This is your funds and business investment guide in the Cayman Islands. But before you read on, you may also want to check out Cayman Resident's section on Cayman's Financial Performance that details the latest statistics on investment funds.
Common fund vehicles used in the Cayman Islands to operate mutual and private funds include the exempted company, the segregated portfolio company, the unit trust and the exempted limited partnership.
The Segregated Portfolio Company (SPC) can also be established with protected cells or segregated portfolios. The SPC makes it possible to provide a means for different groups to protect their assets when carrying on business through a single legal entity as shareholders and creditors have recourse only to the assets of a particular portfolio to which their shares are allocated. The unit trust is usually established under a trust deed with the investors’ interest held as trust units.
The Exempted Limited Partnership provides a second unincorporated vehicle and it can be formed as easily as the exempted company or the trust unit. Each type of vehicle can operate as an open-ended fund (where investors have the right to redeem their shares or interests at their own election), or as a closed-ended fund (where the right to redeem shares or interests is made at the election of operator of the vehicle).
The investment funds industry is regulated and monitored by the Cayman Islands Monetary Authority (CIMA) through a number of pieces of legislation including the Mutual Funds Law, the Private Funds Law and Monetary Authority Law. An attorney can provide more information on structuring a fund in the Cayman Islands and can advise on the necessity for a licence/applicable regulation and assist in compliance with the formalities.