Most Read Contributor in British Virgin Islands, February 2017
Segregated Portfolio Companies (SPCs)
are well recognised and widely used corporate vehicles, and the BVI
is seeing increasing demand for them in the funds context. A
segregated portfolio company benefits from statutory segregation of
its assets and liabilities in one segregated portfolio from those
of any other segregated portfolio, and from the general assets and
liabilities of the company, but is a single, legal entity. The SPC
has only one set of constitutional documents, one board of
directors and, importantly, one set of annual licence fees. The
ability to segregate the assets and liabilities of one segregated
portfolio from another makes SPCs popular for umbrella or
multi-class investment funds which can operate different investment
strategies and, in particular, different levels of leverage,
without risking cross contamination across the segregated
The use of SPCs in the funds and insurance industries has grown
in recent years and the concept is now well understood and
recognised in the international financial services industry.
Harneys BVI is receiving more frequent enquiries about establishing
SPCs, not only for their traditional uses in the BVI as regulated
funds and insurance companies, but also for a broader range of
uses, for example as closed-end, unregulated funds or employee
The BVI Business Companies Act, 2004 provides scope for greater
flexibility as to the type of vehicles that are able to adopt the
SPC structure, and the FSC is looking into widening the
circumstances in which SPCs can be used. We expect that the use of
SPCs in the funds industry will continue to grow, and that when the
BVI expands the permitted uses of the SPC, it will become even more
This article explores regulation of SPCs and key features of
SPCs, including duty of directors, creditors, liquidation, shares,
dividends and distributions, contracting with an SPC and financial
A version of this article was also published in HedgeWeek.
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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Over the last 40 years, the Cayman Islands has matured into one of the world's most sophisticated and successful international financial centres, providing a competitive, effective, transparent, cost-efficient and tax-neutral platform for international capital flows underpinned by an environment of legal, political and economic stability.
In the context of the Private Member's Motion, Cayman Finance strongly urges the movers of the motion and the other members of the House to remain focused on the need to protect the Cayman Islands Financial Services Industry, which is directly responsible for more than half of the Islands' economy, more than half of the government's revenue and employs more Caymanians than any other industry.
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