If you want to open a segregated portfolio company in the Cayman Islands, our magazine offers detailed information about it in the lines below.
| Quick Facts | |
|---|---|
| Applicable legislation |
The segregated portfolio company (SPC) in the Caymans is registered under the Companies Act revised in 2021 |
|
Trading name requirements |
The company must bear the SPC letters in its name |
|
Special shareholding requirements |
The SPC company must have at least one shareholder |
| Management requirements | The segregated portfolio company in the Cayman Islands must have at least 2 managers |
| Specific management conditions | The SPC must have a board of directors and one of the following: separate portfolio directorate, investment or management committee. |
| Possibility to use for investment fund creation in the Cayman Islands (YES/NO) |
YES, the SPC is suitable for starting an investment fund |
| Other uses of the SPC | This type of company can also be used to operate as a captive insurance company and structured-finance enterprise
|
| Registration authority | The SPC must be incorporated with the Companies Register |
| Special authorization requirements (YES/NO) | The segregated portfolio company must also register with the Monetary Authority of the Cayman Islands |
| Registration timeframe (approx.) | Approx. 5 to 10 business days |
| Types of funds it can be used for |
The SPC can be used to create registered, administered and licensed mutual funds, master funds, limited investor funds, private funds |
| Taxation of a SPC | There are no taxes imposed on SPC companies in the Cayman Islands |
| Annual filing requirements for a SPC |
SPCs must file annual tax returns in January for the past year |
| Advantages of the SPC company | Imposition of an annual fee instead of a corporate tax, possibilty to be used for the creation of various types of investment funds, as well as for other financial-related businesses, possibility to be used by foreign investors |
| Registration documents |
– Memorandum and Articles of Association, – list of each segregated portfolio, – declaration of the company’s assets and liabilities, – notice of registration. |
|
Possibility to operate abroad (YES/NO) |
Yes. |
|
Assets held by a SPC |
– Share capital, – other assets. |
| Possibility of having corporate shareholders | Yes. |
| Possibility to have natural persons as shareholders |
Yes. |
| Possibility to convert a regular exempt company into a SPC |
Yes, such a conversion is possible. |
| Conversion requirements |
– Passing a special resolution by the shareholders, – obtain the consent of the Monetary Authority in the case of licensed companies. |
| Types of investors addressed when used as an investment company |
Various types of investors, in accordance with the type of fund created. |
| Minimum share capital |
There is no minimum share capital requirement for this type of company, as it must have authorized capital established by the shareholders. |
| Restrictions (if any) | No, all restrictions have been lifted for the Cayman SPC. |
| Types of assets it can hold |
– General assets, – portfolio assets. |
| Types of general assets |
Income and property rights. |
| Types of portfolio assets |
Share capital, and reserves attributed to the Portfolio. |
| Capital gains tax |
No, there is no capital gains tax in the Cayman Islands. |
| Access to other tax benefits | Yes, the Tax Exemption Undertaking. |
| Legal forms available for registration | The SPC can be registered as an exempt private company. |
|
Full foreign ownership availability (YES/NO) |
Yes, a Cayman SPC can have 100% foreign ownership. |
|
Considerations about portfolio assets |
Portfolio assets may be used to mitigate liabilities towards shareholders and creditors of the SPC. |
| Contract requirements | Upon entering a contract, the Cayman SPC will execute the respective agreement on behalf of each Portfolio. |
| Limitations on the number of portfolios an SPC can create (YES/NO) |
No, there are no limitations on the number of such portfolios. |
| Resident director requirement (YES/NO) |
No. |
| Exchange control restrictions over an SPC in the Caymans |
No, there are no exchange control restrictions for this type of entity. |
| Possibility for each segregated portfolio to have its own investment manager (YES/NO) |
Yes, according to the Cayman Companies Law. |
| Possibility to transfer assets between segregated portfolios (YES/NO) |
Yes, however, directors must ensure the transfer is made at full value of each asset. |
| Rights of creditors in an SPC | The assets of a portfolio are available for creditors of the respective portfolio. |
| Possibility to transfer the assets of a portfolio to the general assets of the SPC (YES/NO) |
Yes. |
| Conditions to convert portfolio assets into general ones |
The conversion can be made for the payment of: – registration fees, – annual return fees, – taxes, – fines, – professional fees, – service provider fees. |
| Repatriation of profits availability for foreign shareholders (YES/NO) |
Yes, profits may repatriated by foreign stakeholders. |
| Access to double tax treaties (YES/NO) |
Yes, among which with countries like the UK, New Zealand, Japan, Argentina, Australia, Belgium, France, Denmark, Italy, Germany, Canada, and the USA. |
| Availability of SPC forms in other jursidictions (YES/NO) | Yes, in British Virgin Islands, Delaware (USA), Bermuda, Guernsey and Jersey. |
What is a segregated portfolio company?
