If you have a Cayman company which you no longer require and would like to dissolve before 31 December 2022 in order to avoid paying the annual fees next year, on the basis that the company is not a regulated entity and is solvent, the voluntary liquidation process should commence by 31 August 2022.
We strongly recommend clients to start the liquidation process earlier, especially for clients holding entities with complex structures. This is to ensure full dissolution by the end of the calendar year. This helps companies avoid additional regulatory costs and reduce administrative burdens.
Voluntary liquidation process
The voluntary liquidation procedures of a company would follow the below procedure:
- Determine if the company is suitable using the solvency test
- Declarations of Solvency signed by all directors
- Shareholders pass a Special Resolution, which must:
- Resolve to wind up the company;
- Appoint voluntary liquidator(s);
- Approve the liquidators fee; and
- Provide for an indemnity to the liquidators
- Notice and Liquidators consent, filed with the Registrar of Companies (Registrar) and a notice that the shareholders have resolved to liquidate the company
- Publish the First Gazette Notice
- Publication of Notice in other jurisdictions
- Publish the Second Gazette Notice
- Pay any creditors claims
- Pay final dividend
- Final meeting held and notice to Registrar
The following types of companies may find a 2022 dissolution date beneficial:
- Companies that are reporting as Financial Institutions under FATCA or CRS
- Relevant Entities undertaking Relevant Activities under the Economic Substance Act
Benefits of voluntary liquidation
Why should you consider to voluntarily liquidate a Cayman entity which you no longer require? Voluntary liquidation can efficiently close down a company while avoiding court processes and legal action. Additionally, it offers protection from personal liabilities and from wrongful trading accusations. The company’s leases can also be cancelled and outstanding debts written off.
Should you be considering terminating your Cayman company, please contact your usual Marbury advisor or info@marburys.com for further information.