CAYMAN ISLANDS Law and Practice Contributed by: Daniel Lee, Sophia Scott, Kimberly Robinson and James Turner, Maples Group
capacity to sue and be sued and to hold prop - erty. Companies limited by guarantee are rarely incorporated for purely commercial purposes, rather they are more typically used for non-profit/ club scenarios where there is no expectation of
It is also possible to establish a trust for use as an investment vehicle. Such a structure would usually take the form of a unit trust under which the investors (the unitholders) contribute assets to the trustee to be managed and invested in accordance with the terms set out in the trust deed and any accompanying contractual docu - ments. 3.2 Incorporation Process It is necessary to engage a licensed corporate services provider to assist with the incorporation process. Exempted/Ordinary Resident/Ordinary Non- Resident Companies/Other Companies To incorporate a company, the corporate services provider will prepare and file the memorandum and articles of association with the Registrar of Companies, together with the appropriate filing fees. In the case of exempted companies only, a statement is also required to be filed, confirm - ing that the company’s operations will be con - ducted mainly outside of the Cayman Islands. The initial subscriber shareholder will typically be an affiliate of the corporate services provider and the subscriber will transfer the subscriber share to the shareholder of record after incor - poration or shall be automatically repurchased by the company following the issuance of any further shares. Once the Registrar of Companies has processed the incorporation documents, the company will be deemed to have been incorpo - rated and a Certificate of Incorporation will be issued. Exempted Limited Partnerships To register a Cayman Islands partnership as an ELP, the corporate services provider, on behalf of its general partner, must submit to the Reg - istrar of Exempted Limited Partnerships in the Cayman Islands a statement setting out certain
profits passing to the members. Trusts (Including Unit Trusts)
In contrast to the vehicles described above, a trust does not have separate legal personality and so a trust itself cannot hold property in its own name. Rather, legal title to property held upon the terms of the trust is vested in the trus - tees of the trust and it is the trustees who enter into transactions in that capacity and who can sue and be sued. The primary legislation that sets out the framework for trusts in the Cayman Islands is the Trusts Act (2021 Revision) (the “Trusts Act”). The Trusts Act incorporates provi - sions that detail the conflict of laws rules affect - ing Cayman Islands trusts (the ”Trusts (Foreign Element”) Provisions”). These provisions are particularly relevant in instances where a Cay - man Islands trust has been established by a settlor domiciled outside of the Cayman Islands in a jurisdiction that does not permit testamen - tary freedom. Trusts can be established for various objectives, such as wealth management, estate planning, philanthropic endeavours (Charitable Trusts) and employee incentivisation schemes, much like foundation companies. Cayman permits the establishment of non- charitable purposes trusts created pursuant to the Cayman Islands Special Trusts (Alternative Regime) Act 1997 (known as STAR Trusts), the purposes of which may be to benefit or carry out, as the case may be, a mixture of persons and purposes so long as they are lawful and not contrary to public policy.
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