CAYMAN ISLANDS Law and Practice Contributed by: Adam Johnson, Appleby
5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity A Cayman Islands company’s constitutional docu - ments will set out its governance framework, includ - ing the powers of its board of directors, who ordinarily manage the day-to-day operation of the business. In relation to a company incorporated as a company lim - ited by shares, the liability of its shareholders is limited to the amount (if any) unpaid on their shares. 5.3 REITs REITs and real estate derivatives from Cayman Islands real estate are quite uncommon due to the relatively small size of the jurisdiction and the taxable event that arises when an interest in land (including the equity capital of a land-holding corporation) is trans - ferred (see 2.10 Taxes Applicable to a Transaction ), although there have been a few occurrences of foreign REITs acquiring Cayman Islands commercial property and at least one occurrence of a domestic REIT that is in the process of being formed. Institutional investment in the Cayman Islands is increasing as the sizes of projects require large amounts of capital. However, the majority of com - mercial real estate is held privately. 5.4 Minimum Capital Requirement There are no minimum capital requirements for a Cay - man Islands company. 5.5 Applicable Governance Requirements The subscribers of the memorandum of association of a Cayman Islands company are deemed to have agreed to become shareholders of the company, and every other person who has agreed to become a member of a company and whose name is entered on the register of members will be deemed to be share - holders of the company. The company will typically have one or more directors who manage the day- to-day business of the company. The constitutional documents set out the governance framework, along with the Companies Act (as revised).
5.6 Annual Entity Maintenance and Accounting Compliance
Cayman Islands companies are obliged to pay annual fees in January to the Cayman Islands General Reg - istry. A schedule of incorporation and annual fees levied by the Cayman Islands government for different types of company can be found on the Cayman Islands Gen - eral Registry website. Exempted companies and foreign companies are required to engage a registered office provider in the Cayman Islands, for which additional annual fees will apply. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time There are two types of arrangements that allow a per - son, company or other organisation to occupy and use real estate for a limited period without buying it outright. • A lease grants a tenant the right of exclusive pos - session of a property for a specified period of time. It gives a tenant contractual and proprietary rights in the property, which can typically be transferred to a third party, subject to any restrictions in the lease. • A licence allows a landowner to grant permis - sion for the use and occupation of a property. The occupier of a property does not have exclusive possession, however, and their rights under the licence cannot be transferred. A licence is merely a personal right and does not create a registrable interest. 6.2 Types of Commercial Leases There are no specified types of commercial leases. Given the relatively small size of the jurisdiction, there are relatively few sophisticated landlords of large- scale developments, so landlords use their own form of lease.
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