June 2024 A solvent Cayman Islands company may be dissolved in one of two ways (i) by voluntary liquidation; or (ii) strike off. Under the Companies Act (as revised) (Companies Act), a Cayman company is regarded as solvent if it can pay its debts as they fall due in the ordinary course of business. This is particularly important in relation to voluntary liquidation. If during the voluntary liquidation or after the process is complete, the relevant company was not solvent, the directors may face harsh consequences, including fines and imprisonment. Strike-off In certain circumstances, the directors of a company may apply to the Registrar of Companies (Registrar) to have the company struck off the Company Register of the Cayman Islands. This procedure is only appropriate where the company: is not conducting any business and ideally have never operated; and has no (or only nominal) assets and liabilities. Although the procedure to strike off a company is more straight forward and less expensive than a voluntary liquidation, a struck- off company may face potential issues in the future. Such issues include, but are not limited to: any aggrieved creditor or shareholder applying to court to have a struck-off company reinstated within two years of the date of its strike-off (or up to 10 years if the Cabinet of the Cayman Islands allows) as permitted under the Companies Act. As a result, a strike- off does not ensure the end of the company's life. to reinstate the company, it will need to pay annual fees and penalties for the period from strike-off to reinstatement. as a result of reinstatement, the court has the power to award damages to any person to return them to the position they [...]