CAYMAN ISLANDS Law and Practice Contributed by: Daniel Lee, Sophia Scott, Kimberly Robinson and James Turner, Maples Group
1. Legal System 1.1 Legal System and Judicial Order
2. Restrictions on Foreign Investments 2.1 Approval of Foreign Investments Foreign Investments in the Cayman Islands Local operating business Approval from the Cayman Islands authorities may be required if foreign investors are investing in a Cay - man Islands company that conducts local business (ie, with businesses and individuals located in the Cayman Islands) (a “Local Company”). This is neces - sary where a foreign investor will hold greater than 40% voting or economic interest in a Local Company. The Local Companies (Control) Act (As Revised) of the Cayman Islands (LCCA) provides that a Local Com - pany must have 60% Caymanian shareholders and directors, who maintain 60% of the economic and vot - ing control. An application must be made to the Trade and Business Licensing Board (the “Board”), estab - lished pursuant to the Trade and Business Licensing Act (As Revised) of the Cayman Islands (TBLA), to obtain a special licence under the LCCA or waiver of its provisions to permit greater than 40% foreign ownership and control. Entities registered or incorporated in the Cayman Islands conducting business outside the jurisdiction There is no prohibition on foreign investors investing in Cayman Islands entities that do not fall within the category of a Local Company – ie, entities registered or incorporated in the Cayman Islands but not doing business with businesses and individuals in the Cay- man Islands. Certain categories of entities, such as those regis - tered under the Mutual Funds Act (As Revised), may require minimum investment thresholds, but there are no restrictions on foreign investors making an invest - ment in a Cayman Islands mutual fund. Property in the Cayman Islands There are no restrictions on foreign investors purchas - ing property in the Cayman Islands.
The Cayman Islands is a common law jurisdiction, which is based on the English model. It comprises statute law and binding case precedents. English and British Commonwealth case authorities are generally persuasive, but not binding, on the Cayman Islands courts. Cayman Islands law is derived from several sources: • primary legislation – ie, local statutes passed by the Legislative Assembly of the Cayman Islands or its predecessors, and approved by the Governor of the Cayman Islands; for example, the Compa - nies Act (As Revised) of the Cayman Islands (the “Companies Act”) and the Private Funds Act (As Revised) of the Cayman Islands; • secondary legislation – ie, legislation enacted pursuant to local statutes; examples include the Companies Winding-Up Rules (2023 Consolidation) and the Private Funds Regulations (As Revised) of the Cayman Islands; • statutes passed by the United Kingdom (UK) Par - liament that have been expressly extended to the Cayman Islands; • Orders of His Majesty’s Privy Council that are applicable to the Cayman Islands; and • any relevant remaining English and British Com - monwealth common law and rules of equity estab - lished by settlement not having been replaced by local or UK statute. The Grand Court of the Cayman Islands (the “Grand Court”) is the superior court of record of first instance for the Cayman Islands. The caseload of the Grand Court is divided into five divisions: Civil, Family, Admi - ralty, Financial Services and Criminal. Appeals from the Grand Court are to the Cayman Islands Court of Appeal (which usually sits three times annually). The final court of appeal is the Privy Council in England.
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