I. ABOUT THE COUNTRY

The Cayman Islands consists of three islands, located approximately 475 miles south of Miami, Florida and 180 miles northwest of Jamaica. The capital and main commercial center is George Town, located on Grand Cayman. The total population is approximately 25,000. The official language is English, the legal tender is equal to about USD1.20. The Cayman Islands are a British Crown Colony governed by the Legislative Assembly and official members headed by a Governor appointed by the Crown. The islands are regarded as politically stable and have no desire for independence. The Islands have excellent transportation and communication facilities. There are currently in excess of 18,000 companies and 500 banks and trust companies registered in Cayman. There are a number of experienced law firms and international accounting firms present in the islands.

II. THE ADVANTAGES

One of the reasons why the Cayman Islands became a major offshore financial for international commerce is the absence of direct taxation. Companies incorporated in the Cayman Islands enjoy the same tax-free status as individuals regardless of nationality. There are no capital gains, gift or inheritance taxes but stamp duty is chargeable on transfers and mortgages of real property. The Cayman Islands have no double taxation treaties with any other part of the world but have undertaken to assist foreign governments by giving them information where a Cayman Island Company has been used or involved in activities which are mutually considered as criminal. But this treaty does not cover tax offences so no information would be revealed where allegations of tax offences are made. This absence of taxes, together with political and racial stability, has attracted the attention of investors seeking a tax haven for their operations. The introduction of laws and the development of the financial sector have encouraged new investments and continued development of the economy of the Islands.

There are also no excessive restrictions on your freedom of trade or your ability to transact business in any part of the world. There is no exchange control and no restrictions on the movement of funds to or from the Islands. Besides, the Cayman Islands also have efficient postal services to the United States, Europe and other parts of the world.

Confidentiality of business transactions is strictly observed in the Cayman Islands and is further enhanced by the Confidential Relationship (Preservation Law) enacted in 1976. These laws are designed to protect bona fide business dealings. Strict penalties and sentences are imposed on those disclosing such information.

III. CHARACTERISTICS OF CAYMAN COMPANIES

Companies formed in the Cayman Islands are either ordinary or exempt.

1. Ordinary Companies

Ordinary companies are formed in much the same way as they are in England. A Memorandum of Association (Charter) must be filed with the Registrar of Companies, stating the name of the registered office, the objectives and the authorised share capital. The company may either draw up its own Articles of Association (Bylaws) or use the standard Table A", and may operate with only one shareholder. An ordinary company must have at least one director and is required to hold at least one shareholder meeting every year. It must also file an annual report with the Registrar of Companies, listing the shareholders and officers.

2. Exempt Companies

The Cayman Island exempt company may obtain a guarantee from Government exempting it from any taxes which could be introduced by future legislation for a period of up to 20, which may be extended to thirty years on application.

SHAREHOLDERS
There is no requirement to file details of the shareholders in any public registry. Bearer or registered shares are permitted.

DIRECTORS
Companies have to inform the company registrar details of the directors but this information is not available for public inspection. Directors need not be resident in the Cayman Islands but each year one statutory meeting of the directors must be held within the islands. Appointment of proxies is permitted. At least one director is required and corporate directors are permitted.

ANNUAL REPORTING
There is no requirement to file accounts with the registrar. However, an annual return must be filed. The return takes the form of a simple declaration.

LOCAL REQUIREMENTS
A registered office address within the Cayman Island is required and a Cayman resident must be appointed as registered agent.