A legislative amendment intended to make it easier for charitable entities to obtain special exemptions under the Companies Law will go into effect on March 1.
The amendment is to Section 80 of the Companies Law, which allows charitable organizations to operate as limited liability companies without having to have the “limited” or “ltd.” designation in their names, and without having to pay certain fees under that law. The amendment reduces the application costs organizations have to pay to obtain the Section 80 exemptions, and it also streamlines the process for them to achieve this status.
Section 80 applies to nonprofit organizations that prefer a legal structure with limited liability. Those entities would in practice first register as a company under section 80 of the Companies Law and then subsequently register under the Non-Profit Organisations Law to be able to raise funds from the public.
The section also applies to privately funded organizations to be recognized as not for profit and still enjoy limited liability. Privately funded organizations do not need to register under the Non-Profit Organisations Law, if they are not soliciting funds from the public.
Under current rules, Cabinet has the ability to approve applications under Section 80, as well as any subsequent changes to the companies. However, this process has been criticized as slow and expensive.
The amendment will have organizations apply for Section 80 status to the General Registry rather than Cabinet. It also reduces application fees from $1,000 to $300, and fees for making administrative changes – such as changing a director – from $500 to $25.
“Government has listened to the public’s comments about Section 80 companies registering as charities in the Cayman Islands, and we have made steps to reduce the cost and turn-around time for processing such applications,” Financial Services Minister Tara Rivers said of the impending amendment.