The Caymans Islands Foundation in 2024

Since 2003, Healy Consultants Group assists multi-national Clients’ with creating Foundations in every country on the planet. This web page will help you decide if this entity is suitable for your business.

The Caymans Islands Foundation is a flexible dynamic hybrid limited liability corporate vehicle; a blend of a company and a trust. It functions like a civil law foundation, but in the form of a company limited by shares or by guarantee. It is a body corporate with a legal personality distinct from its i) members and ii) directors and iii) company secretary and iv) supervisor and v) and other connected persons.

• Popular uses of the Foundation

  • In the private wealth context, a Cayman Foundation is similar to a trust; with assets being held for the benefit of beneficiaries on terms specified in the Foundation’s governing documents. The Foundation is a traditional succession planning vehicle including i) protection of assets from future personal liability and ii) avoiding forced heirship rules in civil law jurisdictions and iii) preservation of family wealth and continuity of family businesses and iv) efficient and timely distribution of assets upon death without the need to apply for probate; and
  • Foundation companies are vehicles for holding riskier assets like crypto currency because the director duties are owed to the Foundation and not to the beneficiaries. The entity can execute contracts and token agreements and open exchange or bank accounts. Consequently, the Caymans Islands Foundation is popular with venture capital (VC) investors; and
  • Multi-national Clients’ from common law jurisdictions use foundation companies to hold higher-risk assets such as shares in family businesses and as part of family office and private trust company (PTC) type structures; and
  • One of the most interesting uses of a Cayman Foundation is as a Decentralised Autonomous Organisation (DAO), popular with blockchain and crypto-currency multi-national Clients’; seeking a more democratic form of governance whereby decisions are made by a defined community. The Foundation will limit the liability of the founders of the protocol or the community and enter into off-chain real world transactions. The Foundation can be structured without an owner and instead governed by the DAO. Pursuant to the by-laws adopted, the directors will take instructions from the DAO. The activities of the Foundation may include i) issuing or distributing the governance tokens and ii) administering a grant program and iii) entering into services agreements and iv) managing the treasury of governance tokens. The foundation founders launch a smart contract and organize the initial issuance of tokens. The members (foundation beneficiaries) who are the token-holders and deposit their own virtual assets in the foundation treasury to participate in the development of DAO. The board of directors / foundation council are elected by the founders and make decisions in the interests of the DAO members. The foundation supervisor is a trustee who ensures that DAO managers do not go against the will of DAO members in the decision-making process; and
  • The Foundation can also be used as part of a Family Office structure, directly to hold assets or as the top-holding entity, contracting with service providers, suppliers and staff members; and

• Attractive features of this Foundation

  • The foundation can cease to have members making it an ownerless vehicle and can be established with or without share capital. This is known as an orphan entity. While a Cayman Foundation must initially be incorporated with one or more members, it can cease to have members at any time, without affecting the Foundation’s existence, capacity or powers; and
  • The flexible nature of Cayman Foundations allows governing rules and constitutional documents to be drafted in a highly bespoke manner. The constitution of a Cayman Foundation can be supplemented by “Bylaws” which are not filed with the Register of Companies and can therefore remain private, affording the Cayman Foundation a degree of privacy in its operations coupled with further flexibility to set its own rules in relation to its structure and management; and
  • The firewall provisions of the Trusts Act apply to foundation companies providing protection against claims in foreign courts; and
  • As with an ordinary company, a Cayman Foundation is managed by its board of directors, rather than by a trustee. Foundations are attractive to multi-national Clients’ whom find a trust unsuitable, for example, due to the tax treatment in their home jurisdiction or because they were uncomfortable transferring legal ownership of assets to a trustee;
  • The Founder is able to retain certain powers in relation to the entity including the ability to i) amend governing documents and ii) approve distributions and iii) appoint or remove directors;
  • The Caymans Foundation does not have to have a founder and may be incorporated without one. A Foundation Company may not have beneficiaries; and
  • An existing Cayman exempt company may be converted to a Cayman Foundation; and
  • A beneficiary of the foundation company has no powers or rights relating to the foundation company, its management or its assets and is not an interested person. Therefore, beneficiaries do not have the power to request reports, accounts, information and explanations concerning the foundation company’s business and affairs, and the discharge of its directors’ duties and the exercise of their powers.
  • Details of members, directors, supervisors and officers are not disclosed in a public registry; and
  • Unless the constitution provides otherwise, there are no restrictions on what the foundation company can invest in; and

