Cayman Islands Limited Liability Companies - Corporate and Company Law - Corporate/Commercial Law (2025)

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1. INTRODUCTION

The principal statute governing the formation and operation oflimited liability companies (each an "LLC") in the CaymanIslands is the Limited Liability Companies Act (2023 Revision) (the"Act").

An LLC is a body corporate with legal personality separate fromthat of its members, capable of exercising all the functions of anatural person of full capacity irrespective of any question ofcorporate benefit. An LLC has perpetual succession, the capacity tosue and be sued it its own name and the power to acquire, hold anddispose of property. Any one or more persons may form an LLC forany lawful business, purpose or activity, whether or not forprofit, provided that there is always one member.

An LLC is essentially a hybrid entity combining many of thecharacteristics of existing Cayman Islands exempted companies andexempted limited partnerships. Please see our publications entitled"Cayman Islands Exempted Companies" and "CaymanIslands Exempted Limited Partnerships" for further details inrespect of those entities.

2. PRE-REGISTRATION MATTERS

2.1 Company Name

The proposed name of the LLC can be reserved with the Registrarof Limited Liability Companies (the "Registrar") for upto one hundred and twenty days. No LLC may be registered with aname that is the same as, or substantially similar to, the name ofanother company on the register. The use of certain words incompany names such as "royal", "chartered" and"bank" is restricted.

The name of an LLC may, but need not, contain the words"Limited Liability Company" or the abbreviation"L.L.C." or "LLC". We do, however, recommendthat the name includes one such designation to distinguish the LLCfrom other corporate entities.

An LLC may be registered with a dual name in a foreign script.There is no requirement that the dual name be a translation of thecompany's English name.

2.2 Contracts

Where a person purports to enter into a contract in the name of,or on behalf of, an LLC which has not yet been registered, he orshe will be personally liable under the contract unless theagreement itself provides otherwise. However, an LLC may ratify thecontract and, by doing so, will become bound by and entitled to thebenefits set out in the contract from the date of registration ofthe LLC. Such ratification by the LLC will have the effect ofreleasing the person who purported to act on the LLC's behalffrom personal liability.

3 ECONOMIC SUBSTANCE

The International Tax Co-Operation (Economic Substance) Act(2021 Revision) (as amended) (the "ESAct") applies to a defined class of relevant entitiesincluding exempted companies and exempted partnerships, foreigncompanies and foreign partnerships registered in Cayman, limitedliability companies, general partnerships (other than localpartnerships) and limited liability partnerships that are required,subject to what is said below, to maintain economic substance inthe Cayman Islands unless they are (i) tax resident outside theCayman Islands; (ii) an investment fund (including entities throughwhich any such fund invests or operates); or (iii) a not-for-profitcompany.

The ES Act requires that all Cayman Islands entities notify theCayman Tax Information Authority ("TIA")of, amongst things, whether or not it is carrying on a"relevant activity" (as defined in the ES Act and asdiscussed further below) and, if so, whether or not it is a"relevant entity".

The notification to the TIA is by way of an annual EconomicSubstance Notification ("ESN") whichmust be filed prior to an entity filing its annual return with theGeneral Registry's Corporate Administration Portal("CAP"). As general partnerships are notregistered through CAP, the Department of International TaxCompliance (the "DITC") has advised thatgeneral partnerships must file an ESN in the form of a spreadsheetto registered office service providers for submission to theDITC's Economic Substance Team at DITC.EScompliance@gov.ky1.

A relevant entity is subject to the ES Act from the date onwhich it commences a relevant activity unless the entity is apartnership (exempted, general or foreign) that was in existenceprior to 30 June 2021 in which case it was required to comply withthe ES Act by 1 January 2022. Non-compliance with the ES Act willresult in significant financial penalties and continuedcon-compliance may result in an application by the TIA to the GrandCourt for an order that the entity is defunct.

