CAYMAN ISLANDS Law and Practice Contributed by: Agnes Molnar, Jason Ta, Paul Walters and Gemma Walters, Travers Thorp Alberga
derived from the disposal of debt securities be subject to Cayman Islands income or corpora - tion tax. See 1.2 Structures Relating to Finan- cial Assets . There is no income tax treaty arrangement with the USA or any other country that is applicable to payment on debt or equitable instruments; however, the Cayman Islands has entered into a tax information exchange agreement with the USA, the UK and various other countries. 7.4 Other Taxes An SPE may receive a tax concession under - taking (under the Tax Concessions Law (2018 Revision)) from the Financial Secretary of the Cayman Islands in respect of the taxable status of the SPE, which can be valid for up to 30 years. See 7.1 Transfer Taxes to 7.3 Withholding Tax- es . 7.5 Obtaining Legal Opinions An opinion from Cayman Islands counsel, addressed to, among others, the SPE will typi - cally confirm certain matters, including (sub - ject to usual reservations, qualifications and assumptions): • The Cayman Islands currently has no form of income, corporate or capital gains tax and no taxes, fees or charges are payable to the Cayman Islands government in respect of the execution, delivery or performance of the transaction documents by the SPE. • The courts of the Cayman Islands will observe and give effect to the choice of governing law of the applicable transaction documents as a valid choice of law in proceedings in the courts of the Cayman Islands. • A judgment obtained in a foreign court will be recognised and enforced by the courts of the
Cayman Islands without any re-examination of the merits at common law (where such foreign court has jurisdiction, and the judg - ment is final and conclusive and not contrary to public policy within the Cayman Islands). • Submission to jurisdiction by the SPE to the courts of a non-Cayman Islands jurisdiction is valid and binding. • There is no concept of substantive consolida - tion. • Where the securitisation involves the transfer of Cayman Islands-domiciled receivables, or assets governed by the laws of the Cayman Islands, upon the winding up of the SPE, the liquidator or receiver appointed in respect of such SPE would have recourse only to the assets of such SPE in order to satisfy the claims of the creditors of the SPE. • Where the securitisation involves the transfer of Cayman Islands-domiciled receivables, or assets governed by the laws of the Cayman Islands, the sale and transfer of the applica - ble assets should be treated as an absolute assignment and transfer and not as the crea - tion of a security interest. 8. Accounting Rules and Issues 8.1 Legal Issues With Securitisation Accounting Rules Other than in respect of considerations relating to the orphan structure of the SPE and non- consolidation of assets and receivables, there are no specific legal issues in connection with accounting rules that apply to securitisations in the Cayman Islands. Typically, the SPE will have no prior operating history (other than warehouse financing).
8.2 Dealing With Legal Issues See 7.5 Obtaining Legal Opinions .
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