New company registrations in Cayman for the first quarter of 2009 are down 44 per cent from the first quarter of last year.
The decline brought new company registrations to numbers last seen during the first quarter of 2002.
In its latest statistics released last week, the Cayman Islands General Registry reported 1,880 new companies registered in the first quarter of 2009, a drop of 44 per cent from the 3,372 companies registered in the same period in 2008.
“Cayman plays a pivotal role in global financial markets and these comparatively lower figures are entirely expected given the historic events of the last six months or so,’ said Nick Rogers, partner at Walkers law firm.
Last year saw 11,861 companies registered, a 17 per cent drop from 2007.
In comparison, the first quarter in 2007 saw 3,396 companies registered, out of 14,240 for the year, the highest number on record.
However, the exact type of companies that are being registered is not public, meaning it is difficult to determine the kinds of companies most affected.
The General Registry also reported 233 new partnerships registered in the first three months of 2009, a dramatic decline of 59 per cent from the 568 new partnerships registered in the same period in 2008,. The 2008 figure was in itself a dramatic 46 per cent rise over the 389 partnerships registered in the same period in 2007.
James Bergstrom, managing partner of Ogier law firm noted one of the main reasons for the decline in company registrations is that many are based on the establishment of new investment funds.
‘There is just not the same volume of investment funds being created right now,’ he said.
His fellow financial services professionals appear to be adopting a wait and see attitude that’s avoiding a gloomy outlook.
‘Although we closely monitor registration numbers, the more important guidance for us comes from our clients. Many of them are telling us that they expect a significant pick-up in activity later in the year, and a lot of our clients are preparing themselves for the launch of new products at that time,’ said Mr. Rogers.
He noted that one point is easy to overlook.
‘We now know that the financial markets were still overly bullish in the first quarter of 2008: so although the 2009 numbers look significantly lower than in the corresponding period of 2008, the comparison perhaps unfairly sets one unduly optimistic period against a period of particular fear and uncertainty after the carnage of the last quarter of 2008,” he said.
He also pointed out that the economic situation is not being helped by a negative attitude toward offshore centres.
“Despite an unusual level of anti-Cayman rhetoric internationally – generally driven by populism and demonstrating a complete misunderstanding of Cayman’s role in facilitating global capital flows – we have yet to see any evidence that our sophisticated clients are turning their back on Cayman.”
Mr. Bergstrom was in agreement that for now, it appears the fall in numbers is a reflection of the economic downturn, rather than a reaction to the offshore backlash, in particular Cayman’s grey listing by the G-20.
‘However, the longer that we remain on the grey list, the longer it may reflect in declining numbers,’ he said.