Government has published a bill to create for the first time limited liability companies in the Cayman Islands. If passed into law, the Limited Liability Companies Bill 2015 will allow the establishment of Cayman LLCs that in its suggested form would be very similar to a Delaware limited liability company.
Offshore law firm Walkers said in a client advisory that there has been considerable demand from the U.S. financial services industry for a Cayman LLC and the firm expects “the market to take up using it straight away.”
The draft LLC Bill is largely based on the current Delaware Limited Liability Companies law.
One advantage of the Delaware LLC is that the business structure and the workings of the company can be tailored in an operating agreement to the exact needs of the LLC members.
This includes for example agreeing mechanisms such as capital accounting and capital commitments, allocations of profits and losses, allocations of distributions, voting rights and classes of interests, Walkers said.
The LLC agreement also stipulates whether the management of the LLC is determined by the majority of its members or by a management structure with different classes of managers that have certain rights, powers and duties. According to the bill, Cayman LLCs will be registered with the registrar of Limited Liability Companies but the LLC agreement does not have to be filed. Exempted companies in Cayman will be able to convert into an LLC.
If the bill becomes law an LLC would be able to merge or consolidate with exempted companies or any foreign entity with separate legal personality. Transfers into and out of Cayman are also permitted.