Continuation (or transfer) of a foreign company to the Cayman Islands – Corporate / Commercial law

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This guide describes the legal process by which a corporation incorporated, registered or existing with limited liability under the laws of any jurisdiction outside the Cayman Islands may apply to be registered by continuance as an exempt corporation under the Companies Act (2021 revision) (Companies Act).

Conditions precedent

Part XII of the Companies Act provides that the Registrar of Companies in and for the Cayman Islands (Clerk) registers a candidate company (the holder) if:

(a) the Holder is a legal person incorporated, registered or existing with limited liability and share capital under the laws of a jurisdiction which allows or does not prohibit such transfer;

(b) the Registrar has paid to the Registrar a fee equal to the fee payable on the incorporation of an exempt corporation;

(c) the holder has delivered to the Registrar a copy, certified and authenticated (usually by a Registrar of Companies, or the local equivalent) with the public seal of the country, city or place under whose laws it was consisting of the following documents, collectively known as Charter documents:

(i) its certificate of incorporation;
(ii) its memorandum and statutes or equivalent constitutional documents defining its constitution (accompanied by a certified translation into English, if necessary);
(iii) a certificate of good reputation, or if the competent authority does not issue such certificates, a declaration signed by an administrator as to the good reputation of the Holder; and
(iv) a list of the names and addresses of its directors;

(d) the name of the holder is acceptable to the Registrar;

(e) the Registrant has filed with the Registrar a notice of its proposed head office in the Cayman Islands;

(f) the Holder has filed with the Registrar a declaration signed by one of its directors that the Holder’s operations will be conducted primarily outside the Cayman Islands; and

(g) the Holder has filed with the Registrar an affidavit under oath of one of its directors declaring that, after investigation, the Director is of the opinion that the requirements specified in section 2 below have been met.

Requirements to be met

In the affidavit referred to in section 1 (g) above, the Director must file that:

(a) no petition or other similar proceeding has been filed and remains pending or an order or resolution passed to liquidate or liquidate the holder in any jurisdiction;

(b) no receiver, trustee or administrator or other similar person has been appointed in any jurisdiction and is acting with respect to the Holder, its affairs or property or any part thereof;

(c) no plan, order, compromise or other similar arrangement has been made or entered into in a jurisdiction whereby the rights of the holder’s creditors are and continue to be suspended or restricted;

(d) the Account Holder is able to pay its debts as they fall due;

(e) the application for registration is in good faith and is not intended to defraud the holder’s creditors;

(f) EITHER the Holder has no secured creditors as of the date the affidavit is sworn OR, (and as an additional deliverable), the Holder has delivered an undertaking signed by an administrator of the Holder that the Holder has notice of transfer has been or will be given within 21 days to the Registrant’s secured creditors;

(g) the consent or transfer approval required for any contract or commitment entered into or given by the Holder has been obtained, released or waived, as the case may be;

(h) the transfer is authorized by and has been approved in accordance with the incorporation documents of the holder;

(i) the laws of the Holder’s current jurisdiction with respect to the transfer have been or will be complied with;

(j) the Holder is incorporated in a form or substantially in a form which could have been incorporated as a company limited by shares exempted under the Companies Act;

(k) the Holder will, upon registration under the Companies Act, cease to be incorporated, registered or exist under the laws of the current jurisdiction of the Holder; and

(l) the Licensee, if he is (or will be when registered by way of continuation) prohibited from carrying on business in or from the Cayman Islands unless he has obtained a license under a law , applied for and obtained the required license.

The affidavit must also include (normally by way of attachment) a statement of the assets and liabilities of the Holder made up to the last possible date before the date of this affidavit.

Licence

The licensee, if he is (or will be when registered by way of continuation) prohibited from carrying on business in or from the Cayman Islands unless he has been licensed under a law, he must have applied for and obtained the required license prior to registering as an exempt business.

Public interest

The Registrar must not be aware of any other reason why it would be contrary to the public interest to register the registrant.

Amendments to the charter documents

Within 90 days of registration, the Licensee must make the necessary changes to its memorandum and articles by special resolution passed in accordance with the Companies Act to ensure that they comply with the requirements of the Corporate Law. companies, with regard to an exempt company.

Effect of registration

Upon registration, the Registrar will issue a certificate stating that the holder has been registered as an exempt company under the Companies Act and specifying the date of such registration. This certificate is conclusive proof that compliance has been made with all the registration requirements of the Companies Act.

From the date of registration, the Holder continues to be a legal person for all purposes and this company must have:

(a) the capacity to perform all the functions of an exempt company;

(b) the ability to prosecute and be sued;

(c) perpetual succession;

(d) the power to acquire, hold and dispose of property; and

The members of the Holder are required to contribute to the assets of the Holder in the event of liquidation under the Companies Act, as provided therein.

For the avoidance of doubt, continuation registration under the Companies Act does not work:

(a) create a new legal entity;

(b) prejudice or affect the identity or continuity of the Holder as previously constituted;

(c) affect the ownership of the Holder;

(d) to affect any appointment made, resolution adopted or any other act or thing done in connection with the holder by virtue of a power conferred by any of its constitutional documents or by the laws of the jurisdiction under which it was previously constituted, registered or existing;

(e) affect the rights, powers, authorities, functions and responsibilities or obligations of the Holder or any other person; Where

(f) render defective any legal proceedings instituted by or against the holder of the domain name; any legal proceedings which may have been pursued or initiated by or against the holder prior to its registration under the Companies Act may, notwithstanding such registration, be continued or initiated by or against the holder after registration.

After registration, the registrar is required to publish:

(a) a notice in the Cayman Islands Gazette that the holder has been registered in the Cayman Islands;

(b) the jurisdiction under the laws of which the Holder was previously incorporated, registered or existing; and

(c) the previous name of the holder (if different from that of the holder in the Cayman Islands).

Provisional registration

The Companies Act also provides for the provisional registration of a company incorporated, registered or existing in another jurisdiction by filing with the Registrar the charter documents, a limited affidavit and payment of a prescribed fee. Provisional registration does not constitute a continuation as a Cayman Islands company, but provides a mechanism by which continuation formalities are largely completed prior to actual registration. When provisionally registering a registrant, the Registrar will issue a certificate attesting that the registrant is provisionally registered by continuation as an exempt company and specifying the date of such provisional registration.

A registrant who is provisionally registered is required to deliver to the Registrar within 60 days of registration details of any changes to their constitutional documents or proposed headquarters in the Cayman Islands. The holder is also required to file an additional affidavit and pay an annual fee in January of each year following provisional registration.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.


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