CAYMAN ISLANDS Law and Practice Contributed by: Daniel Lee, Sophia Scott, Kimberly Robinson and James Turner, Maples Group
the Registrar of Companies. Ordinary resident com - panies must also file an annual list of shares held by Cayman Islands residents with the applicable immi - gration board to comply with the LCCA’s 60% local
LDCs are uncommon but may be used where a project must be completed within a certain timeframe. Upon expiry, the LDC will be deemed to have commenced voluntary winding up. Exempted Limited Partnerships An exempted limited partnership (ELP) is registered under the Exempted Limited Partnership Act (As Revised) of the Cayman Islands (the “ELP Act”) and is the most common partnership structure in the Cay - man Islands, providing a flexible vehicle for investors to pool capital for investment activities outside the Cayman Islands. It is frequently used as a private equity fund, hedge fund or feeder fund. The respec - tive rights and obligations of the general partner and limited partners are set out in an ELP agreement. Lim - ited partners have limited liability, with all manage - ment responsibility vesting in the general partner who is liable for the ELP’s debts and liabilities if the ELP’s assets are inadequate. Limited Liability Partnerships A limited liability partnership (LLP) is formed and reg - istered under the Limited Liability Partnership Act (As Revised) of the Cayman Islands. It is the preferred structure for professional firms in the Cayman Islands, having a separate legal personality and affording lim - ited liability to its partners. An LLP is not a body cor - porate and differs from a UK LLP which is structurally more akin to a corporate rather vehicle. The LLP, rath - er than the partners, is liable for its debts and losses. A partner may be liable for their own negligent acts or omissions where they have assumed an express duty of care and acted in breach of it. An LLP must be established by at least two persons for any lawful pur - pose. Any person, including natural persons, a body corporate or other partnerships, may be a partner. As there is no requirement to carry on business “with a view to profit”, an LLP may be a helpful option for not- for-profit organisations. Foundation Companies and Companies Limited by Guarantee A foundation company is incorporated under the Foundation Companies Act (As Revised) of the Cay - man Islands (the “Foundation Companies Act”) as a body corporate with legal personality distinct from its members, beneficiaries, directors, officers, super -
ownership requirement. Overseas Companies
Overseas companies (usually referred to as foreign companies) have been incorporated in another juris - diction and intend to carry on business in the Cay - man Islands. They must register with the Registrar of Companies pursuant to Part IX of the Companies Act, which is necessary to enable them to hold land, carry on business locally, or act as the general partner of a Cayman Islands ELP (for which they are commonly used). Segregated Portfolio Companies A segregated portfolio company (SPC) is a form of exempted company incorporated under the Compa - nies Act, which may create one or more segregated portfolios to segregate the assets and liabilities held within or on behalf of each segregated portfolio from those of other segregated portfolios and from the gen - eral assets of the SPC. The SPC remains a single legal entity; any segregated portfolio does not constitute a separate legal entity. SPCs are commonly used for mutual funds and other investment vehicles seeking A limited liability company (LLC) is formed and regis - tered under the Limited Liability Companies Act (As Revised) of the Cayman Islands (the “LLC Act”) and combines characteristics of an exempted company and an ELP, similar to a Delaware LLC. LLCs are cor - porate entities with separate legal personality and limited liability. They offer particular flexibility regard - ing operation, management, member rights and profit sharing, and can be used for a variety of purposes including as investment vehicles. Exempted Limited Duration Companies asset and liability segregation. Limited Liability Companies An exempted limited duration company (LDC) is a form of exempted company incorporated under the Companies Act. An LDC exists for a fixed period (not exceeding 30 years) specified in its memorandum of association and must have at least two members.
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