3.1 Relevant Activities

Relevant entities will be required to meet the economicsubstance test ("ES Test") in respect oftheir relevant activities in the Cayman Islands. The categories ofrelevant activities include the following which are further definedin the ES Act:

  1. Banking business;
  2. Distribution and service centre business;
  3. Financing and leasing business;
  4. Fund management business;
  5. Headquarters business;
  6. Holding company business;
  7. Insurance business; Intellectual property business; and
  8. Shipping business.

3.2 Economic Substance Requirements

For relevant entities carrying on relevant activities, the ESAct requires that they:

  1. conduct core income generating activities ("CIGAs")(see further below) in relation to the relevant activity;
  2. be directed and managed appropriately in the Cayman Islandsrelated to the relevant activity; and
  3. iii.with regard to the level of relevant income from therelevant activity carried out in the Cayman Islands, have anadequate –
    • amount of operating expenditure incurred in the CaymanIslands;
    • physical presence (including maintaining a place of business orplant, property and equipment) in the Cayman Islands; and
    • number of full-time employees or other personnel withappropriate qualifications in the Cayman Islands.

Relevant entities carrying on the business of a pure equityholding company (one that only holds equity participations in otherentities and only earns dividends and capital gains) will havereduced requirements such that they will need to comply with allfiling requirements under the Act and have adequate human resourcesand premises in the Cayman Islands for holding and managing equityparticipations in other entities.

Each relevant entity that is carrying on a relevant activity andis required to satisfy the ES Test will be required to file anannual return with the TIA in respect of their status under the ESAct.

3.3 Core Income Generating Activities

CIGAs are defined in the ES Act to mean activities that are ofcentral importance to a relevant entity in terms of generatingincome and that are being carried out in the Cayman Islands. CIGAsmay be outsourced provided that the relevant entity is able tomonitor and control the carrying out of the CIGA. The TIA will onlyaccept the relevant entity's claim to have satisfied the ESTest by means of domestic outsourcing if the information isverified by the service provider. Such verification must be madewithin thirty days of the relevant entity providing the sameinformation to the TIA.

Service providers undertaking outsourcing functions are requiredto register with the DITC so that the DITC can independently verifythe engagement and nature of the services provided.

4. FORMATION AND REGISTRATION

Registration of an LLC is effected by filing with the Registrara registration statement signed by or on behalf of any personforming the LLC and the payment of a prescribed fee. Theregistration statement is required to state the name of the LLCand, if applicable, the foreign name, the address in the CaymanIslands of the registered office, names and addresses of members,the nature of business, the financial year end, the term if notformed for an unlimited duration, together with a declaration thatthe LLC shall not undertake business with the public in the CaymanIslands other than so far as may be necessary for the carrying onof the business of that LLC outside of the Cayman Islands.

The Registrar will make the registration statement available forinspection by any person upon payment of a fee of CI$50/US$61.

5. MEMBERSHIP

In connection with the formation of an LLC, a person that is tobe admitted as an initial member of the LLC is admitted upon theregistration of the LLC. After the formation of the LLC, a personmay be admitted as a member either by being issued with an LLCinterest, or upon a transfer of an LLC interest, through a plan ofmerger or consolidation or in connection with the continuation of aforeign entity as an LLC in the Cayman Islands. Provided that allthe requirements for admission contained in the LLC agreement havebeen met, any such person, howsoever admitted, will, withoutfurther actions or formalities, be deemed to have become a memberand agreed to be bound by the terms of the LLC agreement from thatdate as if that person and all existing members and other partiesto the LLC agreement had duly executed and delivered the LLCagreement.

A person ceases to be a member of an LLC upon the happening ofany event provided for in the LLC agreement.

5.1 Members' Contributions

The liability of a member to contribute to the assets of an LLCis limited to the amount that the member has undertaken tocontribute, whether in the LLC agreement or otherwise. Subject tothe LLC agreement, no member or manager of an LLC is personallyliable for any debt, obligation or liability of the LLC solely byreason of being a member or acting as a manager of the LLC.

