After much anticipation in the market, we are delighted to
report that the Limited Liability Companies Bill 2015 (the
"LLC Bill") has been Gazetted in the
Cayman Islands today and is expected to become law very early next
year. Once passed in to law, Cayman Islands Limited Liability
Companies (an "LLC") will be available
for the first time.
A Cayman Islands LLC will be very similar to a Delaware limited
liability company. There has been much demand from the US financial
services industry for a Cayman Islands LLC, and we expect the
market to take up using it straight away.
The draft LLC Bill is largely based on the current Delaware
Limited Liability Companies law, with certain changes for Cayman
Islands law and concepts. The key features of a Cayman Islands LLC
It will be a body corporate with
separate legal personality, having at least one member.
The liability of a member to make
contributions to the LLC will be limited to such amounts as agreed
in the LLC Agreement.
Registration of the LLC will be
effected by the filing of a registration statement with the
Registrar of Limited Liability Companies in the Cayman Islands (the
"Registrar"). The LLC Agreement is not
required to be filed with the Registrar.
Members are free to agree among
themselves the internal workings of the LLC in the LLC Agreement.
This includes agreeing mechanisms such as capital accounting and
capital commitments, allocations of profits and losses, allocations
of distributions, voting rights (including negative consents) and
classes of interests.
The management of the LLC shall
either vest in its members acting by a majority in number or, if
the LLC Agreement provides, by one or more managers. The LLC
Agreement may provide for classes of managers having such rights,
powers and duties for the relevant class as specified therein.
Subject to the provisions of the LLC
Agreement, a manager of a LLC shall not owe any duty (fiduciary or
otherwise) to the LLC or any member or any other person except a
duty to act in good faith, and such duty of good faith may be
expanded or restricted by the express provisions of the LLC
A person serving on any board or
committee of a LLC shall, subject to the LLC Agreement, not owe any
duty to the LLC or to any member and may, if expressly permitted by
the LLC Agreement, act in a manner which the person believes to be
in the best interests of a particular member or members (even
though it may not be in the best interests of all members or the
A LLC shall not make a distribution
or release a member from any obligation to the LLC to the extent
that the LLC is insolvent at such time. A member who receives a
distribution or is purportedly released and who had actual
knowledge the LLC was insolvent at the time of the distribution or
purported release, shall be liable for the amount of the
distribution or for performance of the obligation purportedly
A LLC shall maintain a register of
its members, a register of its managers and a register of mortgages
Exempted companies will be able to
convert into an LLC.
An LLC may merge or consolidate with
exempted companies or any foreign entity with separate legal
Transfer by way of continuation into
the Cayman Islands and transfer by way of continuation out of the
Cayman Islands are also permitted for LLCs.
Walkers has worked closely with the Cayman Islands government on
the new legislation. We will provide a further update once the
Limited Liability Companies Bill 2015 becomes 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.
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