Cayman foundation companies

The case used in this module

Each module tells its own made-up Brindlecove story, so details can differ from one module to the next.

Key words

Foundation company

A Cayman company that the Registrar has declared to be a foundation company under section 5 of the Foundation Companies Act.¹²

Objects

The purposes set out in a foundation company's memorandum. They may, but need not, benefit other people.³

Constitution

A foundation company's memorandum and articles of association, but not its bylaws.¹

Bylaws

Extra rules a constitution can provide for. Directors must follow them as far as the law and the constitution allow, but they are not part of the constitution.⁴

Supervisor

A person, other than a member, who has an unconditional right under the constitution to attend and vote at general meetings.¹

Beneficiary

A person who will or may benefit from a foundation company carrying out its objects. Unless the constitution says otherwise, a beneficiary has no rights over the company.¹⁵

Qualified person

Someone licensed or permitted under Cayman's Companies Management Act to provide company management services. A foundation company's secretary must be one.¹⁶

Interested person

A member or supervisor, someone with the right to become one, or anyone the constitution declares to be one.¹

Company limited by guarantee

A company whose members promise to pay up to a set amount if it is wound up. It may, but need not, also have share capital.⁷

Exempted company

A Cayman company registered as exempted because its objects are to be carried out mainly outside the Cayman Islands.⁷

DAO (decentralised autonomous organisation)

A group that makes decisions through votes by holders of its token, often with no formal corporate structure.⁸

Wrapping a DAO

Forming a legal entity, such as a foundation company, to act as a DAO's formal legal representative or operating body.⁹

Economic substance notification (ESN)

The yearly notice every Cayman company gives the Tax Information Authority, saying whether it carries on a relevant activity.¹⁰¹¹

Beneficial owner

Under Cayman's Beneficial Ownership Transparency Act, an individual who owns or controls 25% or more of the shares or votes, or otherwise has ultimate effective control.¹²

Virtual asset service

Under Cayman's VASP Act, issuing virtual assets, or exchanging, transferring or keeping them safe for others as a business.¹³

Registered office

Where a company's official records are kept. For a foundation company, it is its secretary's business address.¹⁴