The introduction of the Cayman Islands’ Limited Liability Companies Law, 2016, which came into force in mid-July, has been broadly welcomed by the island’s financial services and legal community.
The introduction of the LLC has happened partly as a result of requests made by the US financial services industry for such a vehicle. The law reflects many key features of Delaware’s Limited Liability Company Act with certain modifications to conform with Cayman Islands law.
A LLC merges certain characteristics of a Cayman Islands exempted company with those of a Cayman Islands exempted limited partnership. According to law firm Appleby, an LLC provides “a significant alternative structuring option to complement the existing choice of vehicles in the Cayman Islands”.
In a briefing note, Appleby added: “We believe our clients will embrace the LLC as the suitable form of business vehicle in certain circumstances; it can be useful in a variety of areas including the structuring of investment funds (especially where the structure already includes one or more limited liability companies registered elsewhere), general corporate transactions requiring joint venture or special purpose vehicles and venture capital, private wealth and private equity structures.”
The law firm also praised the Cayman Islands for listening to the needs of global markets.
“The law is the natural outcome of the Cayman Islands paying attention and responding to the input and needs of global industry and its participants and further consolidates the Cayman Islands’ position as a leading offshore jurisdiction,” it said in the note.
Law firm Walkers also praised the usefulness of the new law.
“An LLC will be flexible as it permits the parties to agree the terms applicable to it in the LLC Agreement. This added flexibility delivers greater choices in the structuring of any international transaction,” it said in a note.
It added: “The introduction of the LLC will complement the existing stable of legal vehicles available in the Cayman Islands for international transactions, including exempted companies, exempted limited partnerships and trusts.”
Jude Scott, CEO of Cayman Finance, has also welcomed the LLC regime arguing that it gives Cayman a competitive advantage in the international market. “It is the most recent example of Cayman’s constant focus on evolving our industry to anticipate and meet the ever-changing needs of our clients,” he said.
Limited Liability Company, Cayman Islands, Law, Investment funds, Appleby, Cayman Finance, Jude Scott