Anguillan company law is primarily codified in three principal statutes: the International Business Companies Act (Cap I.20);c.5 of 2000 the Companies Act (Cap C.65); and the Limited Liability Companies Act (Cap L.65).
The Companies Act is generally reserved for companies engaged in business physically in Anguilla, and companies formed under it are generally referred to as either "CACs" (an acronym for Companies Act Companies) or "ABCs" (an acronym for Anguillan Business Company). The other two statutes relate to the incorporation of non-resident companies as part of the Territory's financial services industry. Companies incorporated under International Business Companies Act are called International Business Companies (or, more usually, "IBCs"). IBCs represent the largest number of companies in Anguilla. Companies incorporated under Limited Liability Companies Act are called Limited Liability Companies, and are also commonly referred to by their three-letter acronym, "LLCs".
Registering a company
In practice, all companies formed in Anguilla are ordinarily incorporated by a trust company. Because all companies are required to have a licensed registered agent, and only trust companies are so licensed, in practice they control the incorporation procedure.
Technically any person may incorporate an IBC or a CAC by subscribing and filing the Articles of Incorporation,, section 2(1); , section 5(1). but as all IBCs and CACs are required by law to maintain a registered agent at all times,, section 37(1); , section 150(1). in practice the registered agent will invariable deal with the incorporation procedure.Because only registered agents have access to the Anguilla Companies Registry's electronic ACORN system, in practice it would be very difficult for anyone else to incorporate an IBC. Similarly any person may form an LLC by subscribing the Articles of Formation,, section 11(1) but because all LLCs are required at all times to have a registered agent,, section 6(1). this process is usually undertaken by that agent.
All IBCs must be incorporated as companies limited by shares. A CAC may be incorporated as either (1) a company limited by shares, (2) a company limited by guarantee, or (3) a company limited by shares and by guarantee., section 6.
Corporate personality
In Anguilla a company has separate legal personality from its members (unlike, for example, a partnership registered under the Limited Partnership Act (Cap L.70) or otherwise regulated by the Partnership Act (Cap P.05)).
The members of a company is not liable for the debts or obligations of the company., section 4; , section 57; , section 23. Similarly, directors or officers of a company are not normally liable for the company's debts except insofar as they may otherwise be liable for their own conduct or actions. The primary circumstances where liability may be imposed upon directors in relation to their acts as directors are (1) where the director is guilty of fraudulent trading or misfeasance, or (2) where the director undertakes personal responsibility or liability for certain actions., section 4; , section 23. There is no express statutory provision in relation to the director of a CAC, but see also Williams v Natural Life Health Foods Ltd UKHL 17.
Conversely, the assets of a company are regarded as belonging solely to the company and not the company's members. In exception circumstances the courts are prepared to "pierce the corporate veil" and treat the assets of the company as belonging to the members (or, conversely, treat the company's obligations as the obligations of the members), but the circumstances in which this will be done are rare and exceptional.Prest v Petrodel Resources Ltd UKSC 34.
Corporate constitution
The corporate constitution of an Anguillan company depends upon which statute it is incorporated under. For an International Business Company they are the Articles of Incorporation and the by-laws. The Articles of Incorporation are publicly filed upon incorporation, but they are a relatively perfunctory document containing very little information beyond the name of the company, the registered office and registered agent, and particulars of the authorised share capital. The regulation of the company's affairs is primarily delegated to the by-laws which are a private document not accessible by the public which are maintained at the company's registered office., sections 7 and 11. For a private company registered under the Companies Act they also consist of the Articles of Incorporation and by-laws., section 7(1). For a limited liability company they are the Articles of Formation and the LLC agreement. Similar to IBCs, the Articles of Formation are publicly filed upon registration, but they are a relatively perfunctory document containing very little information beyond the name of the company, the registered office and registered agent. The principal regulation of the company's affairs is primarily delegated to the LLC agreement which is a private document not accessible by the public which are maintained at the company's registered office., sections 11 and 12.
The Articles of Incorporation (or Formation) of a company are filed with the Companies Registry but are not available for public inspection. However, the by-laws or LLC agreement are private, and not available to the public. In each case the constitutional documents may be amended without a court application, but where the document is publicly filed, the amendment will normally need to also be publicly filed before it becomes effective.
For IBCs and CACs the Articles of incorporation and by-laws will bind the company and each member of the company as if they had been executed by them personally., section 13; , section 22. There is no equivalent provision for LLCs.