• Accounting and tax considerations

  • A foundation company is not subject to any income, withholding or capital gains taxes in the Cayman Islands. Members or beneficiaries of a foundation company will not be subject to any income, withholding or capital gains taxes in the Cayman Islands with respect to their interests, nor will they be subject to any estate or inheritance taxes in the Cayman Islands; and
  • Foundation companies are not required to file financial statements, nor tax return. An annual return must be submitted annually stating whether there has been a modification of the Memorandum of Association and confirming that no business has been conducted within the jurisdiction.
  • Foundations are prohibited from paying dividends or other distributions of profits or assets to its members or proposed members. Instead, officers can receive i) reasonable remuneration as a director or supervisor and ii) be indemnified or reimbursed for expenses or liabilities incurred in relation to the Foundation and iii) benefit from a loan entered into with the Foundation and iv) receive benefits disposing of surplus assets on its winding-up;
  • Foundation companies are exempt from taxation and may obtain a tax undertaking certificate from the Cayman Islands government guaranteeing no change to their tax status for a period of up to 30 years from the date of the undertaking; and

• Legal and compliance considerations

  • The creation of a Caymans Islands Foundation is similar to that of the exempt company (click link). There must be at least one director and one member and the constitution must be filed with the Register of Companies. The entity must be limited by shares or by guarantee with or without share capital. The entity has a certificate of incorporation and an M&AA; and
  • The Foundation By-Laws is the main document that will govern the business of the Foundation. It is crafted by the Founder and can be legally enforced;
  • Every foundation company is required to pay an annual Companies registry fee to the Registrar in January of each year of US$ 854; and
  • Where a Cayman Foundation elects to cease having members, it must have one or more “Supervisors” (who may but need not be directors). As suggested by the title, such officeholder essentially fills the gap left by the lack of members in that they can enforce the rules of the Cayman Foundation as against the directors and would typically have the right to access the files, books and accounts of the company; and
  • In addition to the usual registers of members, directors, and mortgages and charges, a foundation company must also maintain a Register of Supervisors.
  • A Foundation company may be incorporated by one or more members, who can be non-residents, corporate bodies or individuals; and
  • A Cayman Foundation must maintain a register of its beneficial owners (the “Register”) to be kept at its registered office. The company secretary uploads the beneficial owner details to the General Registry via its Corporate Administration Platform (“CAP”) system. The information is encrypted upon submission and further encrypted upon receipt. The data is then deleted from CAP and goes to a non-internet facing, offline server only accessible by a Government authorised competent authority; and
  • Each foundation company shall keep at its registered office a register of its supervisors containing i) their names and addresses and ii) the date of appointment and iii) any date on which a supervisor’s appointment ceased; and
  • A minute book should also be maintained at the registered office. The registered office is also required to maintain copies of certain records for anti-money laundering purposes; and
  • The Caymans company secretary must file an annual economic substance report with the Cayman Tax Information Authority; and
  • Caymanian corporate legislation is largely based on American and English law, which makes it quite universal in its application and operation around the world; and
  • The Caymans Islands Foundation charter identifies i) beneficiaries to receive benefits over time and ii) certain powers to be held by persons or entities other than the directors of the foundation and iii) can appoint a supervisor or advisory committees.

• Our fees

  Within a week, Healy Consultants Group will register a Caymans Islands Foundation for our Client and our fee will be US$ 18,992, as outlined in this draft sales invoice:

  View invoice PDF

Conclusion

To advance your registration of a Cayman Islands Foundation, communicate with our Staff below: