Anguillan company law

Anguillan company lawis primarily codified in three principalstatutes:
The Companies Act is generally reserved forcompaniesengaged in business physically inAnguilla, 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'sfinancial services industry.  Companies incorporated under International Business Companies Act are calledInternational Business Companies(or, more usually, "IBCs").  IBCs represent the largest number of companies in Anguilla.Companies incorporated under Limited Liability Companies Act are calledLimited Liability Companies, and are also commonly referred to by theirthree-letter acronym, "LLCs".
In practice, all companies formed in Anguilla are ordinarily incorporated by atrust company.  Because all companies are required to have a licensedregistered 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,but as all IBCs and CACs are required by law to maintain a registered agent at all times,in practice the registered agent will invariable deal with the incorporation procedure.Similarly any person may form an LLC by subscribing the Articles of Formation,but because all LLCs are required at all times to have a registered agent,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.
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.Similarly,directorsor 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 offraudulent tradingor misfeasance, or (2) where the director undertakes personal responsibility or liability for certain actions.
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.
The corporate constitution of an Anguillan company depends upon which statute it is incorporated under.
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.There is no equivalent provision for LLCs.
The business and affairs of an Anguillan company are usually managed by itsboard of directors.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.The Companies Law is almost entirely silent in relation to the position of the directors, and the relevant legal principles are all derived from thecommon 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,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 theDuomaticprinciple.
There are no special statutory provisions to protect minorityshareholdersagainst "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 inFoss v Harbottle,or seek awinding-up of the company on just and equitable grounds.
The directors owe their duties to the company itself, and not to the individual members.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 ofderivative 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).
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.
IBCs can only be formed asshareissuing 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.
Shareholders in an Anguillan company do not enjoy statutorypre-emption rightsorrights of first refusalin 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.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.Shares in an International Business Company are person property, and thesitusof the shares is in Anguilla,and shares may bemortgaged or chargedby the shareholder.Dividends on shares may only be paid out ofsurplus, 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 itscapital.
International Business Companies may acquire and hold their own shares astreasury shares, but whilst they hold them the shares are disabled in terms of voting powers and rights to receive dividends.
International Business Companies may issuebearer shares, but they may only be held by a licensed custodian, who must maintain records of the beneficial owner of the share.There are no equivalent restrictions on the power of companies to issue bearer debt securities or bearershare warrants.
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.
Where a creditor takessecurityfrom an IBC for the indebtedness of the company, the company may elect to opt into the public security registration regime.In practice, asecured creditorwill often insist that it does so, and loan documents often contain a covenant to this effect.  Once the IBC has elected to become a security registering company, then either the company or any secured creditor may register any security interest created by the company in the register of registered charges.Order of entry of security interests in the public register determine priority as between competing security interests,but there is no general right of public inspection of the register or registered charges.  Registration of a security interest either requires an original document or a "wet-ink" certified true copy.  In addition, each IBC must keep a private register of charges, but this is a matter of internal record keeping and does not affect the priority of security interests or third party creditors' rights generally.
There is no public registration system for security in relation to a CAC.  All CACs are required to enter particulars of mortgages and charges in a private register of charges, but this is not a document which the public have access to, and registration (or failure to register) does not affect third party rights.
There are no equivalent security registration provisions at all for LLCs.
There are no restrictions prohibiting Anguillan companies of any type from givingfinancial assistancefor the acquisition of their own shares or membership interests, and no requirement to go through a "whitewash" procedure.
There are a number of statutory provisions whereby companies registered in Anguilla may reorganise themselves, either pursuant to a general group reorganisation, or as part of adebt restructuring, or in order to complete anM&A transaction.
By contrast, there are no real statutory reorganisational processes at present which apply to CACs.
Anguillan corporate insolvency law is presently highly fragmented, with various different parts of appearing in either the Bankruptcy Act (Cap B.15) or the Companies Act (Cap C.65).  However, the matrix of laws is nonetheless fragmentary and incomplete.  At present there are no provisions under Anguillan law in relation to corporate insolvency which address insolvency set-off, or the avoidance of dispositions after the commencement of winding-up.  There are also no powers conferred upon theliquidatorspecifically relating to challenging transactions entered into the "twilight" period which prejudice the general body of creditors, but there is limited scope to seek redress for such transactions outside of the insolvency regime under the Fraudulent Dispositions Act (Cap F.60).
However, the legislature is currently considering a comprehensive new Insolvency Act which will both close all of the relevant gaps in the law, and consolidate all related laws relating to both corporate insolvency and personal bankruptcy into a single statute.
Where a liquidator over a company is appointed (either voluntarily or by the court), the liquidator's primary duty is to collect in all of the company's assets and then distribute thempari passuto the company's creditors.  The law confers wide powers upon the liquidator to enable him to do so.  Once a liquidator is appointed,unsecured creditorscannot commence legal proceedings against the insolvent company without the leave of the court, and any rights of action against the company are converted into claims in the liquidation process.  Any disposition of property by the company after the commencement of winding-up is void unless the court otherwise orders.
Secured creditorsgenerally do not participate in the liquidation process, and may continue to proceed with any enforcement action directly against their collateral pursuant to a validsecurity interest.
Anguillan law provides for statutorynettingrelating to financial contracts under the Netting Act (Cap N.03), and this will prevail over any other off provisions arising by law.
Financial services are regulated in the Cayman Islands by theAnguilla Financial Services Commission(or FSC), an independent regulator.  The FSC's ambit extends to companies (and any other entities) which are engaged in regulated business.  The principal types of business which are regulated are:
Most regulated business in Anguilla is regulated if it is conducted "in or from within" the jurisdiction.  Accordingly, if an Anguillan company is incorporated to provide investment advice in Switzerland, it would still be regulated in Anguilla because it is providing regulated services "from within" the jurisdiction.