The Limited Liability Companies Bill, 2015 (the "LLC Bill") has been published in the Cayman Islands and is expected to be enacted into law in early 2016. This paves the way for the introduction of a new type of corporate vehicle in the Cayman Islands: the Limited Liability Company (the "Cayman LLC").
WHAT IS A CAYMAN LLC?
Whilst there are various types of limited liability companies presently available in the Cayman Islands, the Cayman LLC will be a distinct entity. The LLC Bill has been modelled using both local legislation (notably the Cayman Islands company and partnership laws) as well as the limited liability legislation of Delaware. As such, the Cayman LLC will have certain features of Cayman companies and partnerships (for example, member liability not being limited by shares nor by guarantee but rather by reference to members' capital accounts and capital contributions) and also features of a Delaware LLC (for example, allowing for freedom of contract amongst the members as to determining the internal operations of the company). In addition, some key features of the Cayman LLC include: separate legal personality; limited liability for its members; member managed or manager managed. The law implementing the Cayman LLC will also allow for conversion (i.e. a Cayman exempted company will be able to convert into a Cayman LLC), merger and consolidation and continuation into and out of the Cayman Islands.
WHY USE A CAYMAN LLC?
The Cayman Islands is the leading jurisdiction globally for fund formation. Given the obvious benefits of using a Cayman LLC (including, simplified fund administration, similar corporate features to a Delaware LLC and the general flexible nature of such an entity) together with the longstanding industry demand for this type of vehicle in the Cayman Islands, once the LLC Bill is enacted into law, we expect that the Cayman LLC will hit the ground running.
The Cayman LLC is expected to become available in the early part of 2016. We will provide a further update once the LLC Bill is enacted into law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.