Setting Up and Managing a Cayman Foundation: A Comprehensive Guide
A Cayman foundation can be memberless and founderless, and it can be limited by guarantees, meaning no shareholders or members are required. The foundation must have at least one director, one supervisor, and one secretary. Directors and supervisors do not need to be natural persons and could even be the same person. If the Director and Supervisor are both corporates there is the requirement to appoint a person with significant control (Controller). This has to be a natural person.
This guide will cover the essential steps and considerations for setting up and managing a Cayman foundation limited by guarantee.
To establish a Cayman Foundation, you must provide your registered agent with the following know-your-client (KYC) information and documents for each:
Director
Supervisor
Controllers of the foundation
Required Documents:
Certified true copy of passport
Certified true copy of recent proof of address (e.g., utility bill, credit card statement, bank statement)
Certification Requirements:
The certification must include the certifier’s (i) full name, (ii) position or occupation, (iii) address, and (iv) the date of certification.
Documents not in English require a certified translation.
For more details on certification, refer to our helpdesk article here.
All entities incorporated in the Cayman Islands must pay renewal fees in advance by the end of December each year. Once the renewal fees are paid, the entity will be renewed for the entire following year. Payments made after the due date will incur penalties.
Economic Substance Notification (ESN): All legal entities domiciled or registered in the Cayman Islands must file an Economic Substance Notification (ESN) by 31 January each calendar year, regardless of whether they are a Relevant Entity conducting one or more Relevant Activities during their previous financial year.
There are two methods to close a Cayman Foundation: formal liquidation/dissolution or striking off the company register.
Formal Liquidation/Dissolution: If the foundation has been active and possibly has outstanding assets and liabilities, and the directors wish to have a proper discharge from their duties, voluntary liquidation or dissolution is the preferred choice. All pending dues in the name of the entity must be settled before dissolution.
Striking Off the Company Register: If the directors and controllers are satisfied that no assets or liabilities remain and the foundation has not been active, they may request the foundation be struck off the register. This is the most economical and fastest way to close the entity. If the foundation is struck off after January 1st, 2023, it will be almost immediately dissolved. There is a 90-day window to restore the foundation; after this period, the foundation will be dissolved. Restoration after dissolution, if needed, must be done through the BVI courts within five years, making it a difficult and expensive process.
Setting up and managing a Cayman Foundation is straightforward with the right guidance. Whether you’re establishing your entity, managing its operations, or considering dissolution, understanding these steps will ensure your foundation remains in good standing.