (directors, officers and members); and
- any due diligence required by the CEC – including a certified true copy of the passport of every director of the company.
Once received, CEC will prepare and complete the necessary application forms to be submitted to the Special Economic Zone Authority ("SEZA"). These are reviewed by the company and returned to the CEC to be filed with SEZA.
Any application to SEZA will be processed within five business days. Upon receipt of the application SEZA will either grant or refuse to grant the trade certificate and will notify the applicant with any reasons for refusal in writing. Upon receipt of any trade certificate, CEC will send the company a CEC welcome pack which includes:
- the Trade Certificate (the licence to operate the company in the SEZ);
- the Zone Employment Certificates (the five Year Work/Residency Visas for any staff who relocate to Cayman); and
- use of all the business centre facilities within the CEC.
One Zone Employment Certificate should be completed per non-Caymanian employee and should be accompanied by the following documents, either as originals or certified copies:
- a police clearance certificate issued in the previous country of residence of the employee;
- all necessary medical requirements and the immigration Medical Questionnaire;
- one face-on and one profile, passport size photo; and
- a cover letter, on the letterhead of the company explaining the necessity of the employee in the operation of the company.
Once completed and the documentation listed above is compiled, CEC submits the Zone Employment Certificate applications to SEZA which processes them within five business days.
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.