Cayman Islands: Memorandum - The Formation And Management Of Cayman Islands Companies

• No personal or corporate taxes. No estate or inheritance taxes.
• British Colony. No independence movement.
• Political stability.
• Racial harmony.
• English law is applicable and the language is English.
• Excellent communications, daily flights from Miami and several flights a week from Atlanta, Houston, Jamaica, Tampa and New York.
• Efficient telex, telephone, telefax, cable and postal facilities.
• No exchange control regulations.
• Excellent professional and banking services.
• Secrecy. The laws of the Cayman Islands have been formulated to maintain the utmost secrecy.

[1] EXEMPTED COMPANIES

A Company which proposes to carry on its business mainly outside the Cayman Islands may be registered as an exempted Company. Some features of an Exempted Company are as follows:

• The shareholders of the Company are not on public record, and are not known to the Registrar of Companies.
• In January of each year the Company must file with the Registrar of Companies a Statement signed by the Secretary or a Director that the operations of the Company have been mainly outside the Cayman Islands and that the provisions of the Companies Law have been complied with. There are no other annual reporting requirements.
• The Company may issue Bearer Shares.
• The name of the Company need not include the word "Limited" or "Ltd."
• The Company may obtain a Guarantee from the Government against the imposition of future taxes in the Cayman [stands, such Guarantee is normally granted in the first instance for a period of 20 years.
• The Company may alter its Memorandum of Association without restriction.
• The Directors must hold at least one meeting in the Cayman Islands each year. Such meeting may be held by Alternate Directors which we can provide.
• The Company may not own a British registered ship, except in very special circumstances.

(2) ORDINARY COMPANIES

These Companies may either be designated resident and used for local purposes within the Cayman Islands, or non-resident and used for offshore purposes. Some features of an Ordinary Company are as follows:-

• The Company is required to maintain at its Registered office and open to public inspection, a Register of Members containing the names, addresses of its past and present shareholders. If required, nominees may be used and the information contained in the Register will relate to the nominees and not to the beneficial owners.
• An Annual General Meeting of members must be held once in each year including the year of incorporation. This meeting need not be held in the Cayman Islands.
• The name of the Company must include the word "Limited" or "Ltd."
• In January of each year the Company must file a Return with the Registrar of Companies giving details of its authorised and issued capital and shareholders.
• Subject to certain restrictions the Company may alter its Memorandum of Association with respect to the objects of the Company and its share capital.
• The Company may own a British registered ship even though the
• beneficial owners of the Company are not British Subjects.

(3) FOREIGN COMPANIES

Foreign Companies are defined as all bodies corporate incorporated outside the Cayman Islands which establish a place of business or commence carrying on business within the Islands. Every foreign company must be registered as such within one month after becoming a foreign company as defined above. Once registered, a foreign company has the same power to hold lands in the Islands as if it were a Company incorporated in the Cayman Islands.

(4) SHELF COMPANIES

We keep a number of Ordinary and Exempted Companies available for immediate purchase. Fees are US$200.00 more than normal for Companies incorporated in the current year. Fees for older Companies depend on the date of incorporation.

REGISTRAR OF COMPANIES

In the case of each of the above companies a List of Directors and Officers must be filed with the Registrar of Companies. The Registrar must be advised of any changes in Directors and Officers. The above information is kept confidential by the Registrar as are details of the shareholders of an Ordinary company. The only information which the Registrar will give to the public is as follows:-

• Whether the subject company is an Ordinary, Exempted or a Foreign Company.
• The address of the Company's Registered Office.
• Date of Registration.

ACCOUNTS

There is no requirement for the filing of accounts but the provisions of Section 58 of The Companies Law should be noted:

[1] Every company shall cause to be kept proper books of account with respect to......

• all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place;
• all sales and purchases of goods by the company;
• the assets and liabilities of the company.

(2) For the purposes of subsection (1), proper books of account shall not be deemed to be kept with respect to the matters aforesaid if there are not kept such books as are necessary to give a true and fair view of the state of the company's affairs and to explain its transactions.

INFORMATION REQUIRED FOR INCORPORATION

(a) Choice of three names for the Company in order of preference.

(b) Whether an Ordinary or Exempted Company is required.

(c) The authorised share capital of the Company. We recommend that a company be incorporated with an authorised capital of US$50,000.00 this being the maximum authorised capital permitted for the minimum Government fees.

(d) A brief outline of the main objects of the Company.

(e) The name and address of the beneficial owners of the shares and the number of shares which are to be issued to each shareholder or, if it be the case, that they are to be registered as bearer shares or in the name of nominees.

(f) The names, addresses and occupations of the Directors and Officers. The Company may appoint such Officers as it requires but we normally recommend only a Secretary and an Assistant Secretary. A sole Director may not also be the Secretary.

It usually takes about five working days to arrange the incorporation of a standard company although in certain circumstances this may be considerably reduced.

