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The Cayman Islands remains one of the world's most reputable jurisdictions for company formation and investment structures. Known for its stability, tax neutrality, and robust regulatory environment, Cayman attracts global businesses, private clients, and institutional investors alike. This guide outlines the essentials of setting up a Cayman entity, the available structures, and the key compliance obligations for maintaining good standing in November 2025.
Why choose the Cayman Islands?
The Cayman Islands does not impose any corporate, income, or capital gains taxes, providing an efficient and neutral platform for international business. Its legal system is founded on English common law principles and benefits from a respected, independent judiciary. Regulation by the Cayman Islands Monetary Authority (CIMA) ensures a high standard of compliance and international credibility. Cayman entities are also known for their flexibility, making them ideal for use as holding companies, joint ventures, investment funds, or other special purpose vehicles.
Key Cayman entity types:
The Cayman Islands offers several types of legal entities, each suited to different commercial and investment purposes:
- Exempted Company: The most common vehicle for international operations, ideal for businesses that conduct activities outside the Cayman Islands. It offers flexibility in share structure, management, and reporting. See the Companies Act.
- Limited Liability Company (LLC): A hybrid structure that combines partnership-style flexibility with corporate personality. LLCs are increasingly used for private equity, joint ventures, and bespoke investment structures. See the Limited Liability Companies Act.
- Foundation Company: Commonly used for philanthropic, estate planning, or asset protection purposes. It can hold assets, perform governance functions, and operate without shareholders. See the Foundation Companies Act.
- Exempted Limited Partnership (ELP): The preferred structure for private equity and investment funds, valued for its contractual flexibility, limited partner protection, and confidentiality. See the Exempted Limited Partnership Act.
The incorporation process
Establishing a Cayman entity is a streamlined process overseen by the General Registry. The key steps include selecting the appropriate structure, reserving a company name, appointing a registered office or agent, and filing incorporation documents such as the Memorandum and Articles of Association. Once government fees are paid and the Certificate of Incorporation is issued, the entity can open bank and compliance accounts to commence operations.
Ongoing compliance requirements (as of 2025)
Maintaining a Cayman entity involves adhering to several ongoing legal and regulatory obligations:
- Beneficial Ownership Transparency: Under the Beneficial Ownership Transparency Act 2023, entities must maintain accurate and accessible beneficial ownership information. The regime introduces enhanced reporting obligations and controlled access routes for certain types of entities.
- Economic Substance: Entities carrying on "relevant activities" must demonstrate adequate local presence, management, and expenditure in line with the International Tax Co-operation (Economic Substance) Act (2024 Revision). Annual filings and substance notifications are mandatory.
- Anti-Money Laundering (AML) and Know-Your-Client (KYC) Standards: Entities must comply with the Cayman Islands' anti-money laundering, counter terrorism financing, and counter proliferation financing framework which includes (but not limited to) the Anti-Money Laundering Regulations (2025 Revision), Proceeds of Crime Act (2025 Revision), the Guidance Notes on the Prevention and Detection of Money Laundering, Terrorist Financing and Proliferation Financing in the Cayman Islands (February 2024) together with certain Overseas Territory Orders passed by the Government of the United Kingdom which implement UN or EU sanctions or restrictive measures against countries, regimes or individuals deemed to be in violation of international law.
- Annual Filings: All entities must file annual returns and pay renewal fees to maintain good standing.
- Data Protection: The Data Protection Act (2021 Revision) governs the handling of personal data and imposes strict requirements for security, consent, and retention.
Common uses of Cayman Entities
Cayman structures are widely used in international finance and investment. Common applications include holding and joint venture companies, family offices, trusts, and foundations, as well as securitisation and structured finance vehicles. The jurisdiction also remains a preferred domicile for investment and hedge funds due to its regulatory efficiency and investor familiarity.
The Importance of local expertise
Setting up and maintaining a Cayman entity requires strategic planning and awareness of evolving local laws. Engaging experienced Cayman-based legal and corporate service providers ensures your structure is compliant, efficient, and aligned with global standards. Broadhurst LLC provides comprehensive support for company formation, governance, and ongoing legal advice in the Cayman Islands. For tailored guidance on establishing your Cayman entity, contact Ben Booker at ben@broadhurstllc.com
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.
