CAYMAN ISLANDS Law and Practice Contributed by: Simon Thomas, Richard Spencer, Alexandra Clynes and Sayak Bhattacharya, Campbells
4.2 Tax Treatment The Cayman Islands have no direct taxes of any kind. There are no corporation, capital gains, income, profits or withholding taxes. There are no inheritance taxes or death duties. Upon application to the government, Cayman compa - nies, limited partnerships, trusts and SPCs can expect to obtain a written undertaking that they will be exempted from taxes for a minimum of 20 years (companies and SPCs) and 50 years (lim - ited partnerships and trusts). Accordingly, any income or capital gains (whether accumulated or distributed) will not be subject to tax in Cay - man. However, this may be taxable in the home jurisdiction of investors and any manager. The Cayman Islands does not have any double taxa - tion treaties, and there are no exchange control or currency restrictions in the Cayman Islands. The Cayman Islands do not have any double taxation treaties.
termined price after meeting certain condi - tions (eg, vesting periods). • Key Features: (a) Option Pool: A percentage of equity is reserved for employees, typically 10–20% of the company’s total shares. (b) Vesting Schedules: Standard vesting terms include a four-year schedule with a one-year cliff, ensuring employees remain committed for an extended period before fully benefiting from their options. (c) Tax Efficiency: The Cayman Islands’ tax- neutral regime ensures no local taxes on stock option grants or exercises, though employees may face tax liabilities in their home jurisdictions. Restricted stock units (RSUs) or restricted ordinary share grants • RSUs are occasionally used for senior man - agement, granting shares outright after meet - ing performance or time-based milestones. Typically, such units are subject to transfer restrictions and include conditions allowing for repurchase by the company, which are activated in a scenario where the employee leaves. Share appreciation rights or phantom stock units • There are contractual entitlements to cash sums equivalent to the then fair market of an underlying security in the company, usually
4.3 Government Endorsement Please see 4.1 Subsidy Programmes .
5. Employment Incentives 5.1 General
To secure the long-term commitment of found - ers and key employees, ventures in the Cayman Islands utilise a combination of equity-based incentives, contractual obligations, and govern - ance mechanisms. These approaches align the interests of key stakeholders with the company’s growth objectives while ensuring retention and performance. Equity or Quasi-Equity Based Incentives Employee stock option plans (ESOPs) • Purpose: ESOPs are widely used to incen - tivise and retain key employees by granting them the right to purchase shares at a prede -
subject to vesting schedules. Co-Investment Opportunities Employee co-investment schemes
• Key employees are offered opportunities to invest alongside institutional investors in the company or fund, aligning their financial inter - ests with long-term success. This approach
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