Companies based in the Cayman Islands that might be considering a voluntary liquidation can benefit from beginning the process early to ensure timely filing and avoid stressful deadlines as their entity reaches the end of its life cycle. With the right preparation and guidance, the procedure can be straightforward.

Beginning the process in an earlier month can help companies avoid additional regulatory costs and ease burdens associated with annual filing / reporting requirements. In addition to immediate cost-savings, Companies can avoid other filings and any fees that might arise out of having a stub year. 

What deadlines do companies need to consider for Cayman Islands voluntary liquidation?

Companies looking to dissolve before 31 December 2023 need to begin the liquidation process before 31 August 2023, though we recommend that companies with potentially more complicated cases begin the voluntary liquidation process well before that date. It is also suggested that funds registered with the Cayman Islands Monetary Authority ("CIMA") under the auspices of the  Mutual Funds Act (2021 Revision) or the  Private Funds Act (2021 Revision) ("Funds") commence dissolutions proceedings well in advance of the 31 August 2023 deadline to have the company dissolved by the end of the year. This is to ensure that the final audited financial statements have been filed with CIMA before 30 August 2023. 

What type of company might find that a 2023 dissolution date is to its advantage?

  • Companies that are Reporting Financial Institutions under  FATCA or CRS
  • Relevant Entities undertaking Relevant Activities for Economic Substance

Companies that fall into either of those categories may benefit from having a wind-down date effective in 2023, as filing and/or reporting to the Cayman Department for International Tax Cooperation may be required if in existence in 2024. 

What liquidation considerations do companies need to keep in mind concerning the Cayman Islands Administrative Funds Regime?

Timely filing with CIMA is a must. A Fund must file an application to cancel its CIMA Licence or Certificate of Registration on the earlier of these two dates:

  • 21 days from the date the Fund ends business; or
  • 31 December of the year in which the Fund ends business as a mutual fund. 

Failure to comply may incur an administrative fine from CIMA of up to CI$5,000 (US$6,000).

Funds looking to de-register from CIMA typically will need to undergo a final audit for the period of either:

  • The date a third-party liquidator is appointed; or
  • The date that final redemptions are paid in full to investors. 

We recommend that Funds looking to wind down business during the second half of 2023 begin the process early to allow for these necessary filings. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.