After much anticipation in the market, we are pleased to report
that the Limited Liability Companies Bill 2015 (LLC
Bill) was published in the Cayman Islands on 18 December
2015. The LLC Bill is expected to be in force this month making
Cayman Islands Limited Liability Companies (LLC)
available for the first time in the jurisdiction.
What is an LLC
The introduction of the LLC responds to requests made by the US
financial services industry for a LLC vehicle. As a result the LLC
Bill takes many key features of the current Delaware Limited
Liability Companies Law and those familiar with the Delaware
concepts will recognise many of these characteristics, with certain
modifications to conform with Cayman Islands law and concepts.
Essentially, the Cayman LLC is a hybrid entity, merging certain
characteristics of a Cayman Islands exempted company with
characteristics of a Cayman Islands exempted limited
Key Features of an LLC
i. An LLC is a body corporate with separate legal personality
and limited liability, like a Cayman exempted company, without the
constraint of having share capital.
ii. Exempted companies will be able to convert into an LLC.
iii. An LLC may merge or consolidate with exempted companies or
any foreign entity with separate legal personality.
iv. Members of an LLC may have capital accounts and make capital
contributions, with profits and losses allocated amongst those
members as provided in the LLC agreement.
v. 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.
vi. Subject to the provisions of the LLC agreement, a manager
shall not owe a duty (fiduciary or otherwise) to the LLC or any
member or any 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 agreement.
vii. The registration of an LLC is simple – registration
requires the filing of a registration statement and payment of the
appropriate fee. The LLC agreement is not required to be filed with
the Cayman Islands Registrar of Companies
viii. An LLC may apply for a 50 year tax undertaking certificate
from the Cayman Islands Government.
ix. An LLC is required to maintain a register of members, a
register of managers and a register of mortgages and charges
however only the register of managers is required to be filed with
x. Transfers by way of continuation into or out of the Cayman
Islands are also permitted for LLCs.
Appleby will provide further updates as the LLC Bill moves
through the legislative process, and once the commencement date for
the new law is set.
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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