The segregated portfolio company (SPC) refers to a type of legal entity that has as a main characteristic the fact that the investors may set up internal portfolios.
An important trait of the internal portfolio refers to its assets and liabilities, which are separated from the company’s general assets. At the same time, the company may also have segregated portfolios, which can have separate assets and liabilities.
Can I set up a SPC in the Cayman Islands if I am a foreigner?
Yes, this is a great structure for foreign investors.
What is the legal form a Cayman SPC can take?
Segregated portfolio companies are usually registered as exempt companies.
What are the requirements to set up a segregated portfolio company in the Cayman Islands?
The following:
- to have a local registered address;
- to add the termination SPC to the trading name;
- to determine the use of the SPC and write it in the Articles of Association;
- to have at least one shareholder;
- to have at least one manager (the shareholder can also act as a manager).
Here is an infographic on this type of entity:
What is the registration procedure for SPCs in the Cayman Islands?
The following papers must be submitted in order to set up an SPC in the Caymans:
- the Memorandum and Articles of Association;
- notice to the Registrar of Companies;
- a list of the names of each newly constituted segregated portfolio.
The following steps must be taken by the company when it plans to transform an existing exempted company into an SPC:
- submit a declaration signed by at least 2 directors to the Registrar of Companies with information about the company’s assets and liabilities, and the assets and liabilities intended for transfer, among others;
- approve the transfer of assets and liabilities by special resolution.
The company should also be registered with the Cayman Islands Monetary Authority.
Can another company be a shareholder in a Cayman SPC?
Yes, it can. This means that the respective corporate structure is also allowed to be the director of the company.
Is there a minimum share capital required to open a Cayman segregated portfolio company?
No, but a minimum authorized capital of USD 50,000 is recommended.
IMPORTANT! Depending on the use of the company, additional financial requirements may apply. This is often the case of starting an investment fund.
What are the main uses of a SPC in the Cayman Islands?
The following:
- investment fund setup: the SPC is used to create separate cells in order to have multiple investment strategies;
- master-feeder structure: the SPC can also be used to keeping various types of assets with minimal legal and administrative fees;
- insurance and reinsurance activities: the SPC is used to operate various cells independently under one umbrella company;
- securitization: the SPC can also be used as a special purpose vehicle (SPV).
What are the types of investment funds I can create through a SPC in the Cayman Islands?
You can create:
- hedge funds;
- umbrella funds;
- private equity funds;
- closed-ended funds.
Here is also a video on this topic:
What are the advantages of a SPC in the Cayman Islands?
The Cayman SPC corporate structure has multiple advantages, which is why multi-class hedge funds, umbrella, and master-feeder funds usually adopt it. Apart from this:
- the possibility to create a statutory “ring fence” within an SPC allows for protection against potential cross-liability problems involving the assets and liabilities of the multiple cells;
- such a business form pays annual government fees that are 50% less than those of an exempted corporation;
- the SPC is a Cayman business structure with no residency requirements for directors or shareholders, similar to a typical exempted company;
- there are no limits on exchange control.
Among other advantages, the SPC and its owners are exempt from Cayman taxes.
Investors interested in starting a hedge fund or a segregated portfolio company in this country are welcome to contact our team of affiliates in the Cayman Islands for more details on the legal requirements. If you have any questions on the segregated portfolio company in Cayman and its uses, our partners can advise you.
Investors interested in starting a hedge fund or a segregated portfolio company in this country are welcome to contact our team of affiliates in the Cayman Islands for more details on the legal requirements. If you have any questions on the segregated portfolio company in Cayman and its uses, our partners can advise you.