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Industry Updates

Cayman Islands Voluntary Liquidations 2021

06 Jul 2021

Historically, the timing of the commencement of the voluntary liquidation of a Cayman Islands company was often driven primarily by the desire to avoid incurring the following year's annual government fees.  To avoid those fees, the liquidation had to commence by December, with the final meeting being held before the end of January.  This timetable resulted in an effective dissolution date into the next calendar year, while still avoiding the government fees for that year.  However, given increasing regulatory costs and annual filing / reporting requirements, we often see companies looking to commence their liquidations earlier.  There may now be increased operational efficiencies in completing the dissolution within the current calendar year as additional regulatory filings and other costs for stub years can be avoided.  Similar considerations may also apply to other types of Cayman entities.

This is particularly relevant to companies that are Reporting Financial Institutions under FATCA1 or CRS2, as well as those that are Relevant Entities undertaking Relevant Activities for Economic Substance3, all of which may be required to further report to the Cayman Islands Tax Information Authority should they be in existence during 2022.  Companies that are registered for taxation purposes in other jurisdictions or that have annual financial reporting requirements might also find a 2021 dissolution date advantageous.

For a Cayman Islands company to be dissolved by 31 December 2021, its voluntary liquidation will need to have commenced before 30 August 2021.  Additional time may need to be allowed where the affairs of the company are not straightforward.  Funds that are registered with the Cayman Islands Monetary Authority ("CIMA") pursuant to the Mutual Funds Act (2021 Revision) or the Private Funds Act (2021 Revision) ("Funds") may also need to consider an earlier commencement date to ensure that the final audited financials are completed and filed with CIMA prior to the final meeting of the Fund.  CIMA requires that a Fund undertakes a final audit for the period either up to the date of the appointment of the third party liquidator or to the date of the full payment of the final redemptions.

Maples Group's voluntary liquidations team is composed of dedicated and experienced professionals with extensive experience in the dissolution of various corporates, structured finance vehicles and investment funds.  For further information on the team and our liquidation services, please view our Overview of Services.  Additionally, you may wish to refer to our legal guides with information on preparing your entities for liquidation and the statutory process: Voluntary Liquidations of Solvent Cayman Islands Companies and Voluntary Dissolution and Winding Up of a Cayman Islands Exempted Limited Partnership.
For more information on voluntary liquidations, please click here to get in touch with our Cayman Liquidations team. 

1 In the Cayman Islands under The Tax Information Authority (International Tax Compliance) (United States of America) Regulations (2021 Revision)

2 In the Cayman Islands under The Tax Information Authority (International Tax Compliance) (Common reporting Standard) (Amendment) Regulations (2021 Revision)

3 In the Cayman Islands under the International Tax Co-operation (Economic Substance) Act (As Revised)

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Backed by an extensive operational and support network, our specialist voluntary liquidation and dissolution services team has developed best practices and is widely recognised as the market leader.