HSM Corporate Services
Cayman Islands Government Publishes Beneficial Ownership Transparency Act, 2023
Following the recent removal of the Cayman Islands from the FATF grey list, the Cayman Islands has published the Beneficial Ownership Transparency Act, 2023 to better align the beneficial ownership regime more closely with the Cayman Islands’ anti-money laundering regulations. Read more +
Action Needed for Cayman Companies that Own UK Property
As Russia’s invasion of the Ukraine continues, the United Kingdom has pushed its hunt for Russian Oligarch’s assets into high gear and has fast tracked the Economic Crime (Transparency and Enforcement) Act 2022 (the “Law”) into force. The Law was Read more +
Year-end Company Dissolutions Update and Reminder 2022
As we draw closer to the end of 2022, many clients will be considering their Cayman Islands structures and querying whether any entities are surplus to requirements. HSM’s Head of Corporate and Commercial, Peter de Vere, covers the key points Read more +
HSM Produces Updates to the Cayman Islands Economic Substance Regime
Most clients are now relatively familiar with the Cayman Islands Economic Substance regime requiring real economic substance for certain entities (known and ‘Relevant Entities’) carrying or certain activities (known as ‘Relevant Activities’). Our firm’s previous article on the introduction of Read more +
Timing Considerations for Year-end Company Dissolutions
As we draw closer to the end of 2021, many clients will be considering their Cayman Islands company structures and querying whether any entities are surplus to requirements.
The desire to wind up any Cayman entities before the end of the year is fueled primarily by the need to avoid any annual fees for the maintenance of the Company being incurred next year.
To avoid those fees the voluntary liquidation of a Cayman Company would typically need to commence in late November early December (at the latest) with the final meeting being held before the end of January.
This timetable results in an effective dissolution date into the next calendar year, while still avoiding the government fees for that year.
If a dissolution is not completed (i.e. if the final return is not filed) by 31 January then the full annual return fees for the new-year are due and payable to the Cayman Islands Government.
For a Cayman company to be dissolved by 31 December (and receive a 31 December date on a certificate of dissolution) its voluntary liquidation will need to have commenced before 30 August (assuming a zero balance sheet liquidation). If the liquidation is more complicated then more time would be required and an even earlier start date would be necessary. It is important to note that the Companies Act (as Revised) stipulates that a company is dissolved upon the expiration of 3 months from the registration of the final return and this timing must be considered if a 31 December (or earlier) dissolution date is required.
The above timing considerations also come into play if there may be increased operational efficiencies in completing the dissolution within the current calendar year (if additional regulatory filings and other costs for stub years can be avoided).
For example, investment funds that are registered with the Cayman Islands Monetary Authority (“CIMA”) may need to consider an earlier commencement date to ensure that the final audited financials are completed and filed with CIMA prior to the final meeting of the Fund. CIMA requires that a Fund undertakes a final audit for the period either up to the date of the appointment of the third party liquidator or to the date of the full payment of the final redemptions.
Strike Offs
The option to strike off a company remains an attractive (and cheaper) option for many clients whose companies do not have an active history of trading or were set up only to hold a single asset.
Whilst a strike off does not entail the process of appointing a liquidator and carrying out a formal liquidation it should be remembered that a) the Registrar only strikes off companies in batches at the end of each financial quarter and as such if a year-end dissolution is required then a strike off application should be filed ideally no later than November and b) a strike off remains reversible within a 10 year time frame and should not be viewed as having the same finality of a formal liquidation.
Conclusions
HSM Chambers has a wealth of expertise in advising on both voluntary liquidations, official liquidations and strike offs. We can accept liquidator appointments and would be happy to provide a fee quote for any of your dissolution needs.
Key Contact
Peter de Vere
Head of Corporate and Commercial
Tel: 1 345 815 7360
pdevere@hsmoffice.com