Subject to the LLC agreement, a person may receive an LLCinterest or be granted other rights in respect of the LLC withoutmaking any contribution or being obligated to make a contributionto the LLC.

Subject to the LLC agreement, a member may grant a securityinterest to a third party in respect of any or all of the LLCinterest of that member. Any such security interest has priorityaccording to the time that written notice of the security interest,signed by the secured party and the relevant member, is validlyserved at the registered office of the LLC.

5.2 Transfer of Membership Interests

An LLC interest is capable of being transferred in whole or inpart in accordance with the Act and the provisions of the LLCagreement. An assignee of a member's LLC interest who is notadmitted as a member has no right to participate in the managementof the business or affairs of the limited liability company exceptas provided in an LLC agreement or otherwise upon the approval ofall of the members and in compliance with the terms of the LLCagreement. Subject to the LLC agreement, unless and until anassignee of an LLC interest becomes a member, the assignee has noliability as a member solely as a result of the assignment.

5.3 Distributions to Members

The profits and losses of an LLC and distributions of cash or inkind by an LLC are allocated or paid among the members in themanner provided in the LLC agreement. Subject to the LLC agreement,the profits and losses and distributions of an LLC are allocated onthe basis of the agreed value of the contributions made by eachmember. An LLC may not declare, make or pay a distribution, orrelease a member from any obligation to the LLC if, at the time ofsuch distribution or purported release, the LLC is, or would be asa result be, unable to pay its debts as they fall due in theordinary course of business. A member who receives a distribution,or is purportedly released from an obligation in violation of thissolvency test and who had actual knowledge of the violation at therelevant time, is liable to the LLC for the amount of suchdistribution or for the performance of the obligation purportedlyreleased.

6. MANAGEMENT

The Act provides for the management of the LLC to be vested inits members acting by a majority in number unless the LLC agreementprovides for all or part of the management of the LLC to be vestedin a manager or managers. Unless the LLC agreement providesotherwise, the members acting by a majority in number or a managerappointed in accordance with the LLC agreement shall have theability to bind the LLC. The rights and duties of the members andmanagers in an LLC are, as between themselves, to be determined bythe LLC agreement. Subject to the LLC agreement, a manager does notowe any duty (fiduciary or otherwise) to the LLC or any member orother person in respect of the LLC other than a duty to act in goodfaith in respect of the rights, authorities or obligations whichare exercised or performed or to which such manager is subject,provided that the duty of good faith may be expanded or restrictedby the LLC agreement.

Further, subject to the LLC agreement, a member does not owe anyduty (fiduciary or otherwise) to the LLC or any member inexercising any of its rights or in performing any of itsobligations under the LLC agreement to the LLC or to any member,and where such member is exercising any vote, consent or approvalright, it may act in its own best interests and as it sees fit eventhough it may not be in the best interests of the LLC or any othermember.

A manager of an LLC may also, if permitted by the LLC agreement,be a member.

7. LIMITED LIABILITY COMPANY AGREEMENT

The Act imposes a requirement that the member or members of anLLC enter into an LLC agreement to regulate the business or affairsof the LLC. The LLC agreement must be governed by Cayman Islandslaw. The LLC will be bound by the terms of the LLC agreementwhether or not it is signed by the LLC. An LLC agreement may beentered into at any time before, after or at the time of the filingof a registration statement and, if entered into before suchfiling, is deemed to be effective on the date of registration ofthe LLC.

The Act, however, affords flexibility to the members to agreeamong themselves the internal workings of the LLC, with appropriateminimum safeguards. For example, an LLC agreement may:

  • give indemnities to any member or manager or other person fromand against any liability;
  • provide that a member or manager who fails to perform inaccordance with the LLC agreement shall be subject to specifiedremedies, sanctions or consequences;
  • provide for classes of LLC interests;
  • provide for the taking of an action, including the amendment ofthe LLC agreement, without the vote or approval of any member orclass of LLC interest or group of members and may provide that anymember or class of LLC interests or group of members shall have novoting rights;
  • grant to all or certain identified members or a specified classof LLC interest or group of members, the right to vote separatelyor with all or any class of LLC interest or group of members ormanagers on any matter;
  • provide that voting shall be on a per capita, number, financialinterest, class, group or any other basis.

