Cayman Islands: Cayman Approves Limited Liability Companies Bill, 2015

Last Updated: 18 May 2016
Article by Nick Rogers and Piers Dryden

On 6 May 2016, the Limited Liability Companies Bill, 2015 (the Law) was approved by the Legislative Assembly of the Cayman Islands.  It is expected that accompanying regulations (including fee schedules) will be published soon and that the Law, will come into force by the summer.

Once the Law is enacted (by way of a separate commencement order), a new class of Cayman Islands entity, the limited liability company (LLC), will be available for use by clients seeking to establish fund and corporate structures in the Cayman Islands. The introduction of the LLC is a response to demand from the investment funds and financial services industry and will reinforce the position of the Cayman Islands as the leading jurisdiction for offshore investment funds and offshore corporate and SPV structures. 

Characteristics of an LLC

The LLC is based on the Delaware limited liability company, but also draws on some well recognised features of Cayman's successful exempted company and exempted limited partnership. Below we summarise some key characteristics of the LLC.

  • An LLC is a body corporate with separate legal personality and limited liability for its members which may be formed for any lawful purpose.
  • Only one member is required to register an LLC, which is achieved by filing with the Registrar a registration statement (in a manner similar to the process used to register a Delaware LLC) and payment of the appropriate fee.
  • The internal governance and management arrangements of the LLC may be determined by the members amongst themselves, subject to certain statutory provisions. Such arrangements are to be set out in the LLC Agreement. By contrast with the requirement to file the articles of association of a Cayman Islands exempted company, the LLC Agreement is not filed with the Registrar.
  • Management of the LLC may be undertaken by one or more managing members or by one or more non-member managers. There is flexibility to determine the scope of duties that will be owed by the manager to the LLC, subject to a minimum duty to act in good faith.
  • Members have no duties (fiduciary or otherwise) when exercising their rights or authorities or performing any of their obligations under the LLC Agreement.
  • Members have capital accounts and make capital contributions rather than subscribing for shares. Profits and losses are allocated among members in the manner set out in the LLC agreement in a manner consistent with the way a Delaware LLC or a Cayman Islands exempted limited partnership allocates profits and losses.
  • There are no capital maintenance requirements to limit the ability to make distributions, only a cash-flow based solvency test.
  • An LLC must maintain a register of members, a register of managers, a register of security interests and a register of mortgages and charges.  As with the register of directors of an exempted company, the register of managers must be filed with the Registrar. The Registrar must be notified within 60 days of any change of manager.
  • The Law permits an existing Cayman Islands exempted company to merge with, consolidate with or convert to an LLC and permits non-Cayman Islands entities to re-register and continue into the Cayman Islands as LLCs.
  • An LLC may apply for a 50 year tax undertaking certificate from the Cayman Islands Government on the same terms as currently available to exempted companies, exempted limited partnerships and exempted trusts.
  • The Law states that the rules of equity and common law applicable to companies registered in the Cayman Islands will apply to LLCs, save where such rules are inconsistent with the express provisions of the Law or the nature of an LLC. This enables Cayman Islands courts to use existing case law when applying and interpreting the Law and means that there will be a body of helpful common law in place from the outset.

Some possible uses of LLCs

We anticipate that LLCs will be suitable for a range of uses in investment funds and other international structures, and in corporate transactions generally. Some potential uses are set out below.

  • Investment fund structures.  Currently, where a Cayman Islands exempted limited partnership is used in a fund structure, its general partner is typically either a Delaware LLC or a Cayman Islands exempted company. The Cayman LLC will enable clients who prefer to use an LLC as general partner to keep the mind and management of the exempted limited partnership entirely offshore. Where, in a master-feeder structure, the US feeder is an LLC, the ability to use an LLC for the Cayman feeder should enable greater ease of administration with consequent cost savings.
  • Joint Venture Companies (where the business of the joint venture is outside the Cayman Islands).  An LLC enables flexible treatment of profits and losses free from the capital-maintenance rules applicable to companies; potentially favourable pass-through treatment of profits and losses for tax purposes; and, by contrast with a Cayman company, the ability to stipulate, in the LLC agreement, that a person appointed to a board or committee by a particular member may act in the best interests of that member rather than the LLC and increased flexibility to specify the extent of duties of board members.
  • Private equity sponsor vehicles.  The flexibility of management and economics of an LLC is likely to make it a natural choice for carry vehicles and special limited partners in private equity structures, particularly where participating principals are located outside the US.
  • Securitisation SPV.  The ability for "orphan status" (whereby the interest in the SPV is held by a purpose trust so that the underlying asset pool being securitised is off balance sheet and not consolidated with the originator) to be achieved by a STAR trust holding a membership interest in an LLC makes an LLC an alternative to the traditional approach of using an exempted company to hold the underlying asset pool with the STAR trust holding shares in the exempted company SPV.
  • Holding company.  Currently, a Delaware LLC is frequently the vehicle of choice to act as the holding entity of a corporate group. The Cayman Islands has key advantages that contribute to its entrenched status as a leading international financial centre, such as tax neutrality, legal respectability (grounded in the application of common law, with the Privy Council at its apex) and a pro-investment culture.  Undoubtedly, there will be circumstances where these advantages make the case for a Cayman LLC to be preferred to a Delaware LLC.

Ogier has worked closely with the Cayman Islands Government and been centrally involved with the development of the Law and we are well placed to assist clients seeking to use LLCs for fund and corporate structures and transactions.

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.