Cayman Islands: Step Journal: Flexibility Un-limited

Last Updated: 6 April 2017
Article by Morven McMillan and Maxine Bodden
Most Read Contributor in Cayman Islands, October 2017


An LLC is a legal en arate legal personality, like a Cayman Islands exempted company. Its members have limited liability. However, the LLC does not have share capital; it permits more flexible governance arrangements and capital account mechanics in a manner similar to a limited partnership. It has the capacity to sue and be sued in its own name, to incur debts and obligations, and to acquire and dispose of assets. An LLC may be formed for any lawful business, purpose or activity, and any limits on its powers will be set out in the LLC agreement, which must be in writing and governed by Cayman Islands law. An LLC agreement executed prior to the LLC's registration will only take effect from the date of registration of the LLC.

An LLC must have at least one member, but that member need not have a Cayman Islands nexus. Generally, liability is limited to the amount a member has contractually agreed to contribute to the LLC, whether this is contained in the LLC agreement or otherwise. The formation and registration of an LLC is a simple process. Broadly speaking, it requires the filing of a registration statement and payment of the appropriate fee. An LLC may (but is not required to) use one of the following suffixes in its name: 'Limited Liability Company', 'LLC' or 'L.L.C.'.


The LLC further enhances the range of structuring options already available in the Cayman Islands. For some clients, the LLC may offer additional flexibility and be well suited for consideration in certain transactions: e.g. closed end funds that need separate legal personality; general partner vehicles; preference share deals; employee incentive plans; and joint ventures in circumstances where a complex shareholders' agreement would otherwise be required to supplement an exempted company's articles of association. It has already proved to be a popular innovation.

An LLC may allow for more simplified and flexible administration than is required for the operation of an exempted company. This includes, for example, straightforward methodologies for tracking or calculation of the value of a member's investment in the LLC, as well as more flexible corporate governance concepts. In particular, the ability to provide greater symmetry with onshore LLC vehicles in some onshore- offshore fund structures can allow for greater ease and cost efficiency of administration, and can help to better align the rights of investors.

Members of an LLC may have their economic interests represented by way of a capital account, may (but need not) make capital contributions,1 and may agree that profits and losses will be allocated among the members and among classes or groups of members as provided in the LLC agreement. Different classes of membership interests with a range of voting, economic and other rights can be created.


An LLC affords considerable flexibility to its members to agree among themselves the internal structure and management arrangements, subject to certain statutory minimums. By default, an LLC will be managed by its members acting by a majority in number. However, the LLC agreement may provide for it to be managed by one or more managing members, or by non-member managers. Management of an LLC must be undertaken in good faith, and this standard of care may be varied, but not eliminated, by the express provisions of the LLC agreement. A manager of an LLC will have the rights, powers and respon ibilities afforded to it, and be subject to the obligations specified in the LLC agreement, regardless of whether the manager is a party to the LLC agreement.

Currently, there are no direct income or corporate taxes in the Cayman Islands. However, an LLC may apply for a 50-year tax undertaking certificate from the Cayman Islands government in similar terms to an exempted company, an exempted limited partnership or an exempted trust. Such a certificate confirms that the LLC will not be subject to Cayman Islands income or corporate taxes for a period of 50 years from the date of the certificate. This provides an additional level of he members of the LLC.


An LLC is requir and, in certain circumstances, make available to the Cayman Islands authorities four statutory registers containing details of the following:

  • members,
  • managers,
  • mortgages and charges, and
  • security interests granted over LLC interests.

Only the register of managers is filed with the Cayman Islands Registrar of Limited Liability Companies (the Registrar). Where the default position regarding management applies, such that management is vested in the members, the details of the members should be recorded in the register of managers. Unless otherwise provided for in the LLC agreement, each member of an LLC has the right to inspect information regarding their membership interest or, subject to certain conditions, the state of the business and financial condition of the LLC. To form and register an LLC, a registration statement must be filed with the Registrar by, or on behalf of, an initial member. The registration statement must contain the following core information:

  • the name of the LLC and, if applicable, its dual foreign name, together with a translation if relevant;
  • the LLC's registered office address in the Cayman Islands;
  • if the LLC has not been formed for an unlimited duration, the term, if any, for which the LLC is formed; and
  • a declaration that the LLC shall not undertake business with the public in the Cayman Islands, other than so far as may be necessary for the carrying on of the business of the LLC outside the Cayman Islands.

An LLC will be deemed to be registered on the date of filing of the registration statement, and the Registrar will issue a certificate of registration. This certificate is conclusive evidence that the statutory requirements in respect of formation and registration have been satisfied. Any change to the prescribed particulars in a registration statement must be updated by filing a certificate of amendment with the Registrar within 30 days of the change. The member or members of an LLC must enter into a written LLC agreement to regulate the conduct of the business or affairs of the LLC, but the LLC agreement does not need to be filed with the Registrar. Although the registration statement may effectively constitute the LLC agreement, a short-form LLC agreement is typically entered into at the same time as filing for registration. There are many standard provisions under the LLC Law that will apply to an LLC unless otherwise varied by the LLC agreement. These must be reviewed carefully to see which standard provisions should be varied to meet particular commercial requirements.


There are statutory time constraints, of either 30 or 60 days, for due notification of certain events to the Registrar, and it is therefore important to provide copies of the relevant signed documents to the registered office provider promptly to avoid the imposition of penalties. Every LLC must keep or cause to be kept proper accounts and material underlying documents. In January every year, an LLC must:

  • file with the Registrar a return signed on behalf of the LLC certifying that the LLC has, during the preceding calendar year, complied with the provisions of the LLC Law; and
  • pay the Registrar a prescribed annual fee. Failure to do so may lead the Registrar, upon six months' prior written notice, to deem the LLC a defunct entity and strike it off the register.


Because of the LLC's inherent flexibility, including, potentially, with respect to the structuring and issue or transfer of membership interests, some commentators have started to speculate on its use in estate or business succession planning. Given the long-standing body of jurisprudence, equitable principle, and statutory provision and protections2 supporting the establishment and administration of trust structures in the Cayman Islands, and the familiarity of trust structures to settlors, beneficiaries, regulators and tax authorities across a broad range of jurisdictions, one would generally expect trusts to continue to be the preferred structure for high-value estate and business succession planning. Further, it remains to be seen what position relevant domestic revenue authorities will take on the fiscal treatment of, for example, individual LLC members' interests and succession to such an interest on death of a member.

What is plain, however, is that, for certain complex commercial transactions, the flexibility of the new LLC vehicle is providing an interesting additional structuring option among the many available in the Cayman Islands.


1 Which may be in cash, property, other assets, services rendered, or simply an obligation to contribute assets or perform services

2 For example, the firewall provisions in the Cayman Islands Trusts Law (2011 Revision)

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.

Morven McMillan
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”

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.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


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.