The Cayman Islands is a major offshore jurisdiction for hedge funds. It is attractive as a domicile for funds because of the fully developed business law, the English-based legal system and a regulatory and professional infrastructure capable of implementing large and complex international business transactions.
Setting up a hedge fund in the Cayman Islands offers:
• Relatively low cost
• Flexible and practical business statutes
• Cayman Islands insolvency law is simple and effective
• Strong compliance culture
• English-based legal system, established judiciary and absence of political or sovereign concerns
• Professional infrastructure and reputation. Well-known for its established and experienced financial services sector
• 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
• Requirement for a regulated open-ended Cayman Islands fund to have its audit signed off by an accounting firm located in the Cayman Islands.
• The other service-providers to the fund (investment managers, advisers, brokers, administrator, etc.) may be located anywhere in the world
There are three main hedge fund structures:
Companies. Companies are incorporated with limited liability, with open-ended investment companies issuing redeemable shares. The limited liability company is widely used for hedge funds.
Unit Trusts. The unit trust is a popular vehicle and Cayman Islands 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.
Exempted Limited Partnerships. The exempted limited partnership concept follows its Delaware counterpart and is very popular with U.S. managers. Closed-ended/private equity funds are most commonly established in the Cayman Islands as exempted limited partnerships.
Hedge funds are formed in the Cayman Islands and are registered mutual funds under Section 4 (3) of the Cayman Islands Mutual Funds Law. The minimum initial investment into a registered mutual fund by all investors, other than persons connected to the investment manager, is at least US$100,000.
Our basic Cayman Islands mutual fund package includes:
› preparation of company Memorandum of Association
› preparation of company Articles of Association
› preparation of the Cayman Islands Monetary Authority application form
› filing with the Registrar of Companies
› filing with the Cayman Islands Monetary Authority
› certificate of incorporation
› share certificates
› minutes of the first board meeting
› register of directors
› register of members
› company seal
› preparation of offering documents and fund agreements
› certifying documents for the Cayman Islands Monetary Authority
› payment of the first year Registrar of Companies fee
› payment of the first year Cayman Islands Monetary Authority fee
› Tax Exemption Certificate
› courier service
› Registered office fee
› Registrar of Companies fee
› Cayman Islands Monetary Authority fee
› Nominee shareholder fee
› Independent directors fee
Other services available
› Obtain CUSIP/ISIN number
› Independent directors to the fund
› Nominee shareholder of voting shares
› Preparation of resolutions
› Side letter preparation negotiation
› Certificate of Incumbency
› Formation of a Cayman Islands Investment Manager
› Applying for an exemption of registration of the Investment Manager under the Securities Investment
› Substantive Office in the Cayman Islands
› Employee in the Cayman Islands to provide services including to distribute offering documents
› Website and email address in the Cayman Islands
A retainer equal to 60% of the total fee is required up-front with the balance due upon presentation of the first draft of the fund documents. Payments can be made in U.S. Dollars ($). Our preferred form of payment is bank wire transfer, banking details will be provided on request. Once payment has been received in full the client questionnaire will be sent via email.
Important Cayman Island Links
The following links will be helpful in researching the Cayman Islands: