Plan to minimize fees
If your Cayman vehicle has come to the end of its life cycle, now is the time to initiate the process to avoid or reduce any unnecessary 2021 annual government, registration/licensing and service provider fees. Voluntary liquidations and strike-offs
If you wish to proceed with a termination, there are two basic alternatives to close a Cayman Islands company and achieve a proper closure:
Voluntary Liquidation - This is the most secure method of terminating a solvent company because it protects the company from post liquidation claims. This method is typically utilized for Cayman companies which have been active, had substantial assets and liabilities and want to reduce any potential risk for directors, shareholders, etc. The company can be formally liquidated, passing resolutions of the directors and shareholders to wind up the company and appointing a voluntary liquidator(s), these are filed with the Registrar of Companies and notices are placed in the Cayman Gazette. Following the notices in the Cayman Gazette, a final meeting is held, a liquidator’s report and return is prepared all of which are filed with the Registrar of Companies. A certificate of dissolution will then be issued confirming that the company has been formally dissolved.
Strike-off - As an alternative to a formal liquidation the company may be struck from the register by a simple request to strike-off the company. The strike-off method is typically utilized where a company has not engaged in substantial business activity, had no external investors, never traded or where the directors determine that the company has no assets and liabilities and there is no risk of creditors coming forward with claims against the company. In this case, the board of directors of the company would pass resolutions to approve the strike-off and a request on behalf of the company would be sent to the Registrar of Companies to strike the company off the Register of Companies. The result is the same as a formal liquidation except liabilities, if any, of directors, managers, officers and shareholders continue as if the company had not been dissolved. Also, if it can be shown the company was still carrying on business or in operation at the time of striking off, any shareholder or creditor may apply to the Court, within two or, in some circumstances, within ten years, to have the company re-instated. If the company has assets at the time of striking off which have not been distributed or otherwise dealt with, such assets are forfeit to the Cayman Islands Government. The Registrar will strike the company from the register at the next opportunity and if requested provide a certificate of strike off.
Cayman regulated/registered funds and fund managers
If your Cayman regulated fund (mutual and private fund) or fund manager (registered person) company is regulated/registered with the Cayman Islands Monetary Authority (CIMA), additional time should be allocated in the termination process to ensure the regulatory obligations have been met. It is advisable to have the redemptions, distributions and final audits (where applicable and required) completed before the voluntary liquidation and strike off process to ensure a timely completion and avoid any unnecessary delays. If you have any questions or would like to discuss this further, please get in touch with your usual IMS/CFS/SHCS contact. IMS can act as liquidator in relation to voluntary liquidations in most circumstances or can assist with necessary filings where we are not voluntary liquidator. For further information contact Gary Butler at gbutler@ims.ky.