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Cayman Islands
"Cayman fund structure was non-negotiable for institutional LPs. Regulatory framework, service providers, and legal certainty justify the premium."
Fund Structures
- Exempted Limited Partnership (ELP): Most common for private equity, venture capital (LP structure with separate GP entity, typically Cayman exempted company)
- Exempted Company: For hedge funds, mutual funds (can be open-ended or closed-ended)
- Segregated Portfolio Company (SPC): Multiple portfolios under single legal entity, each ring-fenced (used for fund of funds, multi-strategy funds)
- CIMA regulated vs unregulated: Mutual funds typically CIMA-registered (lighter regime than licensing). Private funds can be unregistered if <15 investors.
- Zero tax on all income, gains, profits
- Cayman Islands Monetary Authority (CIMA) oversight provides credibility
- Legal framework refined over decades, predictable, fund-manager-friendly
Company Formation - Exempted Companies
- Exempted Company most common for non-fund purposes (holding companies, SPVs, joint ventures)
- Zero taxation (no corporate tax, income tax, capital gains tax, withholding taxes)
- Minimum 1 shareholder, 1 director (can be same person, corporate directors allowed)
- No minimum capital
- Must file annual return (ownership details to Registrar, not public but accessible to authorities)
- Beneficial ownership regime in place (not publicly accessible but available to competent authorities)
- No requirement to file accounts publicly (confidential to registered office)
- Fast incorporation (1-3 days)
Regulatory Framework & Substance
- CIMA (Cayman Islands Monetary Authority) regulates funds, banks, insurance, trusts
- Economic substance requirements introduced 2019 (must demonstrate adequate people, assets, expenditure in Cayman OR be tax resident elsewhere with proper evidence)
- Pure holding companies with no Cayman-source income can claim exemption from substance if tax resident elsewhere
- Professional services sector world-class: law firms (Maples, Walkers, Ogier), administrators, auditors (Big 4 all present)
- Regulatory stability and predictability valued by institutional investors
- Costs higher than BVI/other offshore (premium jurisdiction, higher service quality)
Banking & Practical Considerations
- Strong banking sector for funds and substantial businesses (Cayman National Bank, international banks including HSBC, Butterfield, others)
- Compliance rigorous but professional (not anti-business, just thorough)
- For smaller structures, may need to bank elsewhere (similar challenges to BVI for non-fund entities)
- Annual fees substantial: government fees ~$1,200-2,000+, registered office ~$2,000-5,000+, admin/accounting services for funds can be $20,000-100,000+ depending on complexity
- Ideal for: hedge funds, private equity funds, venture capital funds, large holding structures with institutional investors
- Not ideal for: small businesses, active trading, companies needing frequent banking/payments
- Reputation: Generally more credible than other offshore jurisdictions due to fund industry dominance and OECD cooperation
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Important Notice: Aventarys Group connects clients with licensed third-party professionals. We do not provide legal, tax, accounting, or financial advice. All services are delivered by independent licensed providers. Clients should consult their own legal and tax advisors before making any decisions.
