Cayman Enterprise City (CEC) is empowering businesses to harness the benefits of operating within a tax-neutral jurisdiction.
With the introduction of foundation companies under the Cayman Islands' Foundation Companies Act (as Revised) in 2017, CEC offers a unique opportunity for businesses and individuals seeking versatile special-purpose vehicles to establish operations within one of the world’s most innovative special economic zones – either Cayman Tech City (CTC) or Cayman Commodities & Derivatives Centre (CCDC).
This article explores the benefits, structure, and potential applications of foundation companies within CEC’s ecosystem and provides actionable steps for those looking to establish such entities.
What Are Foundation Companies?
Foundation companies blend the characteristics of traditional limited liability companies with elements of trusts and civil law foundations. These entities are:
- Separate Legal Entities: Foundation companies can hold assets, sue, and be sued in their name.
- Flexible in Purpose: They can be established for commercial, charitable, philanthropic, or private objectives, or a combination thereof.
- Tax-Efficient: They enjoy exemptions from income, withholding, and capital gains taxes, making them highly attractive to global businesses.
Why Choose Cayman Enterprise City for Your Foundation Company?
1. Potential Tax Advantages & Economic Substance
The Cayman Islands government currently levies no direct or indirect taxes on businesses operating within or out of the Cayman Islands. Any entity formed within the Cayman Islands may benefit from these favourable conditions. However, the extent of these advantages may depend on establishing sufficient substance within the jurisdiction. CEC offers businesses the tools and resources needed to efficiently establish the required substance and maximise these tax benefits. That said, it is highly recommended to consult with a qualified tax advisor to assess your specific circumstances and ensure compliance.
2. Transparent & Industry-Specific Special Economic Zones
CEC operates under a fully transparent legal framework, established by the Cayman Islands Government through the Special Economic Zone Act. CEC’s special economic zones (SEZs) cater to specific industries, including fintech, digital assets, and innovation, providing:
- Fast-track licensing
- Streamlined regulatory processes
- Access to world-class infrastructure and professional networks
3. Support for High-Growth Industries
Foundation companies set up within CEC’s special economic zones are ideal for:
- Cryptocurrency and digital asset projects, including token offerings and trading. Foundation companies are increasingly utilised for blockchain initiatives, offering potential legal and tax-efficient advantages for token launches, decentralised finance (DeFi) platforms, and cryptocurrency trading. To fully understand and capitalise on these benefits, consulting with a reputable Cayman Islands law firm is highly recommended.
- Succession planning and asset protection. The ability to designate beneficiaries and restrict member distributions makes foundation companies a preferred choice for high-net-worth individuals seeking to secure family wealth.
- Philanthropic endeavours and charitable organisations. Foundation companies' flexibility allows them to act as non-profits, holding and managing assets for charitable purposes.
4. Expert Guidance and Support
CEC offers end-to-end support, from incorporation and compliance to operational setup. Businesses benefit from the expertise of professionals well-versed in Cayman Islands corporate structures.
Key Features of Foundation Companies in the Cayman Islands
Formation and Structure
Foundation companies are formed in a similar way to other Cayman Islands companies.
The incorporation process involves:
- Submitting a memorandum and articles of association to the Registrar of Companies.
- Ensuring the company’s secretary is a qualified person under Cayman law.
- Paying a registration fee.
Governance and Management
Directors: Foundation companies are managed by a board of directors, who owe duties of care, diligence, and skill. Directors play a central role in ensuring the company operates in accordance with its constitution and applicable laws.
Members: While a foundation company can choose to operate without members, it may elect to admit members as part of its governance structure. Members’ rights and responsibilities are defined in the company’s articles and may include voting on resolutions, participating in general meetings, or providing input on critical decisions. Importantly, foundation companies are prohibited from distributing dividends or profits to members, ensuring assets are utilised solely for the company’s stated objectives.
Supervisors: When a foundation company operates without members, it must appoint a supervisor to oversee governance. Supervisors have specific powers and responsibilities outlined in the company’s articles of association, ensuring oversight and compliance.Compliance Requirements
Foundation companies are subject to robust compliance standards, including:
- Maintaining statutory registers
- Ensuring proper record-keeping at the registered office
Steps to Establish a Foundation Company in Cayman Enterprise City
- Consult with Experts: Contact CEC’s Global Mobility team to discuss your specific needs and the suitability of a foundation company.
- Prepare the Required Documentation: Draft a memorandum and articles of association outlining the company’s purpose, governance, and operational framework.
- Engage a Qualified Secretary: Appoint a licensed professional to fulfil the role of the company secretary and maintain compliance.
- Register with the Authorities: Submit your application and required fees to the Registrar of Companies to incorporate your Cayman Islands company.
- Apply for Zone Trade & Employment Certificate: Establish a physical presence with a Cayman Islands special economic zone company.
- Leverage CEC’s Resources: Utilise the SEZ’s infrastructure and support services to establish and grow your operations within a dynamic business environment.
Get Started with Cayman Enterprise City
Cayman Enterprise City (CEC) simplifies the process of establishing and operating foundation companies in the Cayman Islands. Whether you are launching a cryptocurrency project, protecting family assets, or pursuing philanthropic goals, CEC provides the expertise and resources to help you succeed.
Contact us today to learn how CEC can support the growth and success of your foundation company.
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