The Act provides considerable flexibility on how approvals orconsents of members may be obtained. For example, on a matter to bevoted on, consented to or approved by members, unless otherwiseprovided for in the LLC agreement, the matter may be dealt withwithout a meeting, without prior notice and without a vote byconsent in writing, signed by the members having no less than theminimum number of votes that would be necessary to authorise ortake such action at a meeting at which all members entitled to votethereon were present and voted.

8. CONTINUANCE AND DISCONTINUANCE

8.1 Continuance into Cayman

A foreign entity may apply to the Registrar for permission tocontinue into the Cayman Islands as an LLC. A number of prescribedmatters regarding the applicant's status must be satisfiedbefore the LLC can be registered, although the Act provides thatsome of these points can be satisfactorily confirmed by adeclaration or affidavit signed by an authorised person of theapplicant.

8.2 Discontinuance from Cayman

The Act contains provisions whereby an LLC may be de-registeredas an LLC in the Cayman Islands and continued as a foreign entityunder the laws of any other jurisdiction by application to theRegistrar. A number of prescribed matters must be satisfied beforede-registration is permitted many of which can be confirmed by avoluntary declaration or affidavit of a manager or member.

9. ARRANGEMENTS, MERGERS AND CONSOLIDATIONS

9.1 Arrangements

The Act provides a mechanism for court approved schemes ofarrangement. If a majority in number representing seventy fivepercent vote in value of the creditors or class of creditors, ormembers of class of members agree to any compromise or arrangement,the compromise or arrangement will, if sanctioned by the court bebinding on all creditors or members, as the case may be, and alsoon the LLC or, if the LLC is being wound up, on the liquidator andcontributors of the LLC.

9.2 Mergers and Consolidations

An efficient and cost-effective mechanism exists for mergers andconsolidations between either two LLCs, one or more LLCs and one ormore Cayman Islands exempted companies or one or more LLCs and oneor more foreign companies.

Generally "merger" means the merging of two or moreconstituent companies and the vesting of their undertaking,property and liabilities in one of such companies as the survivingcompany whereas "consolidation" means the combination oftwo or more constituent companies into a consolidated company andthe vesting or the undertaking, property and liabilities of suchcompanies in the consolidated company. The essential difference isthat a consolidation produces a new company different from eitherof its constituent companies, while in a merger one of theconstituent companies will continue to exist as the other is mergedinto it. The surviving company may be a LLC, Cayman exemptedcompany (but no constituent company can be a segregated portfoliocompany) or a foreign company.

The procedure to effect a merger or consolidation involves theapproval by both managers (if any) and members of a written plan,which must include certain prescribed information. A plan of mergeror consolidation, except between a parent and its subsidiary, isrequired to be authorised by two thirds majority in number of themembers of each constituent LLC or, in the case of a particularconstituent LLC, such threshold as set out in the LLC Agreement andsuch other approvals as required in accordance with the LLCAgreement. The consent of each holder of a fixed or floatingsecurity interest of a constituent company in a proposed merger orconsolidation is required unless the court waives the requirementfor consent.

Provision is made for a dissenting member of a Cayman Islandsconstituent LLC or company to be entitled to payment of the fairvalue of his shares upon dissenting to the merger or consolidation.Where the parties cannot agree on the price to be paid to thedissenting member, either party may file a petition to the court todetermine fair value of the shares or interests. These rights arenot generally available where an open market exists on a recognisedstock exchange for the shares of the class held by the dissentingmember.

