The Cayman Islands recently published a bill for creating a new legal entity in the jurisdiction – the Cayman Limited Liability Company. It is expected to be enacted into law in January 2016.
The investment fund industry had been calling for an entity like the LLC as it is thought that mirroring onshore structures will create allow for cost savings and ease of administration. The Cayman LLC is similar in many respects to a Delaware LLC and is in fact based on the Delaware statute with modifications for existing Cayman law.
The LLC combines aspects of the Cayman Islands exempted company and the Cayman Islands exempted limited partnership. The entity is a legal body and provides limited liability to its members. The LLC agreement can allocate profits and losses and govern distributions.
Key Features of the Cayman LLC
Limited liability – An LLC has a separate legal personality and limited liability, like a Cayman exempted company, without the constraint of having share capital.
Flexibility like a partnership – Members may have capital accounts and make capital contributions, with profits and losses allocated as provided in the LLC agreement.
Potential option for existing companies – Exempted companies will be able to convert into an LLC.
Flexibility in governance – The management of the LLC shall either vest in its members acting by a majority in number or, if the LLC agreement provides, by one or more managers.
Simple registration – Registration requires the filing of a registration statement and payment of the appropriate fee. The register of managers is required to be filed with the registrar, but the register of members is not.