Cayman Islands Funds Group
The Cayman Islands is the principal offshore jurisdiction for private equity funds. It is attractive as a domicile for funds because it is supported by a fully-developed business law, an English-based legal system and a regulatory and professional infrastructure capable of implementing large and complex international business transactions.
As closed ended funds are not regulated by CIMA, it is not possible to identify the number of funds launched as closed ended funds. However, the most popular vehicle for such funds is the exempted limited partnership, 44% of which were formed and established by Maples and Calder in the Cayman Islands in 2010.
- Our Cayman office focuses primarily on the North American market and also houses our Latin America Group, which provides investment on all aspects of private equity funds.
- We have significant expertise in relation to Shariah Law compliant private equity products, in particular in our Dubai office.
- Our Hong Kong office funds group has particular expertise in private equity products preferred by Asian investors.
- Our London office primarily services the need of our European based clients. It is at the forefront of developments affecting private equity funds under the European Union Alternative Investment Fund Managers Directive.
Setting up a private equity fund in the Cayman Islands offers a number ...
- Speed and simplicity of establishing Cayman entities.
- Relatively low cost of doing so, particularly in the context of typical transaction sizes.
- Flexible and practical business statutes.
- Cayman insolvency law is simple and effective, and hence of great appeal to lenders.
- Robust and healthy compliance culture.
- English-based legal system, established judiciary and absence of political or sovereign concerns.
- Professional infrastructure and reputation. Cayman is well-known for its established and experienced financial services sector and substantial capacity.
- Compliance with international anti-money laundering, anti-terrorist financing and other financial regulatory standards.
- Significant number of international tax information exchange agreements and OECD ‘white list’ status.
- Tax and exchange control neutrality.
- The service-providers to the fund (investment managers, advisers, brokers, administrator, etc.) may be located anywhere in the world.
There are three main fund structures:
Exempted Limited Partnerships. The exempted limited partnership concept tracks its Delaware equivalent and is therefore very popular with United States promoters and their advisers. Closed-ended/private equity funds are most commonly established in Cayman as exempted limited partnerships.
Companies. Companies are invariably incorporated with limited liability. The limited liability company is only used occasionally for private equity funds.
Unit Trusts. The unit trust has been a popular vehicle for many years and Cayman trust law essentially follows English trust law whereby unit trusts are established under a trust deed giving unit holders undivided beneficial interests in the trust property. Unit trusts are often used (in place of companies) for investors in jurisdictions where participation in a unit trust is more acceptable or attractive than shares in a company.
Our unparalleled overview of the funds market gives our clients an edge. We provide insightful, practical and prompt advice based on the latest legal developments and structuring trends.