What happens if a Caymanian business partner dies?
Hypothetically, a micro business is set up with the required 60% Caymanian, 40% non-Caymanian. There are just two people involved, and it’s going along nicely, but the Caymanian sadly passes away. What becomes of the business and the non-Caymanian’s status both in the business and on the island?
Auntie’s answer: The Local Companies (Control) Law (2019 Revision) sets out provisions for businesses being established in the Cayman Islands. An official from the Department of Commerce and Investment (DCI), which handles trade and business licensing, explained the ramifications of the scenario you describe.
For all of the legal requirements governing partnerships between Caymanian and non-Caymanians for owning a business, you can read through Section 5 of the law (Provisions to be complied with by local companies), but that doesn’t include what happens in the hypothetical situation you are asking about. The DCI official explained what the non-Caymanian partner needs to do.
“If the Caymanian dies the non-Caymanian is required to notify the (Trade and Business Licensing) Board as soon as possible. The board will give time for the estate to be worked out,” the official said.
If the Caymanian children or spouse of the deceased partner inherits the business, then the board will be notified and “due diligence would be provided on the new shareholders and business carries on. If the business is sold to the 40% owner (non-Caymanian) so he now owns 100% of the business then he has to apply for a Local Companies Control Licence (LCCL).”
The board would then take into consideration Section 11(4) of the law (Granting and revocation of licence), before deciding to grant the non-Caymanian owner an LCCL. To be safe, though, the DCI official recommends seeking legal advice in that situation.
The law mentioned above can be found on the CNS Library
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Category: Ask Auntie, Business Questions
Sounds like I need to find some quite ill octogenarians for fronting next time
The first thing to do is find out whether your fronting deal with the deceased is still good with the heirs. if not, see a lawyer quick.
That is exactly what I would do. Going the other way is a hassle.