This memorandum is not intended to be exhaustive but merely highlights some of the more important features involved in winding up a solvent Cayman Islands company pursuant to the Companies Act (Revised) (the “Companies Act”). For the purposes of this article, we will only be addressing exempted companies limited by shares that are solvent. Exempted companies that are limited by duration or by an event occurring of which the memorandum or articles of association provide for such winding up or that are unable to pay its debts as they fall due are beyond the scope of this article.
Cayman companies should consider commencing the voluntary liquidation process now to ensure sufficient time to complete the process before 2024 Economic Substance reporting requirements, 2024 Government fees and for funds, 2024 annual registration fees with the Cayman Islands Monetary Authority (“CIMA”) and 2024 FATCA and/or CRS reporting become required the (“2024 fees and reporting requirements”).
While some companies prefer to dissolve operations through being struck off the register, the risk of striking off is that, for a period of up to ten years after the strike off, creditors, shareholders or other claimants can revive the struck off company by applying to the courts in order to obtain satisfaction of its claims. Furthermore, the Companies Act states unequivocally that “the striking off the register of any company under this Act shall not affect the liability, if any, of any director, manager, officer or member (i.e., a shareholder) of the company, and such liability shall continue and may be enforced as if the company had not been dissolved.”
To not trigger 2024 fees and reporting requirements, a Cayman company’s final dissolution date must be by or before 30 September. Companies wishing to clear their obligations in 2023 should commence liquidation in early July to ensure clearance by 30 September.
For Funds that are exempt from the requirements of Economic Substance, the final dissolution date must be by or before 31 December. Further, liquidation should commence in August or no later than early September to ensure final audit completion, CIMA deregistration and liquidation prior to 31 December.
Initiating liquidation earlier in the year allows the company to minimize expenses and ensure filing obligations do not linger long after the company is dissolved.