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.
Limited liability companies may be established and may serve as the fund vehicle although they are more commonly used as holding vehicles or other vehicles within the fund structure.
The Segregated Portfolio Company (SPC) is a single legal entity which enables the establishment of protected cells (known as segregated portfolios) providing statutory ring-fencing of the assets and liabilities of each segregated portfolio.
A unit trust is usually established by declaration of trust or under a trust deed by a licensed Cayman Islands trustee whereby investors’ interests are represented by trust units.
The exempted limited partnership is established by a limited partnership agreement entered into by the general partner and one or more limited partners. This 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, units or interests at their own election), or as a closed-ended fund (where the right to withdraw shares, units or interests is made at the election of the directors, trustee or general partner, as the case may be).
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.