Cayman Islands: Captive Emigration

Last Updated: 1 February 2010
Article by Paul Scrivener

Paul Scrivener of Cayman law firm, Solomon Harris, considers the steps involved in moving a captive insurance company to a new jurisdiction

In this day and age, certainly in the Western Hemisphere, there is a great deal of jurisdictional choice when it comes to captive domicile. Onshore within the United States no less than twenty four States now have captive insurance legislation. Clearly, the original "centres of excellence" - Vermont, South Carolina and Arizona -continue to flourish but some of the more fledgling centres are certainly snapping at their heels as they start to grow market share. In the offshore world and in a convenient time zone for US captive owners, Bermuda and the Cayman Islands are the dominant players.

From time to time, the prudent captive owner and its consultants will review whether the jurisdiction where the captive is established is still serving its best needs. In most cases, such a review will be conducted with the outcome being that the status quo is certainly the best option. However, circumstances do sometimes arise – generally, a gradual realisation that there is a problem – where the decision is made that change of jurisdiction is necessary. There could be any number of reasons why this is appropriate – taxation concerns, increasing bureaucracy, deteriorating perception of the jurisdiction, disenchantment with the regulatory authority, declining quality of service providers and so on. For the captive owner who determines that change of jurisdiction is the best way forward, a winding up of the existing captive in the "old" jurisdiction and the establishment of a new captive in the "new" jurisdiction is likely to be unattractive from both an operational and a tax perspective and has the clear potential for "business dislocation". It is for that reason that Cayman (and some other jurisdictions) allows an existing captive in another jurisdiction to transfer to Cayman and likewise for a Cayman captive to transfer to another jurisdiction. The technical term is "transfer by way of continuation" and it has proved to be an efficient and cost-effective means to accommodate captives who wish to emigrate from their "jurisdiction of birth" to a different jurisdiction with minimum disruption to their insurance programs.

The biggest single advantage of a transfer by way of continuation, compared with a winding up, is that the existing legal entity continues. It does not cease to exist and is not replaced by a new legal entity in the new jurisdiction. Therefore, policies, reinsurance agreements and all other contracts remain in place, the captive's assets are unaffected and all liabilities to third parties – in particular, to policyholders – remain intact. Therefore, neither the captive nor its insureds are prejudiced in any way by the process and the transition should be smooth.

In Cayman, Part XII of the Companies Law sets out the transfer process in a clear and concise way with the steps for an inward transfer into Cayman set out separately from an outward transfer from Cayman. However, the process in each case is substantially the same with some modifications introduced to reflect certain unique aspects of each of the two processes.

It is probably fair to say that traditionally it has been more common to see foreign captives transferring into Cayman rather than seeing Cayman captives leaving for other jurisdictions and therefore this article will focus principally on inward transfers into Cayman rather than outward transfers out of Cayman.

A foreign captive wishing to transfer to Cayman will, as a starting point, need to ensure that the jurisdiction where it is currently domiciled (home jurisdiction) permits, or at least does not prohibit, an outward transfer. The next step will be to appoint the consultants the captive will need to ensure a smooth transition out of the home jurisdiction and into Cayman. In the home jurisdiction, they will usually be the captive's existing manager and legal counsel who will liaise with the home jurisdiction regulator and other authorities to ensure that all legal and practical steps are taken to enable the captive to exit the home jurisdiction. Where the captive is based onshore, its tax affairs will obviously need to be properly wrapped up. For the entry into Cayman, the captive will need to appoint a new captive manager and legal counsel. The Cayman captive manager will attend to the licensing application with the Cayman Islands Monetary Authority (CIMA) for the captive to be a licensed insurer in the Cayman Islands and Cayman legal counsel will co-ordinate the legal process and the preparation of the various documents required by the Cayman Islands Registrar of Companies (ROC) in order to register the new captive as a Cayman company. The documentary requirements are not onerous but it is important that they are prepared by someone familiar with the process to ensure that the transfer is not delayed or even rejected by ROC.

Coordination between the home jurisdiction consultants, on the one hand, and the Cayman consultants, on the other hand, is of paramount importance because they each need to understand what has to be done in the other jurisdiction so that the transfer takes place smoothly. Without such close coordination, potential problems are either the captive being in two jurisdictions at the same time or, even worse, being in neither jurisdiction for a period of time. Both can spell disaster and clearly need to be avoided. Therefore, the correct approach is to reach agreement in principle in advance with each set of regulators and other authorities (in Cayman, CIMA and ROC) so that all steps are lined up and can then be implemented in such a way that the captive ceases to exist and ceases to be regulated in the home jurisdiction one moment and then the very next moment it starts its new life as a Cayman captive and subject to the regulation of CIMA. The regulators will also liaise with each other and, in particular, CIMA will wish to confirm the good standing of the captive with the home jurisdiction regulator.

ROC is very much at the centre of the process because it is through ROC that the foreign captive will lose its old "nationality" (eg as a Vermont corporation) and take up new "nationality" as a Cayman company. ROC will require various documents and information including the captive's constitutional documents, details of its directors, notice of its proposed registered office in the Cayman Islands, a director's declaration that the captive's business will be conducted mainly outside the Cayman Islands and a director's undertaking confirming notification of the transfer to any secured creditors of the captive.

In addition, ROC will require a director of the captive to file an affidavit or voluntary declaration swearing as to various matters including issues relating to the solvency or financial standing of the captive (in particular, that the objective of the transfer is not to defraud existing creditors), that any consents to the transfer under any contracts to which the captive is a party have been obtained or waived, internal rules under the captive's constitutional documents have been met, as well as legal requirements in the home jurisdiction, and that under the laws of the home jurisdiction the captive will cease to exist once registered as a Cayman company. There must be attached to the affidavit or voluntary declaration a relatively current statement of the captive's assets and liabilities.

ROC will not proceed with the registration until it has approval in principle from CIMA of the captive's insurer's licence and even if all documentation and information is in order, ROC still has an overriding discretion to refuse the registration if it considers it to be against the public interest. Subject to that discretion, ROC will issue a certificate of registration by way of continuation at which point the captive becomes a Cayman company for all purposes in the same way as if it had been originally incorporated as a Cayman company. Obviously, in many case, the old constitutional documents of the captive will not be suitable for a Cayman company because of differences between the law of the home jurisdiction and Cayman law. Cayman law addresses this by allowing the captive a ninety day grace period from the date of its registration in the Cayman Islands to amend its constitutional documents as necessary to ensure that they comply with the requirements of the Companies Law. In most cases, this will involve the captive adopting brand new Memorandum and Articles of Association in a form consistent with other Cayman captives.

Where a Cayman captive wishes to transfer to another jurisdiction, the process will largely be a mirror image of the process outlined above although there will be some differences. The Memorandum and Articles of Association must permit the transfer, the captive must be in good standing with CIMA and ROC, generally, shareholder approval will be required and a filing fee of three times the usual annual filing fee will need to be paid to ROC.

Transfer by way of continuation provides the ideal solution for any captive owner who has decided that the best option is to "emigrate" its captive to a new jurisdiction which better suits the captive's business objectives. For such circumstances, "captive emigration" is alive and well.

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.

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
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must 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