10. MAINTENANCE OF REGISTERS AND UPKEEP OF RECORDS

10.1 Register of Members

An LLC must maintain a register of members containing the nameand address of each person who is a member of the LLC, the date onwhich such person became a member and the date on which such personceased to be a member either at its registered office or, provideda record of the address at which such register is maintained iskept at its registered office, at any other place, information oneach group or class of LLC interest and whether such memberinterests confer voting rights (and whether such rights areconditional). The register of members and the record of the addressat which it is maintained is only open to inspection as providedfor in the LLC Agreement or as permitted by the manager. However,if the Register of Members is not kept at the registered office ofthe LLC in the Cayman Islands, it will need to be made availablethere in electronic or other form on service of an order or noticefor production by the TIA pursuant to the Tax Information AuthorityAct. The Register of Members must be updated within twenty-one (21)days of any change in the particulars therein.

10.2 Record of Members' Contributions

The LLC must maintain or cause to be maintained, in any countryor territory, a record of the amount and date of thecontribution(s) of each member and the amount and date of anypayment representing a distribution or, otherwise, a return of thewhole or any part of the contribution of any member. The LLC mustupdate such record within twenty-one (21) days of the date of anychange in the particulars therein.

Where the records of members' contributions or books andrecords are kept at a place other than the registered office of theLLC, the LLC must, upon service of an order or notice by the TIA,make available, in electronic form or any other medium, at itsregistered office, such records.

10.3 Register of Managers

An LLC must maintain a register of managers containing the nameand address of each manager and a copy of the register managersmust be sent to the Registrar within 30 days of the firstappointment of any manager. Notice of any change must be filed withthe Registrar within 30 days of any such change taking place.

The Registrar will maintain a list of the names of the currentmanagers of each registered LLC and make the same available forinspection by any person upon payment of an inspection fee andsubject to such conditions as the Registrar may impose.

10.4 Register of Mortgages and Charges

An LLC must maintain at its registered office a register ofmortgages and charges over the assets of the LLC and such registermust be open to inspection by members and creditors at allreasonable times.

10.5 Register of Security Interests

An LLC must maintain at its registered office a register ofsecurity interests over member interests in the LLC notified to theregistered office in accordance with the Act and such registershall contain the time and date of receipt of any notices validlyserved at the registered office in accordance with the Act. Theregister is required to be updated within twenty one days ofreceipt of a validly served notice and the register, or an extractthereof, shall be open to inspection by a person who is eitherexpressly provided for in the LLC agreement or permitted by themanager.

10.6 Books of Account

An LLC must keep proper books of account which give a true andfair view of the business and financial condition of the LLC. Suchrecords shall be retained for a minimum period of five years fromthe date on which they are prepared.

The records need not be kept in the Cayman Islands, but willneed to be made available at the registered office on service of anorder or notice for production by the TIA.

The court shall dismiss a winding up petition on the ground thata petitioner is contractually bound not to present a winding uppetition against the LLC.

10.7 Beneficial Ownership Register

Unless exempted by, for example, being listed or regulated, eachLLC has an obligation to create and maintain a register of itsbeneficial owners to be kept at its registered office and, inparticular, is required to take reasonable steps to identify inrelation to the company any individual who is a beneficial owner ofthe LLC and all Cayman incorporated or registered legal entitiesthat would be beneficial owners if they were individuals.

Beneficial owner details are uploaded to the General Registryvia CAP. The information is encrypted upon submission and furtherencrypted upon receipt. The data is then deleted from CAP and goesto a non-internet facing, offline server only accessible by aGovernment authorised competent authority.

There are significant financial penalties for failure toestablish or maintain a beneficial ownership register. TheRegistrar of Companies also has the power to impose fines for anumber of breaches under amendments to the Beneficial OwnershipRegime which introduced further penalties under the AdministrativeFines Regime. Penalties under the Administrative Fines Regime applyto 'in-scope' entities who fail to take reasonable steps toidentify beneficial owners and relevant legal entities, fail toensure their beneficial ownership register remains up to dateand/or fail to provide particulars of registrable persons to theircorporate services providers or certain notices to theirregistrable persons. Entities exempted from the primary obligationsof the Beneficial Ownership Regime may still be in breach if theyfail to provide written confirmation of their exemption andinstructions to file such exemption, or if they incorrectly reportthat they are an exempted entity. Of particular note, CaymanIslands companies and limited liability companies whose beneficialownership register indicates a status of 'Enquiriespending' for three uninterrupted months will be presumed to bein breach and liable to fines under the Administrative Regime.There are a number of other technical breaches for which companies,limited liability companies and/ or their corporate serviceproviders may be fined. The Registrar of Companies may strike thecompany from the register if a fine remains unpaid by a company forninety days.

