Hedge Funds in Cayman Islands

Why exactly the Cayman Islands?

ICD Fiduciaries: Hedge Funds in Cayman Islands

Cayman is a British Overseas Territory and as such maintains all of the security and stability in under the British flag and it is the world leader as a hedge fund domicile for a number of reasons including being a business environment with a well developed financial services laws.

Hedge funds are often set up as a private investment partnership with a restricted number of depositors and ask a very large initial minimum investment.
Contribution in hedge funds are illiquid, in case that they ask investors keep their money in the fund for a minimum of one year.
Cayman Islands have a leading position in jurisdictions for fund formation with an estimated 80% of the world’s hedge funds domiciled there. On December 2008, Cayman had over 10,000 hedge funds registered with the local regulatory authority: The Cayman Islands Monetary Authority (“CIMA”).

Cayman Hedge Funds: Legal & Tax

There are three forms for Hedge funds incorporated in the Cayman Islands – company, a limited partnership or a unit trust. If statutory segregation between assets and liabilities of sub-portfolios is desired, the SPC model will be good.
Each vehicle can be used as a stand-alone fund, a fund of funds or as part of a master-feeder structure. Their managers need not be domiciled in the Cayman Islands.
There are no exchange control or currency restrictions in the Cayman Islands, in sharp contrast to other offshore centres. The Cayman Islands do not have any double taxation treaties.

The most important advantage to establishing a fund:

• Non-public funds can be registered in as little as 3-5 days with CIMA and the vehicle of choice for the fund can be registered within 1 day prior to filing

• Flexible statutory regimes, with an absence of exchange control provisions, that are well-established and relatively reliable cost

• No restrictions on: investment policy, issue of equity interests, prime brokers or custodians

• The legislative and regulatory environment is continuously evolving to strengthen the jurisdiction’s appeal for hedge funds in response to often changing market conditions

• Cayman Islands is a tax neutral jurisdiction – there are no capital gains, income, profits, withholding or inheritance taxes attaching to investment funds established there