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The Cayman Islands, known as one of the most popular choices for international business registration, is attractive because of its relaxed laws and regulations and business-friendly environment.
In this article, we will take a look at the capital structure and equity management of Cayman companies, and demystify them to help entrepreneurs and investors better understand how to manage and allocate assets.
The capital structure of a Cayman company
1. Authorized share capital: Cayman companies usually stipulate their authorized share capital, which is the number of Zui large share capital owned by the company. This number can be determined at the time of incorporation of the company and can be subsequently increased through amendments to the articles of association.
2. Issued share capital: Issued share capital is the number of shares offered in the authorized share capital. The company may choose to issue part or all of the authorized share capital. The shares after the issuance can be distributed to shareholders.
3. Unissued share capital: Unissued share capital refers to the number of unissued shares in the authorized share capital. A company can issue unissued shares when needed.
Equity management of Cayman companies
1. Shareholders' equity: Shareholders are the equity holders of the company, and they have an interest in the company. A shareholder's equity can be expressed by holding different types of shares such as common shares, preferred shares, preferred shares, special shares, etc.
2. Shareholder rights: Shareholders enjoy a series of rights in the company, including the right to participate in shareholders' meetings, voting, the right to obtain the company's profits, and the review and supervision of the company's management.
3. Capital maintenance: Companies often have capital maintenance clauses in their articles of association, which dictate how the company manages and distributes its profits and capital. This includes dividend distributions, retained profits, and capital reinvestment.
4. Shareholder Agreement: A shareholder agreement is a contract entered into between shareholders that stipulates the management, transfer, and inheritance of equity. This helps ensure the smooth operation of the company and avoids disputes and confusion.
Equity transfer and inheritance
Cayman companies allow the transfer and inheritance of shares. Shareholders can sell their equity to other shareholders or third parties, or they can inherit their equity to their heirs through a will or statutory succession provision.
Schematic diagram of the equity transfer process of Cayman company:
Dividends and capital gains
Cayman companies are usually free to decide whether or not to distribute dividends and capital gains to shareholders. Dividends and capital gains can be made in accordance with the provisions of the company's articles of association and shareholders' agreement, which usually need to be approved at a general meeting of shareholders.
With an in-depth understanding of Cayman's capital structure and equity management, companies can better plan and manage their international business.
The Caymanian legal system gives companies a great deal of autonomy and adaptability, allowing them to manage their capital and equity according to local conditions, ensuring compliance and demonstrating corporate wisdom.