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10 things you need to know when striking off a Cayman entity
11 July 2022

Kim Charaman
Vice President, Intertrust Group Cayman Islands

Kim Charaman
Vice President, Intertrust Group Cayman Islands
In most cases, winding up an entity in the Cayman Islands is a case of choosing one of two options: voluntary liquidation or a strike-off.
Striking off an entity is significantly cheaper, quicker and less complicated – and is popular for these reasons.
But a strike-off brings associated risks not present with voluntary liquidation, and thus is not appropriate for all winding-up cases. Here we examine 10 factors to keep in mind when considering a strike-off as an option.
1. A Cayman entity strike-off shouldn’t be complicated
Strike-offs are generally used in straightforward winding-up cases, often when an entity has never traded or is dormant and hasn’t had assets or liabilities for some time. That makes it relatively simple and considerably less expensive than voluntary liquidation. In general it costs about half the price.
2. Legal counsel isn’t necessary for Cayman entity strike-offs
Most strike-offs don’t require legal counsel. The entity’s registered office in the Cayman Islands can complete the entire process – including preparing the strike-off documents and attending to the strike-off filing – and will have access to all necessary information and statutory registers. If you do engage a lawyer to prepare the strike-off documents, the registered office will still be responsible for filings with the Registrar of Companies.
3. Be aware of the risks when striking off a Cayman entity
Though quick, uncomplicated and relatively cheap, a strike-off isn’t as comprehensive as voluntary liquidation. So there are risks to consider. In some cases they won’t apply – but when they do, you should weigh them carefully against cost and efficiency.
4. A struck-off Cayman entity can be reinstated
One of the most notable risks is reinstatement of the entity. For two years after strike-off (or a longer period such as the governor in cabinet may allow, up to 10 years), a member/partner or creditor can apply to have the entity restored to the register. By contrast, an entity dissolved by voluntary liquidation cannot be reinstated.
5. Striking off a Cayman entity doesn’t eliminate liability
Another risk is continued liability. Directors/general partners, officers, managers and members/partners of the struck-off Cayman entity can be liable for its debts and obligations for up to 10 years. That liability can be enforced as if the entity had not been struck off. In other words, strike-off does not bar creditors who may surface later from pursuing claims. However, properly administered voluntary liquidation does.
6. Ignored assets are vested to the government
If you strike off a Cayman entity but forget about one of its assets – often property – that asset will vest to the benefit of the Cayman Islands government.
7. Keep in mind the Cayman entity’s relationships
Before striking off any entity, you need to understand its place in your wider company structure. For example, an entity may be a shareholder in (or general partner to) another active entity. Striking it off without considering the timing of winding up any underlying entities or removing any active relationships could cause issues for the active related entity.
8. Consider deadlines when striking off a Cayman entity
With any kind of winding up, the best policy is always to act early. Invoices may have to be paid and other requirements met before a Cayman entity can be struck off. In terms of hard deadlines, the Registrar administers strike-offs on the last business day of each calendar quarter – at the end of March, June, September and December. But the filing cut-off dates are earlier. In 2022 you need to file by 19 August for a September strike-off, or 11 November for a December strike-off. Start preparing well in advance.
9. Have your Cayman entity paperwork in order
Ensure the entity has no assets or liabilities before beginning the process. This will have to be confirmed to the Registrar for the strike-off filing. In addition, most entities’ financial years will end on 31 December. That means an Economic Substance Notification for 2022 will have to be filed, preferably before the Cayman entity is struck off.
10. Consider the alternative
If you are concerned that a strike-off isn’t suitable, consider voluntary liquidation instead. It’s more complex, but reduces future potential risk for directors, investment managers, shareholders and other stakeholders. Learn more about voluntary liquidation here.
Why Intertrust Group?
- Intertrust Group has a dedicated team of liquidations specialists with more than 15 years’ experience overseeing Cayman entity strike-offs, voluntary liquidations and CIMA deregistrations.
- Intertrust Group can take care of the entire strike-off process, including preparing documents and filing with the Registrar.
- Intertrust Group also draws on expertise from its sub-brand Intertrust Law, which can work closely with the liquidation specialist team or provide pre-winding-up legal advice in cases where clients require it.
- Intertrust Group is a publicly listed company with 70 years’ experience providing world-class administration and company secretarial services to clients around the world.