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Cayman Islands Company Restoration – Reinstating a Cayman company

 

 

Apology for delay. In case you still need this, the fees are as follows:

 

  1. If an application is made by a director or a shareholder:
  • The restoration fee (equal to the original incorporation or registration fee) – for example US$800 for an exempted company with an authorised share capital below US$50K.
  • Any unpaid/outstanding annual fees and penalties – determined by the Registry.
  • The filing fees at Court (currently a total of US$250).
  • The advertisement fee payable to the Cayman Islands Gazette (approximately US$100).
  • Service provide fee – we charge for carrying out all of the preparation work (including obtaining relevant letters and collating documentation, drafting the application, affidavit and Order, filing the application and dealing with advertisement) are usually no more than US$2,500, depending on the work involved and subject also to the Court requiring additional evidence, a hearing or other steps/conditions to be complied with.

 

  1. If an application is made by a creditor:
  • The restoration fee (equal to the original incorporation or registration fee) – for example US$800 for an exempted company with an authorised share capital below US$50K.
  • Any unpaid/outstanding annual fees and penalties – determined by the Registry.
  • The filing fees at Court (currently a total of US$6,100).
  • The advertisement fee payable to the Cayman Islands Gazette (approximately US$100).
  • Service provide fee – there would likely be a need to get a legal advice/incur legal fees to prepare the Petition for the Grand Court and other documents etc. otherwise the process is similar to above.

 

We charge a fixed fee of US$5,000 for legal services for making an application to the Grand Court for the reinstatement of a company to the register.  The Court filing fees are CI$225 (US$274.39).   Before a Company will be restored to the register all outstanding fees and penalties must also be paid to Companies Registry (ROC) – and the usual form of  court order includes this as a condition.
If instructed to proceed we would write to ROC to ascertain the amount of outstanding fees and penalties – and we cannot give any advance estimate as to what these may be.   If no fees were paid at all in 2018, 2019 and 2020  and the company failed to keep a registered office (penalty CI$500) then these fees and penalties could  amount to CI$5,200 (US$6,3414) or more if 2017 fees were unpaid as well.
If the Company is an exempt company it will also need to name a service provider willing to become registered office once the company is reinstated.  Our affiliated company, Sinclair Corporate Services ltd would charge separately for that – but I can indicate the fees excluding Government fees for RO services, on-boarding, compliance and filing the mandatory Economic Substance filing  and beneficial owner filing would be US$1,250 for 2020.

Maggie from HMS forwarded to us your email below, as we regularly work with HMS to provide legal support for their client’s needs. I set out here the reinstatement process in Cayman and an estimate of what you should expect in fees.

Process

The process is as follows:

  1. We confirm reinstatement fees/penalties with the Registrar of Companies. Reinstatement fee is equivalent to the original registration fee. All unpaid annual fees must be made good, and penalties may be applied. The Registrar usually responds within a week to these requests.
  1. Based on the Registrar’s confirmation, the cost estimate will come into clearer view. We can then advise on amount of the funds client must send to us.
  1. We must confirm that a licensed corporate services provider is willing to act as registered office.
  1. Client confirms Company director that will swear the required affidavit.
  1. We will draft the affidavit and send for execution by the director.
  1. On receipt of the signed affidavit, we file the application for restoration with the Court.
  1. The Court deals with these applications administratively without the need for a court hearing. This typically takes 2-3 weeks but it can sometimes be quicker or slower.
  1. Company then must file the Court order and pay fees to the Registrar; the Company is then restored to the register.
  1. Notice of the restoration order is published in the Cayman Islands Gazette.

Please note that if the company was struck off more than 2 years ago, there is an additional approval required from the government which can take a month or more to obtain, but does not materially increase the cost.

Estimate of Costs

Reinstatement FeeUS$731.71Note 1
Annual FeesUS$3,414.64Notes 1, 2
PenaltiesUS$3,414.64Notes 1, 3
Court Fee for ApplicationUS$243.90
Registry SearchUS$36.59
KSG Fixed Legal FeeUS$2,000.00
Gazette NoticeUS$200.00
TotalUS$10,041.48Note 4
Note 1: Based on assumption that Company’s share capital is US$50,000 or lower. If the Company was incorporated with a higher share capital, the fees will be higher. Registrar will confirm amount.

 

Note 2: Based on advice that Company was registered up to 2018. Annual fee calculated at US$853.66 per annum x 4 years (2017-2020). Registrar will confirm amount.

 

Note 3: Statutory penalties max out at 100% of annual fee. This number is based on paying maximum penalty on unpaid annual fees for 2017-2020.

 

Note 4: This estimate is for restoration application only. Registered office provider may charge additional fees for their services.

 

Mark Russell

 

 

 

Strike Off A company may be struck off the register upon application or on the initiative of the Registrar.

The Registrar is vested with the power to strike a company from the Register if he has reasonable cause to believe the company is not in operation or is not carrying on business and where a company has failed to pay its annual fees or file its annual return.

Application for Restoration Section 159 Whether the company is struck off voluntarily or by default, an application for restoration may be made to the Grand Court to restore the company.

Time limit

This application may be made within 2 years of strike off or, with the permission of the Governor in Council, within 10 years.

The Clerk of the Court will determine applications on the papers without a hearing. The Clerk must be satisfied that the company was in operation or carrying on business at the time it was struck off or simply that the restoration of the company is just.

Fees Costs involved in this process include:

Re-instatement fee to the Registry which will normally be equivalent to the original incorporation/registration fee;

Unpaid/outstanding annual fees;

Court filing fees (approximately US$ );

Advertisement fee payable to Cayman Islands Gazette (US$100.00);

Legal fees start at US$2,500.

The legal fees include: obtaining letters of no objection from the Registrar, drafting the originating application, drafting the Order, drafting the affidavit in conformity with the stipulations and requirements of the Grand Court Rules, collating relevant documents, filing the application and placing the necessary advert following a successful application in the Cayman Islands Gazette.

Time frame

The Clerk will usually determine uncontroversial applications within a fortnight of filing however each case turns on its own facts

One re-instated, the company is deemed to have continued in existence as if it had never been struck from the Register. Any assets the company had at the time of strike off will be restored.

 

 

 

Circumstances that have a company struck off

Under section 156 of the Companies Law, the Registrar may strike a company off the Register of Companies if it has reasonable cause to believe that the company is not carrying on business or is not in operation.

The most common reason for the strike off of a company is failure of the company to pay its annual statutory fees.

To have a company reinstated

In the event that a company is struck off voluntarily or by the Registrar, an application may be made to the Grand Court of the Cayman Islands by the company, a shareholder or a creditor of the company, for an Order that the company be restored to the Register.

The application may be made at any time within two years of the date on which the company was struck off or, with the permission of the Governor in Council, at any future period not exceeding ten years from that date.

Restoring a company to the Register

Steps to be taken to restore a company to the Register.

  • The Registrar of Companies will need to be contacted requesting confirmation of the amount in fees, penalties and restoration costs that are payable.
  • If the company has been struck off for more than two years, the Governor in Cabinet must have no objection to restoration of the company to the Register.
  • The Registered Office will draft an application to restore company in accordance with s 159 of the Companies Law.
  • Draft an affidavit to be sworn by a company director or the member seeking restoration, which sets out the grounds for reinstatement. see 102, r.17(2) of The Cayman Islands Grand Court Rules
  • The application, sworn affidavit and Order are filed with the Clerk of the Court.
  • The Clerk of the Court will determine the application without the need for a hearing. If the Clerk is satisfied with the application and the evidence as filed, the Order will be made confirming the restoration subject to the conditions that the fees are paid as stated in the Registrar’s letter and that a notice of the new registered office is filed with the Registrar of Companies.
  • In the final step, notice of the restoration will be published in the Gazette and the process is complete.

Reinstating a Company Back onto the Register After it has been Struck-Off

Pursuant to section 159 of the Companies Law, within two years of a company being struck off the register, a company may submit an application to the Grand Court for reinstatement. Most applications will be processed without the need for a formal hearing and are dealt with within a week of submission. However, it is possible that a hearing before a judge may be required if, for example, the court requires further evidence to be presented.

All applications must be accompanied by a letter of approval from the Registrar of Companies, which will set forth any reinstatement fees. Applications must also include an affidavit sworn by an official representative of the company, who typically is a former director of the company.

The affidavit must state:

• the company’s registration number and its original date of incorporation
• the date the company was struck off including a copy of the notice
• that the Registrar does not object to the company being restored to the registry
• statement of any overdue annual fees and or registry reinstatement fees
• the intended address of the company should it be reinstated and
• the reason the company seeks to be restored onto the registry

Applications made more than two years after the original strike-off date, but no more than ten years later, must also be accompanied by a letter of approval from the Governor in Cabinet.

Cayman Islands Companies Law (2010 Revision) – Company Law

159. If a company or any member or creditor thereof feels aggrieved by the company having been struck off the register in accordance with this Law, the Court on the application of such company, member or creditor made within two years or such longer period not exceeding ten years as the Governor in Cabinet may allow of the date on which the company was so struck off, may, if satisfied that the company was, at the time of the striking off thereof, carrying on business or in operation, or otherwise, that it is just that the company be restored to the register, order the name of the company to be restored to the register, on payment by the company of a re-instatement fee equivalent to the original incorporation or registration fee and on such terms and conditions as to the Court may seem just, and thereupon the company shall be deemed to have continued in existence as if its name had not been struck off; and the Court may, by the same or any subsequent order, give such directions and make such provisions as seem just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off.

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