The Cayman Islands
The Cayman Islands is the fifth largest financial centre
in the world and meets the highest criteria of corporate governance
required for the regulation of its financial services industry. As
a result, businessmen are confident in the knowledge that it is recognized
worldwide as a highly reputable jurisdiction. In fact, most of the
world’s largest banks have a branch or subsidiary located in
the Cayman Islands where the largest international accounting firms
have been established for many years.
The legal system is based on English Common Law, together
with local statutes which have been amended and modernized
from the common law in a manner suitable for a modern financial
Practical winding up legislation is encompassed within
Part V of the Companies Law (2007 Revision) which governs
both voluntary and compulsory liquidations. The English
Insolvency Rules 1986 apply so far as is predictable and
provided that they are consistent with the Companies Law.
Unlike in the English Companies Law no distinction is made
between a Creditors Voluntary Liquidation and a Members
Location and Geography
The Cayman Island is situated 480 miles south of
Florida, USA, and 180 miles northwest of Jamaica in the Caribbean
One of the last remaining British Overseas Territories
in the Caribbean, the Cayman Islands is made up of three
islands: Grand Cayman, Cayman Brac and Little Cayman, with
a total land mass of 100 square miles.
In 2007, the population of the Cayman Islands was
approximately 45,500, with 60% being Caymanian and the remainder
made up mostly of expatriates from the United Kingdom, the
United States, Canada and Jamaica.
There are more than 90 nationalities represented in the
Cayman Islands today. An overwhelming 95 per cent of the
population lives in Grand Cayman-with George Town, the capital,
home to 23,275 residents – followed by the districts
of West Bay and Bodden Town.
The diverse composition of the population has contributed
to a variety of cultural influences that create a fusion
of music, fashion, cuisine and lifestyle. The main language
is English, with Spanish frequently spoken as a second language.
The local currency is the Cayman Islands dollar (CI$), which
is tied to the U.S. dollar at a fixed rate of CI$1.00 = US$1.20, Local currency is issued by the Cayman Islands Monetary Authority.
While many Caribbean dependencies began moving toward
independence in the 1950s and 1960s, the Cayman Islands opted
for British Crown Colony status, now referred to as British
Overseas Territory status.
The government is a parliamentary democracy with free elections
held every four years. The present constitution provides for a system
of government comprising the Governor, Cabinet and Legislative Assembly.
The Governor is appointed by the Queen and is responsible for defence,
external affairs, internal security and the police. In all other
matters, the Governor must follow the advice of the cabinet unless
he or she deems this to be against the public interest.
The Cabinet consists of five elected members of legislative Assembly
who are voted into the Cabinet by the Assembly itself, and three
official members comprising: the Chief
Secretary, the Attorney General, and the Financial Secretary. The
three official members are appointed by the Governor who presides
over the Cabinet. The five elected members are ministers, each with
specific portfolio of subject areas and responsibilities assigned
by the Governor.
The Cayman Islands have three resident judges and
three magistrates. There are three courts: the Summary Court,
the Grand Court and the Court of Appeal. The Summary Court
deals with both civil and criminal cases, which are usually
heard by a magistrate. Appeals from the Summary Court are
heard in the Grand Court. The Grand Court is superior court
of record which administers the common law and the law of
equity of England, as well as locally enacted and applied
laws. The final court of appeal is the Judicial Committee
of the Privy Council in the United Kingdom.
The Cayman Islands is known for its stable macroeconomic
environment, Its integration into the global economy coupled
with dynamic growth in the two main economic sectors of
tourism and financial services have delivered a high standard
of living for the average Caymanian citizen. GDP per capita
was estimated at CI$43,800 in 2004.
The Cayman Islands have also benefited from relatively
low inflation over the last five years. Between 1999 and
2003, inflation averaged a moderate 2.7%. Unemployment remains
constrained as well, as a large proportion of the labor
force is constituted by non-Caymanian residents on work
Political stability a sound legal system, a stable banking environment,
a sound regulatory regime, tax neutrality and the absence of exchange
controls make the Cayman Islands a highly attractive place to do
Given this environment, it’s not surprising that
the Cayman Islands is a thriving centre for international
finance. Cayman Islands clientele have access to wide array
of services including banking, trust, mutual funds, company
management, structured financing, vessel registration, insurance,
and listing on the stock exchange. Supporting this array
of services are highly skilled legal, accounting and other
professional advisors. It is home to the world’s leading
banks, investment agencies, accounting firms and law firms.
The responsibility for regulating the licensing of banks, trust
companies, management companies and insurance companies lies with
the ‘Cayman Islands Monetary Authority’ www.cima.ky
who have introduced a series of up to date laws and regulations.
Indeed, the Cayman Islands banking sector has received an Aa3 country
risk rating for its services and (95% of the) largest banks in the world
are licenced here.
The Cayman Islands’ banking sector adheres to the
guidelines of the Basle Committee on Banking Supervision.
The Cayman Islands are a member of the ‘Offshore Bank
Supervisors’ and the ‘Caribbean Group of Banking
Supervisors’, both of which were formed under the
auspices of the Basle Committee.
Banks adhere to the ‘know your client’ rule.
These rules have been approved by the U.S. Internal Revenue
Service, enabling institutions in the Cayman Islands to
become qualified intermediaries under the US Withholding
Tax Rules introduced on 1 January 2001.
As a leading domicile for offshore hedge funds, the Cayman
Islands is also the second largest captive insurance centre
in the world, and the first choice worldwide for structured
In addition, a vibrant trust and corporate services sector
is supported by English common law and an impressive array
of professional service providers, including the presence
of the majority of the worlds largest accounting firms and
international law firms.
Established in 1997, the Cayman Islands Stock Exchange("CSX") www.csx.com.ky enjoys status as a "recognized stock exhange" under Section 841 of the Income and Corporation
Taxes Act 1988. Recognition by the U.K. Inland Revenue confirms
the CSX as an exchange of comparable merit and capacity to those
in a major economy or significant financial centre. Other major
recognitions include registered organization status by the London
Stock Exchange and affiliate membership of the International Organization
of Securities Commission and Intermarket Surveillance Group. The
CSX’s listing rules have been designed to facilitate the listing
of mutual funds and specialist debt securities, as well as Eurobonds,
derivative warrants and depositary receipts.
There is also a secondary listing facility for companies registered on other recognized exchanges. The exchange is also able to list
domestic equities although demand for this facility is currently
The Cayman Islands Government does not impose income tax,
corporation tax, capital gains tax, gift tax. There are
no property taxes or rates and no controls on the foreign
ownership of property and land. The bulk of government revenues
are earned through consumption-based taxes, such as licensing
fees and customs duties and property transfer taxes.