The directors of a Cayman Islands company need to observe a set of statutory and fiduciary duties, as prescribed in the Companies Law and the Common Law. Our agents can help new company directors in the Cayman Islands with complete information about the local laws applicable to them.
A director should fully understand its duties and liabilities when undertaking the management of a company. According to company law, a legal entity in the Cayman Islands can be incorporated by an individual who can also act as the shareholder and as the director of that company. Sole directors will have different attributions and concerns compared to those who run a company listed on the stock exchange. It is important to understand the different duties and consequences of failing to observe them.
Cayman Islands incorporation is a simple process and also a facile one from a management point of view. The fact that the company can be managed by a single director and that it can engage in various business purposes is an advantage for many foreign entrepreneurs who start an offshore business.
This short guide contains some of the key provisions regarding the director’s duties and liabilities in the Cayman Islands as well as a few general rules for those who act as corporate directors.
Observing the local director’s duties and liabilities is a mandatory requirement for those who wish to set up a Cayman Islands company. Our team can give you more details about the rules applicable to those who are appointed to this position and we can also provide guidance and assistance to existing company directors in the Islands. Feel free to reach out to us if you have questions.
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The function of a Cayman Islands company director
The Companies Law contains the executive and the non-executive duties and liabilities of company directors in the Cayman Islands. There are general provisions, for directors of offshore companies, and there are those related to registration for directors of mutual funds. According to the Directors Registration and Licensing Law, an individual who acts as the company director for a mutual fund must be registered with the Cayman Islands Monetary Authority. One of our Cayman Islands incorporation agents who specializes in corporate management issues can give you more information about the registration and/or licensing requirements.
Investors can choose to appoint a nominee director in the Cayman Islands. This can be the case when a foreign beneficial owner opens a Cayman Islands exempted company and wishes to benefit from the highest degree of confidentiality for his business activities. The nominee director is essentially a third party whose name will appear on the company’s founding documents and also as public information in the documents submitted to the Registrar of Companies. The relationship between the nominee and the beneficial owner is a fiduciary one.
Our Cayman Islands company formation specialists can help you with information on using nominee director services and when needed, can provide you with an offer. We can also provide complete information on the local laws that directly concern company directors.
Director’s duties in the Cayman Islands
The list below includes the main director duties in the Cayman Islands:
- notify any changes: the director must inform the Registrar of Companies of any changes in the registered office;
- maintain registers: the company director is the one to ensure the safekeeping of the company registers: the Register of Member, the Register of Directors and Officers, the Register of Mortgages and Charges;
- file the annual return: he is also the one to make sure that the company complies with the annual filing requirements; he can also be responsible for paying the annual Government fees for the company;
- hold the general meetings: except form the Cayman Islands exempted company, a legal entity must hold an annual general meeting (at least) and the director is the one entrusted with handling this meeting.
- others: the director must also notify the Registrar of Companies of any special resolutions passed by the company.
Apart from the duties described above, the director also has a set of fiduciary duties: he must act in good faith and with a proper purpose, not for personal purposes. they have a duty of confidentiality and must avoid conflicts with other natural or legal persons. They must act in such a way as to promote the success of the business and not engage in activities that would allow them to derive secret profits. Directors are not to misuse company property or pass it on to third parties and they are not to act beyond their authority and powers. The company’s articles of association contain most of the powers granted to a company director. A duty of care, skill and diligence are also expected from a company director.
The liabilities of a company director in the Cayman Islands are listed herein include those towards the company and its shareholders, the liability to third parties and also to other directors.
Our lawyers in the Cayman Islands can give you more details about liability.
A director’s duties, both fiduciary and those related to skill and diligence, are owed primarily to the company. For more detailed information about the Companies Law and the director’s obligations, regardless of the type of company, you can contact our Cayman Islands company formation agents.