CAYMAN ISLANDS FUND

he 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:
• Speed and simplicity of establishing Cayman Islands entities
• 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:
• Service and legal fees
• Cayman Islands Monetary Authority Application Fee
• Registrar of Companies incorporation fee
• Registered office fee
• Communication/Courier costs
• name check
• 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

Annual Fees include:
› Registered office fee
• Registrar of Companies fee
• Cayman Islands Monetary Authority fee
• Nominee shareholder fee
• Independent directors fee

 

 

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