11. ONGOING OBLIGATIONS AND DEFAULT PENALTIES

The ongoing obligations of an LLC and the prescribed penaltiesin the event of default are set out below.

11.1 Filing Requirements

On the occurrence of certain events, a notice is required to befiled with the Registrar within certain prescribed time periods.These are indicated in brackets below.

  1. Change in managers or managers' details (30 days);
  2. Change to the registration statement (30 days);
  3. Change of location of the registered office (30 days).

Significant penalties apply in the event of failure to file anupdate with the Registrar on time.

An annual return must be submitted to the Cayman IslandsGovernment in January of every year together with the prescribedfee. A current listing of the annual government fees is availableupon request. Significant penalties apply for failure to file theannual return on or before 31 March in any year. Where an LLC failsto file an annual return in accordance with the Act, the LLC shallbe deemed to be a defunct company and can, subject to a sixmonths' notice period, be treated as a defunct company andstruck off by the Registrar.

11.2 Default Penalties – Registered office

An LLC is required to maintain a registered office in the CaymanIslands for the service of process and to which all notices andcommunications may be addressed. An LLC may, subject to the termsof the LLC Agreement, change the address of its registered officeto another permitted address in the Cayman Islands. The LLC isrequired to notify the Registrar within thirty (30) days of thatchange and pay the prescribed fee. An LLC that carries on businesswithout having a registered office in the Cayman Islands incurs apenalty of CI$200/US$244 for every day during which its business oraffairs is so carried on.

11.3 Default Penalties – No business in the CaymanIslands

An LLC shall not carry on business in the Cayman Islands, exceptin furtherance of the business or affairs of the LLC carried onoutside of the Cayman Islands. If an LLC carries on any business inthe Cayman Islands in contravention of this requirement then,without prejudice to any other proceedings, the LLC and everymanager of the LLC who is responsible for the contravention commitsan offence and is liable on summary conviction to a fine ofCI$500/US$610 for every day during which the contravention occursor continues, and the LLC shall be liable to be immediatelydissolved and removed from the Register at the discretion of theRegistrar.

11.4 Change in Registration Statement

If, during the continuance of the LLC, any change is made oroccurs in any of the LLC's particulars as set out in theLLC's registration statement (see section 4 above), the LLCmust file a certificate of amendment to the registration statementwith the Registrar specifying the nature of the change and providesuch statement to the Registrar within thirty (30) days of thechange.

Any LLC that is in default of the requirement to provide noticeof the change in particulars will incur a penalty of CI$200/US$244dollars for each day that the default continues which penalty shallbe a debt due to the Registrar.

11.5 Default Penalties - Corporate Records – Register ofMembers

All changes in particulars to the register of members must beupdated within twenty-one (21) days.

An LLC must make available, at its registered office, theregister of members as may be required by service of an order ornotice by the Tax Information Authority pursuant to the TaxInformation Authority Act.

An LLC in default of the maintenance of register of memberrequirements set out in the Act shall incur a penalty ofCI$5,000/US$6,098. A failure to comply with an order or notice ofthe Tax Information Authority without reasonable excuse will resultin a penalty of CI$500/US$610 and a further penalty ofCI$100/US$122 for every day during which the non-compliancecontinues.

11.6 Default Penalties – Corporate Records –Register of Managers

A copy of the register of managers must be sent to the Registrarwithin thirty (30) days of the first appointment of any manager ofthe LLC.

Notification of any change to the register of managers must besent to the Registrar within thirty (30) days of the change takingplace.

