Limited Liability Companies (LLCs) became available in the Cayman Islands in 2016. An LLC is a hybrid form of business entity with characteristics of both a limited partnership and a company. An LLC is governed by an agreement among its members (LLC agreement), much like a limited partnership. However, like a company, its members enjoy limited liability.
The Limited Liability Companies Act, 2016, as amended (Law) imposes few formalities and affords investors in an LLC great flexibility in how they wish their LLC to be governed, with the Law deferring in many instances to the LLC agreement. The LLC has proved popular for a variety of structures including joint ventures, group restructuring entities, general partners, carried interest vehicles, asset holding, special purpose vehicles and investment management companies.
In order to form an LLC, the initial member (or members) will need to file a registration statement with the Registrar of Limited Liability Companies. The registration statement sets out the LLC’s name (along with any dual foreign name and its translation), the general nature of its business, the address in the Cayman Islands of its registered office and its term (or, if formed for unlimited duration, a statement to that effect). I
t also contains a declaration that the LLC will not undertake business with the public in the Cayman Islands other in furtherance of its business outside the Islands as contemplated by the Law. Subject to this restriction (and subject to any restriction that may be imposed under its LLC agreement), an LLC may carry on any lawful business, purpose or activity, whether or not for profit.
Formation and Registration
Upon the filing of the registration statement meeting the statutory requirements and the payment of a fee the Registrar will issue a certificate of registration.
The LLC is a body corporate with legal personality separate from that of its members. It is capable of exercising all the functions of a natural person of full capacity irrespective of any questions of corporate benefit.
An LLC has perpetual succession, the capacity to sue and to be sued and defend legal proceedings in its name, and the power to acquire, hold and dispose of property.
An LLC must have at least one member at all times.
The liability of a member to contribute to the assets of an LLC is limited:
to the amount that the member has undertaken to contribute to the assets of the LLC;
to making such other payments or performing such services as are expressly set out in the LLC agreement or as have otherwise been agreed between the member and the LLC; and
to such other amounts as may be required to be paid or property required to be returned by the member to the LLC pursuant to the LLC agreement or the Law.