MAINTENANCE OF COMPANY

We have incorporated Campbell Corporate Services Limited and three subsidiary companies to provide certain corporate services for our Clients. In the case of nontrading companies with passive investments e.g. bank accounts, real estate other than in the United States, etc. the Directors and Officers of the company may be provided through these companies. If the Directors and Officers are provided, a written indemnity from the Beneficial Owners is required, The form of the indemnity is attached hereto as Schedule 11.

INCORPORATION AND MAINTENANCE FEES

Please see Schedule 1.

Incorporation and prorated management fees are normally payable in advance of incorporation by cheque to us or wire transfer to:

Chase Manhattan Bank,
1 Chase Manhattan Plaza
New York 10081
ABA #021000021
for credit AIC #001 153103 Royal Bank of Canada, Grand Cayman for further credit to Bruce Campbell & Co. A/C #200-665-8.

REFERENCES

Character references relating to the directors and beneficial owners of the Company should be forwarded to us at the time of incorporation. Such references should be obtained from the person's lawyer or bank and may be addressed "To Whom It May Concern". Picture and signature identification will be required (x2), and these can take the form of photocopies of the relevant pages of your passport and driver's licence. Information will also be required in regard to the source of funds which will be invested in the Company and/or by the Company.

If the Company intends to open a bank account in the Cayman Islands, a bank reference will be required in respect of all persons authorised to sign on the account, together with similar picture and signature identification as set out above. A minimum deposit of US$500.00 or US$1,000.00 will be required, depending on the bank chosen, as an initial credit to the account. We can arrange for the opening of the account with a bank of the client's choice at the first meeting of the Board of Directors.

SCHEDULE 1

(Effective 1 April 1994)

(1) INCORPORATION FEES

Our fees for the incorporation of companies including the Government's minimum registration fees are US$1,800.00 for an Ordinary Non-Resident Company and US$1,875.00 for an Exempt Company. The fees are based on the assumption that a completely standard company is prepared and any variation to our standard form or any special expedition will result in increases in these fees.

Our fees for registering a Foreign company inclusive of disbursements are US$1,600.00.

(2) MAINTENANCE FEES

An annual fee of US$1,000.00 is charged for the provision of any one or more of the under-mentioned services by Campbell Corporate Services Limited:-

• Maintaining the Registered Office.
• Keeping Statutory Records.
• Preparing Minutes of the Annual General Meeting.
• Preparing Minutes of the Statutory Directors Meeting (Exempt Companies only).
• Preparing and filing Annual Return. Providing nominee shareholders.
• Providing Campbell Secretades Limfted as Secretary or Assistant Secretary.
• Providing Post Box facilities and forwarding mail.
• Preparing Minutes of up to two other Shareholders and/or Directors Meetings.

Where the Directors of a Company are provided an annual fee in addition to the above is charged. The amount depends on the type of service provided. There is a minimum fee of US$1,000.00 for providing the Board of Directors.

Where Alternate Directors are provided for the purposes of Exempted Companies' Statutory Meetings or where Authorised. Officers are provided pursuant to The Merchant Shipping Acts an annual charge of US$200.00 is made in either case.

The above charges are pro-rated quarterly to the 31st December during the year of incorporation. Annual accounts are normally rendered in November of each year for the forthcoming year. Fees for additional services are normally charged on a time basis.

(3) MINIMUM ANNUAL GOVERNMENT FEES

EXEMPTED                 ORDINARY                 FOREIGN
US$500.00                US$426.83               US$609.76

SCHEDULE 2

TO:   The Partners,
      Messrs. Bruce Campbell & Co.
      Attorneys-at-Law,
      P.O. Box 884, Grand Cayman


      Dear Sirs:

                           RE:


In consideration of your agreeing to provide and having provided 
in the past, management services, for the above Company 
of which I am the beneficial owner, I hereby undertake and agree 
to indemnify you and hold you harmless and keep you indemnified 
and held harmless from all actions, suits, proceedings, claims, 
demands, costs and expenses whatsoever which may be taken or 
made against you or which may be incurred or become payable by 
you in respect of or arising out of any partner or employee of 
your Firm or director, officer or employee of Campbell Directors Limited. 
Campbell Nominees Limited, Campbell Secretaries Limited or Campbell 
Corporate Services Limited having acted in the past or in the 
future acting as officer, director of the Company or having held 
or holding in future any shares in the Company 
or by reason of or in consequences of any decision or act made 
by any such person in relation to the management or administration of 
the said Company. In addition, I undertake to supply you with information 
that is required to be filed by you or your Firm in your 
capacity as directors or Registered office where such 
information is required to be disclosed under the provisions of the 
Companies Law of the Cayman Islands.

I acknowledge that I have read and understand the provisions of 
Section 58 of the Companies Law 1990 and I undertake to keep 
you advised of all transactions and business activities of the Company 
together with details of all deposits, loans and payments made to 
or by the Company and information as to what each payment or receipt 
represents.


Dated this           day of            19


BENEFICIAL OWNER


SIGNED in the presence of.



WITNESS

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.