No company may carry on business in the Cayman Islands unless:
- It is a bank, trust company, insurance company or manager, mutual fund administrator or company manager licensed under the relevant law;
- It is operating under a franchise granted by the Government of the Cayman Islands;
- At least sixty percent of the total voting rights in the company are exerciseable by Caymanians, at least sixty percent of the shares are beneficially owned by Caymanians and at least sixty percent of the directors are Caymanians; or
- The company is licensed under the Local Companies Control Law.
Any company wishing to obtain a license under this Law to do business in the Cayman Islands must apply to the Immigration Board. Upon such application, the Board may either grant or refuse to grant a license or grant a license subject to conditions. When considering an application for a license, the Immigration Board will take into account, inter alia, the economic situation of the Cayman Islands, the due protection of the persons already engaged in business in the Cayman Islands, the desirability of retaining in the control of Caymanians the economic resources of the islands and efforts made by the company to obtain Caymanian participation. A company which obtains a license under this law is entitled, as of right, to the appropriate Trade and Business License.
In order to live and work in the Cayman Islands without restriction, a person must possess "Caymanian Status". Those who do not possess Caymanian Status require permission from the Immigration Department to enter the Cayman Islands and may not work without possessing a work permit.
As a British Dependent Territory, the Cayman Islands have no separate national identity. Nearly all Caymanians are Commonwealth citizens and British Dependent Territory citizens. Some of them are British citizens. However, not all Commonwealth citizens are eligible for Caymanian Status; whilst some who are not Commonwealth citizens are now eligible. Those who remain eligible for Caymanian status are British citizens, British Dependent Territories citizens and citizens of Australia, the Bahamas, Barbados, Belize, Canada, Jamaica, New Zealand, Trinidad & Tobago, the Republic of Ireland and the United States of America.
There is now a quota system for the grant of Caymanian Status other than to those with close family ties to the Cayman Islands, which quota is currently set at nil.
The Immigration Law provides that any person who, after six months residence in the Cayman Islands, has been granted permission to remain permanently, can, after residing continuously in the Cayman Islands for two years, apply to have such grant endorsed to permit him to engage in a particularly named gainful occupation.
Licensing of Local Businesses
An individual or a corporation engaged in almost any business locally, requires to be licensed under the Trade and Business Licensing Law. The provisions of this law are mainly administrative. However, for an application to be entertained, the applicant, if an individual, must either possess Caymanian Status or hold a work permit; if a corporation, the applicant must either be beneficially owned and controlled as to at least sixty percent by persons of Caymanian Status, or hold a license under the Local Companies (Control) Law. The Immigration Board exercises wide discretion in granting or refusing these latter licenses. However, foreign investment, if considered beneficial to the islands' economy is generally encouraged.
Labour Laws and Practice
The Labour Law 1987, governs the terms and conditions of employment, provides remedies for unfair dismissal and severance pay, and provides for regulation of health, safety and welfare of employees.
The Workman's Compensation Law provides for the payment of compensation by the employer to any workman who suffers personal injury by accident arising out of and in the course of his employment. This is an insurable risk and is normally covered by an employer's insurance.
In 1996 the Government introduced legislation providing for the establishment of a National Pensions System. This Law provides that all employers in the islands must offer and contribute to pension plans for the benefit of their employees. It also provides for the regulation by Government, through a Superintendent of Pensions and a National Pension Board, of all existing and future pension plans. Existing pension plans, either offered by employers or provided by approved providers such as insurance companies, will be allowed to continue to operate and be registered where such plans are in compliance with the minimum requirements of the Law.
A Comprehensive Health Insurance Law requiring all employers in the Cayman Islands to offer and contribute to health insurance for the benefit of their employees is presently under development.
This information provides an introduction to aspects of establishing business in the Cayman Islands for the benefit of clients who may be considering using the Islands as an offshore domicile. It is not exhaustive and is merely intended to give a broad indication of possible courses of action.
Before taking action on any business or other decisions related to the Cayman Islands, specific and particular advice should be sought from domestic taxation, legal, accountancy and other relevant professional advisers.
The information provided reflects the laws and regulations existing at December 31, 1996, but later developments have been noted where possible.
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.