Cayman Islands: Cayman Introduces Its Much Anticipated New Bill For The Formation Of Limited Liability Companies

On 18 December 2015, the Cayman Islands published a bill (the LLC Bill) for the creation of a new law to permit the formation of a new type of vehicle in the Cayman Islands, a Cayman Islands limited liability company (a LLC).

This is a particularly exciting development as the Cayman Islands LLC has been eagerly anticipated by the investment funds industry to provide the market with a corporate vehicle that is closely aligned with a Delaware limited liability company and which contains a number of features that make it much more flexible than a Cayman Islands exempted company (being the usual entity used for Cayman structuring purposes). 

Whilst many stakeholders, particularly North American stakeholders, that are already familiar with some of the key characteristics of a Delaware LLC will no doubt welcome the introduction of this new vehicle, Harneys also expects that the introduction of the Cayman LLC will also be welcomed by clients in other jurisdictions – particularly in Asia, where there has been strong demand for a more flexible corporate offshore structure that is more aligned to the expectations of Asian stakeholders. In addition, Harneys expects that the new LLC will be very popular with stakeholders who are looking for a flexible vehicle to facilitate corporate transactions including joint venture and special purpose company structures where the LLC framework (via the LLC agreement) can be developed to suit the requirements of the particular transaction.

For example, a Cayman LLC may be operated by a majority of the members or manager(s) who do not owe any fiduciary duties to the LLC or any member or other person except, in the case of the manager(s), a duty of good faith (which duty can be expanded or restricted by the express provisions of the LLC agreement). As such, the Cayman LLC will be particularly attractive to the private equity industry, private wealth and family offices and venture capital promoters who are looking for an alternative corporate structure where the participants can operate a structure in their own interests largely without the traditional burden, fiduciary responsibilities and associated liabilities of directors of a company. 

In drafting the legislative framework that will govern the formation and registration of a LLC, the drafting committee took into consideration concepts in the Delaware Limited Liability Companies Act but with modifications required to fit with existing Cayman Islands law, including for example, the preservation of the rules of equity and common law.

Following the publication of the bill in the Cayman Islands Gazette for stakeholder consultation, it is expected that the LLC Bill will be implemented into law during the first quarter of 2016 and Harneys will provide further updates as and when this happens.

Key Features

As the LLC Bill is currently drafted, it is expected that Cayman Islands LLCs will have the following key features:

(a)    a LLC is a body corporate (with separate legal personality from its members) with limited liability;
(b)   a LLC may be formed for any lawful business, purpose or activity;
(c)    a LLC will require at least one member (there are no Cayman Islands residency requirements for members);
(d)   a LLC must have a registered office in the Cayman Islands;
(e)   registration is effected by payment of a fee and filing a certificate of formation (i.e. similar to a section 9 statement for an exempted limited partnership);
(f)     a LLC may (but is not required to) use one of the following suffixes in its name: "Limited Liability Company", "LLC" or "L.L.C.". No other company or entity registered under the Cayman Islands Companies Law may use these suffixes in its name, unless it is or will be an entity registered under Part IX of the Companies Law (current ‘foreign company’ registration) or it is an existing entity that is currently using one of these suffixes in its name;
(g)    members are required to enter into a LLC agreement governed by Cayman Islands law to regulate the business or affairs of the LLC and the conduct of its business or affairs. Members are free, however, to agree amongst themselves the internal rules and regulations, subject to appropriate minimum safeguards;
(h)   the LLC agreement is not required to be filed or registered with the Registrar of Companies (which is in line with current Delaware law);
(i)     the LLC Bill makes provision for the vesting of management powers in members or alternately in one or more managers as set out in the LLC agreement (as is the case for members, there are no Cayman Islands residency requirements for managers).  Further and as mentioned previously, the members or manager(s) do not owe any fiduciary duties to the LLC or any member or other person except, in the case of manager(s), a duty of good faith (which duty can be expanded or restricted by the express provisions of the relevant LLC agreement);
(j)     subject  to the terms in the LLC agreement, LLC interests are capable of withdrawal on demand of notice by members;
(k)    subject to the LLC agreement, members are entitled to grant security over the whole or any part of their LLC interest and any such security interest shall have priority according to the time that the written notice of such security interest, signed by each of the secured party and the relevant member, is validly served at the registered office of the LLC, amongst other matters;
(l)     the LLC is required to maintain a register of mortgages and charges in a similar manner to an exempted company under the Cayman Islands Companies Law;
(m) the LLC Bill makes provision for the creation of classes of member/interest;
(n)   the  liability of a member to contribute to the assets of a LLC is limited to the amount that the member has undertaken to contribute to the assets of the LLC, any other payments as set out in the LLC agreement and such other payments or return of property as required under the LLC agreement or the LLC Bill;
(o)   the LLC Bill seeks to preserve the rules of equity and common law (that are not inconsistent with the provisions of the LLC Bill) as noted above whilst addressing minimum statutory duties in the context of members and managers;
(p)    the LLC Bill makes provision for the applicability of other Cayman Islands laws to a LLC (therefore upon implementation of the LLC Bill into law, a LLC will automatically be incorporated into, for example, (a)  the Mutual Funds Law so that a LLC can be structured as a mutual fund; (b) the Exempted Limited Partnership Law  so that a LLC can be formed to act as a general partner of an exempted limited partnership); and (c) the Securities Investment Business Law so that a LLC can be formed to act as an investment manager or investment advisor  to a mutual fund or general partner of an exempted limited partnership;
(q)   the LLC Bill allows for the conversion of exempted companies into LLCs, reconstruction, amalgamations, mergers and consolidation and the migration of foreign LLCs into the Cayman Islands; and
(r)     consistent with OECD commitments, provision is made for various registers to be maintained and, as appropriate, filed or made available to Cayman Islands authorities (being a register of members, register of managers and a register of mortgages and charges and maintaining books of account for at least 5 years.
The LLC Bill as currently drafted creates a great framework upon which to launch the new vehicle and is a welcome addition to the existing suite of Cayman vehicles, reinforcing Cayman’s position as the world’s leading offshore jurisdiction for the investment funds industry. 

We will provide further updates as the LLC Bill evolves after industry consultation and implementation into law. If you have any feedback, questions or comments please do not hesitate to contact your usual Harneys contact.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.