The laws of the Cayman Islands have facilitated the development of three main vehicles for Funds in addition to the traditional Unit Trust.
While a Fund may take the form of a Partnership or Unit Trust many Funds established in the Cayman Islands take the form of an Exempted Company. The advantages of this type of Company are well appreciated and described in our Company Management section.
An Exempted Company may also be incorporated as a Segregated Portfolio Company (“SPC”) with protected cells or portfolios.
Exempted Limited Partnerships
Traditional partnerships are notoriously complex and administratively expensive vehicles and it was as a response to the demands from the financial industry for simplification that the Exempted Limited Partnership was created.
An Exempted Limited Partnership is in reality as simple and straightforward to establish and administer as its corporate counterpart, the Exempted Company. This type of vehicle has a widespread use most particularly in the private equity fund sector. Should your professional advisor consider the appropriate vehicle to be an Exempted Limited Partnership Contact us to ask how we can help.
Segregated Portfolio Companies (“SPC”)
The SPC has many uses with its principal advantage of enabling the assets of one particular group of investors to be segregated (protected) from the assets and liabilities of another.
Cayman Management has found that the SPC is an ideal structure for clients wishing to establish a Fund with a number of classes of investment or diverse groups of investors. It can also be used as an incubator for new Funds without the expense of having to go through a full new corporate structure each time.
SPCs have become a popular Fund vehicle in the Cayman Islands with some international recognition. However, it is important that the governing requirements of the Cayman Islands Companies Law are strictly adhered to in the area of third party contracts. Fund directors must be fully acquainted with the documentary and other technical requirements that make SPCs special. Contact us to discuss the SPC as a possible vehicle for your proposed fund.