Transfer by way of continuation into the Cayman Islands

02 August 2023

The purpose of this briefing is to summarise the process to transfer a foreign entity into the Cayman Islands by way of continuation.

It is a general summary of the law and does not constitute legal advice. If you have any questions about transfers by way of continuation, please contact your usual Bedell Cristin contact.

Introduction

The Companies Act (Revised) allows a body corporate incorporated, registered or existing with limited liability and a share capital under the laws of any jurisdiction outside the Cayman Islands (the "Company") to seek registration by way of continuation as an exempted company limited by shares with the Registrar of Companies.

Conditions for registration

The Registrar shall register the Company if:

it is incorporated, registered or existing in a jurisdiction whose laws permit or do not prohibit its transfer by way of continuation;
the Company is constituted in a form or substantially a form which could have been incorporated as an exempted company limited by shares under the Companies Act (Revised);
it pays the prescribed registration fee (see below);
it delivers the documents described below to the Registrar;
its name is permitted under the Companies Act (Revised) and is available (or it has undertaken to change it within 60 days of registration);
if it is (or will when registered by way of continuation be) prohibited from carrying on its business in or from within the Cayman Islands unless licensed under any law, it has applied for and obtained the requisite licence; and
the Registrar is not aware of any other reason why it would be against the public interest to register the Company.

Application process

The application is filed with the Registrar on the Company's behalf by its proposed registered office service provider.

The application must include the following documents:

certified copies of:
- the certificate of formation or incorporation (or equivalent); and
- the charter, bye-laws or memorandum and articles of association (or other constitutional document);
a certificate of good standing (or declaration by a director that the Company is in good standing, if the relevant jurisdiction does not issue certificates of good standing);
a list of the names and addresses of the directors;
notice of the address of the proposed registered office in the Cayman Islands;
declaration/affidavit signed by a director that the operations of the Company will be conducted mainly outside the Cayman Islands;
declaration/affidavit signed by a director that:
- no petition or other similar proceeding has been filed and remains outstanding or order made or resolution adopted to wind up or liquidate the Company in any jurisdiction;
- no receiver, trustee, administrator or other similar person has been appointed in any jurisdiction and is acting in respect of the Company, its affairs or any part of its property;
- no scheme, order, compromise or other similar arrangement has been entered into or made in any jurisdiction whereby the rights of creditors of the Company are and continue to be suspended or restricted;
- the Company is able to pay its debts as they fall due;
- the application is bona fide and not intended to defraud existing creditors;
- any consent or approval to the transfer required by any contract or undertaking entered into or given by the Company has been obtained, released or waived, as the case may be;
- the transfer is permitted by and has been approved in accordance with the Company's constitutional documents;
- the laws of the relevant jurisdiction with respect to transfer have been or will be complied with;
- upon registration in the Cayman Islands, the Company will cease to be incorporated, registered or exist under the laws of its present jurisdiction;
a statement of the assets and liabilities made up to the latest practicable date;
an undertaking signed by a director that notice of the transfer has been or will be given within twenty-one days to secured creditors (or that the Company has no secured creditors); and
a copy of the board resolutions approving the transfer by way of continuation into the Cayman Islands.

Effect of registration by way of continuation

Upon registration, the Registrar will:

enter details of the Company on the Register of Companies;
issue a certificate of registration by way of continuation; and
publish notice of the registration in the Cayman Islands Gazette.

From the date of registration, the Company continues as a body corporate as if incorporated and registered as an exempted company, under and subject to the Companies Act (Revised). It has, amongst other things:

the capacity to perform all the functions of an exempted company;
the capacity to sue and to be sued;
perpetual succession; and
the power to acquire, hold and dispose of property.

Registration by way of continuation does not, however:

create a new legal entity;
prejudice or affect the Company's identity or continuity as previously constituted;
affect the Company's property;
affect any appointment made, resolution passed or any other act or thing done in relation to the Company pursuant to a power conferred by its constitutional documents or by the laws of its previous jurisdiction;
except to the extent provided by the Companies Act (Revised), affect the rights, powers, authorities, functions and liabilities or obligations of the Company or any other person; or
render defective any legal proceedings by or against the Company and any legal proceedings that could have been continued or commenced by or against the Company may be continued or commenced after registration.

Other things to think about

If the Company must be registered or licensed in the Cayman Islands, for example, because it is a mutual or private fund, or subject to any other licensable or regulated activity (such as banking, insurance, trust company business, money services, securities investment business and/or virtual assets service provider); consideration should be given to the timing of such registration or licensing.

Depending on the nature of the Company's business, upon registration in the Cayman Islands, the Company may have to comply with, amongst others, the following laws and regulations: