If your Cayman vehicle is nearing the end of its term or purpose, now is the time to consider your options in order to minimize annual fees for 2021.
There are two basic routes to closing down a Cayman Islands entity:
Voluntary liquidation
The most final and complete method of terminating an entity is a voluntary liquidation as once the entity has been dissolved, it cannot be reinstated. You will be able to avoid paying 2021 government fees to the Registrar of Companies (ROC) if the Final General Meeting of the entity and all ROC filings have been made by the end of January 2021. If this option is chosen, the process should be started in early November at the latest.
Strike-off
A strike-off is a more cost effective and less time-consuming option, but has the downside that it can be reversed by any member or creditor for a period of 10 years after the strike-off date. Strike-offs are therefore not usually recommended where the entity in question has accepted external investors and/or traded.
The strike-off method is typically utilized where the entity has not engaged in substantial business activity, has had no external investors, has never traded, and does not have external independent directors or where the directors have determined that the entity has no assets and liabilities and there is no risk of creditors coming forward with claims against the entity.
If a strike-off is a viable option, you will need to have all relevant materials filed before 31 December 2020 to avoid 2021 ROC fees. Fees for local services providers, such as registered office fees, may still be due until the entity is finally struck-off. If you wish to strike-off an entity prior to year-end (i.e. so that it will not exist in 2021), all relevant materials must generally be filed by 12 November 2020.
Cayman regulated funds/fund managers registered with CIMA
If you are a regulated fund (mutual or private) or fund manager terminating Cayman entities that are registered with the Cayman Islands Monetary Authority (CIMA), you will require additional time to finalize the termination process. However, by moving quickly you will still have the opportunity to reduce unnecessary 2021 costs.