An LLC in default of complying with the above requirements shallincur a penalty of CI$500/US$610. In addition, if the Registrar issatisfied that a breach has been knowingly and wilfully authorisedor permitted, an LLC shall incur a CI$1,000/US$1,220 penalty andevery manager of the company to which the breach relates shallincur a penalty of CI$1,000/US$1,220 as well as a further penaltyof CI$100/US$122 for every day during which the defaultcontinues.

11.7 Default Penalties – Register of Mortgages andCharges

Any manager of the LLC who knowingly and wilfully authorises orpermits the omission of an entry in the register of mortgages andcharges shall incur a penalty of CI$100/US$122.

The register of mortgages and charges must be open to inspectionby any creditor or member of the LLC at all reasonable times. Ifsuch inspection is refused, any authorised person of the LLCrefusing the same, and every manager of the LLC authorising orknowingly and wilfully permitting such refusal, shall incur apenalty of (CI$4/US$5 for every day during which such refusalcontinues and a Judge sitting in chambers may compel an immediateinspection of the register.

11.8 Register of Security Interests

An LLC must maintain at its registered office a register ofsecurity interests over member interests which shall contain thetime and date of receipt of any of such notices validly served atthe registered office. The register is required to be updatedwithin twenty one days of receipt of a validly served notice andthe register, or an extract thereof, shall be open to inspection bya person (a) expressly provided for in the LLC agreement; or (b)permitted by the manager.

11.9 Record of Members' Contributions

The LLC must maintain or cause to be maintained, in any countryor territory, a record of the amount and date of thecontribution(s) of each member and the amount and date of anypayment representing a distribution or otherwise and a return ofthe whole or any part of the contribution of any member. The LLCmust update such record within twenty-one (21) days of the date ofany change in the particulars therein.

11.10 Books of Account

Every LLC is required to keep proper books of account including,where applicable, material underlying documentation includingcontracts and invoices, with respect to:

  1. all sums of money received and expended by the LLC and mattersin respect of which the receipt and expenditure takes place;
  2. all sales and purchases of goods by the LLC; and
  3. the assets and liabilities of the LLC.

Proper books of account shall not be deemed to be kept if thereare not kept such books as are necessary to give a true and fairview of the business and financial condition of the LLC and toexplain its transactions. Such records shall be retained for aminimum period of five years from the date on which they areprepared. Where the LLC fails to keep proper books of account forthe retention period, the LLC is subject to a penalty ofCI$5,000/US$6,098.

The records need not be kept in the Cayman Islands, but willneed to be made available at the registered office if an order ornotice for production under the Tax Information Authority Act ismade.

11.11 Name

If through inadvertence or otherwise, an LLC on its firstregistration or on its registration by a new name or new translatedname is registered by a name or a translated name which is incontravention of the Act, or which, in the opinion of the Registraris misleading or undesirable, then the LLC may, with the sanctionof the Registrar, change its name or its translated name and shallif the Registrar so directs, change its name or translated namewithin six weeks of the date of such direction or within suchlonger period as the Registrar may think fit. An LLC which defaultsin complying with a direction is liable to a fine of two hundreddollars for every day during which the default continues.

The name of the LLC must be displayed outside the LLC'sRegistered Office and every other place of business maintained byit.

12. WINDING-UP

An LLC may be wound up voluntarily, compulsorily by the court orunder the supervision of the court. An LLC shall be wound upvoluntarily when: (i) the term, if any, for the duration of the LLCexpires; (ii) an event specified in the LLC agreement, followingwhich the LLC is to be wound up, occurs; (iii) the LLC has nomembers; (iv) subject to the LLC agreement, upon the affirmativevote or written consent of at least two thirds in number of themembers of the LLC. Unless inconsistent with the Act, theprovisions of Part V of the Companies Act and the Companies Windingup Rules, as applicable, apply mutatis mutandis to the winding upof an LLC.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.

Cayman Islands Limited Liability Companies - Corporate and Company Law - Corporate/Commercial Law (2025)

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