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Cayman Segregated Portfolio Company
Segregated portfolio companies (collectively, “SPCs” and individually, an “SPC”) are commonly used in the Cayman Islands as fund vehicles for umbrella funds. An SPC enables the creation of a single legal entity with multiple segregated portfolios (collectively, the “Segregated Portfolios” and individually, a “Segregated Portfolio”), each designed to pursue distinct investment objectives, strategies, and restrictions.
The assets and liabilities of each Segregated Portfolio are legally ring-fenced from those of the others within the SPC, thereby safeguarding the interests of investors in each portfolio. This structure offers a cost-effective means of establishing multiple funds under one legal entity.
Why List a Segregated Portfolio on the Cayman Islands Stock Exchange?
Certain institutional investors may be subject to restrictions when investing in unlisted securities due to their internal policies. To accommodate such “restricted” investors, sponsors may establish an SPC with tailored Segregated Portfolios and list those Segregated Portfolios on the Cayman Islands Stock Exchange (“CSX”).
The CSX is a globally recognised listing venue that supports a wide range of securities, including open-ended and closed-ended investment funds, as well as individual Segregated Portfolios within an SPC. The CSX is user friendly with relatively light disclosure and ongoing obligations compared to other exchanges. Listings can typically be completed within a reasonable timeframe, and once listed, pricing and other key information become publicly available—enhancing transparency for investors.
The CSX is user friendly in that:
- there is generally no minimum subscription requirement
- there is no restrictions on investment policy and objectives
- there is no prescribed degree of investment diversification
- no financial statements are required for newly incorporated funds
- corporate directors are permitted
CSX Listing Requirements
The following are the major criteria for listing an investment fund on the CSX:
- experienced management team
- engagement of service providers, including:
- custodian (if investing in custodial assets)
- independent auditor
- administrator (or evidence of adequate net asset value calculation arrangements)
- listing agent (to serve as the liaison with the CSX)
- securities in public hand – for a closed-ended fund, at least 25% of its listed securities must be in the hands of the public at all times. For the purpose of this rule, “the public” means persons who are not directors or substantial shareholders of the fund, or directors of a substantial shareholder of the fund, or an associate of any of them. No such requirement is required for an open-ended fund.
- transferability of securities – but securities may be subject to certain transfer restrictions as disclosed and approved by the CSX
- net asset value calculation – must be at least quarterly
Documents and fees required to be submitted or paid to the CSX include:
- listing document: for a Segregated Portfolio, this will typically include the SPC's offering memorandum, the relevant portfolio supplement, and a “wrapper” with CSX-required disclosures.
- application for admission to listing
- prescribed form of declarations to be made by the directors, issuer and the listing agent
- in the case of a closed-ended fund, a shareholders' statement in a prescribed form
- if appliable, application for waiver from any formal listing requirements and submission of a non-applicability letter
- listing fee
All documents submitted to the CSX must be in English or accompanied by a certified English translation.
Timeline
The listing process typically takes 1–3 months. An International Securities Identification Number (“ISIN”) must be obtained for the securities. Upon approval, the CSX will issue a formal confirmation of listing, the investment fund will be admitted to the Official List of the CSX and fund details (including, inter alia, its Net Asset Value) will be accessible on the CSX website.
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.
