A Cayman Island Exempted Company will not be suitable for all applicants, and you should consider whether the purpose of the company is to be a pure equity holding company.
The Cayman Island economic substance law applies to ‘relevant entities’ that conduct a ‘relevant activity’. A Cayman Exempted Company is a relevant entity and a holding company is one of the relevant activities.
Holding Companies are subject to lower economic substance requirements. If your company will be a pure equity holding company, the economic substance requirement is satisfied if it has complied with all filing requirements and has a registered office in the Cayman Islands. Clara will act as the corporate service provider in Cayman, providing you with a register office and complete your annual filings. Therefore, the economic substance requirement is easily met for most start-ups.
A pure equity holding company means a company that only holds equity participations in other entities and only earns dividends and capital gains.
While it is possible to hold IP in your Cayman HoldCo, if your holding company will receive income from intellectual property, you will not qualify as a pure equity holding company and may need to seek expert legal advice on structuring your entities.