One of the questions we receive regularly from our clients
(existing and potential) is whether they can set up an LLC in
Cayman. "Hi, my name is Jim and I'd like an LLC
please". This is a natural question for clients in North
America as LLCs seem to be the preferred vehicle of choice for
almost any purpose and so why should there be any other choice? For
example, the vast majority of funds set up in the United States are
LLCs, incorporated in Delaware, and every client is familiar with
them and how they work.
We often find that the overlay of having the straight company
concept in Cayman leads to some confusion. Cayman does not
currently have the LLC concept and sticks to the regime of a
company based on English Law. "We have them, why don't
you?" is what we typically hear. Traditionally, our long
legacy as a British colony (you can imagine how a Scotsman writing
this may grumble) has caused us to follow English Law (yes,
Scottish Law is better, Donoghue
–v– Stevenson, anyone, anyone...?).
However. It is not often that Cayman lawyers receive brand new
playthings from the Cayman government, however this past Christmas,
we had reason to break out the bubbly. Legislation was published
for consultation which will introduce the concept of LLCs into
Cayman Law. We're not sure yet as to when the legislation will
be passed and brought into force, so we will have a new plaything,
we're just not able to play with it... yet. We are though
tooling up so that we can get going with this concept once it is
Read more about this on our website.
So, what difference will it make?
Well, we'll have a different answer to the standard question
and we'll be able to say "why yes, you can have an
LLC". We'll also be able to take the attractive concepts
of a Cayman company – flexibility, ability to structure it to
achieve a client's objective – and marry that with even
more flexibility equivalent to a Delaware LLC. Private equity for
example will likely benefit greatly and limited partnerships could
be replaced by a corporate structure with more flexibility than we
could have now.
In a nutshell, a Cayman LLC will:
be a body corporate formed for any (lawful) purpose,
require at least one member,
have a registered office in Cayman,
require an LLC agreement similar to Delaware LLCs and which
doesn't have to be filed with any authorities, and
have registers (of members, of managers) required to be kept so
that Cayman continues to comply with its OECD and other
international obligations in relation to exchange of
... the list goes on.
The legislation will likely be tweaked as a result of public
consultation. However, at this point, we are excited about our new
toy and considerable interest has been generated as a result of the
consultation exercise both within Cayman and around the globe.
Suffice to say for the moment, that this is a major step forward
which will continue to push Cayman's dominance in the
investment funds market. For a while yet, we'll all just have
to exercise some patience...
Of course if you want to discuss more or simply share your
excitement about this new legislation, then you can always contact
me or your usual Harneys contact directly.
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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