Corporate governance
The business and affairs of an Anguillan company are usually managed by its board of directors., section 39. The board must consist of one or more persons, and these may be individuals or companies. Directors owe strict duties of good faith to exercise their powers for a proper purpose and in the best interests of the company.Howard Smith Ltd v Ampol Petroleum Ltd AC 821 The Companies Law is almost entirely silent in relation to the position of the directors, and the relevant legal principles are all derived from the common law.
The members of the company are legally the owners of the company. Although they do not have the power to dictate to the directors how the company should be managed,Automatic Self-Cleansing Filter Syndicate Co Ltd v Cuninghame 2 Ch 34 they have the power to appoint and remove the board, the through this power they exercise indirect control. Resolutions may be passed by the members formally or informally pursuant to the Duomatic principle.
There are no special statutory provisions to protect minority shareholders against "unfair prejudice" on the part of majority shareholders. Accordingly, minority shareholders who are prejudiced in this have to rely upon the common law exceptions to the rule set in Foss v Harbottle,(1843) 67 ER 189 or seek a winding-up of the company on just and equitable grounds.
The directors owe their duties to the company itself, and not to the individual members.Foss v Harbottle (1843) 67 ER 189 Accordingly, where a director acts in breach of their duty, then the proper claimant in any action is the company itself. If the company is unable to take any action (because it is controlled by the wrongdoer) the court may authorise a member to bring proceedings in the name of the company by way of derivative action. However the measure of damages will be the loss to the company, and only the loss to the company. A shareholder cannot sue a person for a wrong committed against the company for the "reflective loss" to the value of their shareholding, as this would result in the wrongdoer paying double compensation for the same wrong (once to the company and once to the shareholders).Johnson v Gore Wood & Co 2 AC 1
The emphasis of Cayman Islands company law is to protect the rights of creditors and members (i.e. the sources of capital) as the key stakeholders in the company. The rights of other stakeholders, such as employees, customers and wider society are given comparatively little protection. This reflects the offshore nature of most Cayman Islands companies, and the different social and economic environments in which they operate.
Shares, equity interests and members
IBCs can only be formed as share issuing companies. Although CACs can be formed as guarantee companies, in practice almost all companies are registered as share issuing companies. LLCs do not have shareholders or issue shares, but they have members who make contributions in return for their interest as members. Legally membership interests in an LLC are a form of hybrid between traditional share capital and partnership interests in the capital of a partnership.For example, section 47(2) of the (dealing with the rights of a mortgagee of a membership interest) are copied directly from equivalent provisions in the Partnership Act in relation to partners charging their interest in the partnership.
Shareholders in an Anguillan company do not enjoy statutory pre-emption rights or rights of first refusal in relation to new issuances or sales of shares. Companies may provide for bespoke provisions relating to such rights in their constitutional documents, and this will sometimes occur in joint ventures or where preferred shareholders invest in the company.
Shareholder voting in Anguillan companies is predicated by the normal basis of majority-control.
Shares in an International Business Company may only be issued as fully paid., section 14(1). The International Business Companies Act is unclear as to what the effect of a purported share issue is where the share is not fully paid, but it seems probable that the result is it would be void.However, there may be a valid underlying subscription contract which subsists, giving rise to an obligation to issue the issues upon payment of the full consideration. Shares in an International Business Company are person property, and the situs of the shares is in Anguilla,, sections 15(1) and 129. and shares may be mortgaged or charged by the shareholder., section 35. Dividends on shares may only be paid out of surplus, which for the purposes of Anguillan law is defined as the excess, if any, of the total assets of the company over the sum of its total liabilities as shown in the books of account, plus its capital., section 1(1) and 32(2).
International Business Companies may acquire and hold their own shares as treasury shares, but whilst they hold them the shares are disabled in terms of voting powers and rights to receive dividends., sections 29 and 30.
International Business Companies may issue bearer shares, but they may only be held by a licensed custodian, who must maintain records of the beneficial owner of the share., section 27. There are no equivalent restrictions on the power of companies to issue bearer debt securities or bearer share warrants.
Debt finance
In addition to raising capital from their members by way of equity, Anguillan companies may raise capital by way of debt, either in the form of loans or by issuing debt securities. Companies are not required to file financing statements in Anguilla when borrowing money.