5 compelling reasons to choose the Cayman Islands for Fund and SPV Governance

The Cayman Islands provides a favourable environment for investment managers to establish and operate funds effectively - regardless of strategy, structure, or size.  With well over 50% of the world’s funds domiciled in the jurisdiction, Cayman is internationally recognised as a preeminent offshore centre for fund entities. 

While there are many considerations when choosing a fund domicile, here are 5 reasons why the Cayman Islands should be at the top of your list. 

1. Established Regulatory Environment: The Cayman Islands provides a well-established regulatory environment that supports stability for fund managers and investors alike. A strong governance framework ensures transparency, investor protection and adherence to fundamental international standards.
2. Tax-Neutral Fund Structures: The Cayman Islands offers tax neutrality, making it an attractive jurisdiction for fund vehicles. Entities domiciled in Cayman can be structured so that they will not be subject to taxes on such entity’s income, capital gains, or dividends for a period of time ranging from 20 to 50 years, depending on the entity type. This tax-efficient environment provides benefits for both fund managers and investors.
3. Trusted Legal System: As a British Overseas Territory, the legal system in Cayman is based on English common law, providing a familiar and reliable legal framework. Operators and investors can appreciate the jurisdiction’s robust legal principles, which help enhance confidence in fund governance.
4. Deep Talent Pool: A highly-skilled workforce of fiduciary, accounting and legal professionals reside in the Cayman Islands. Their expertise ensures efficient fund administration, compliance and governance. Whether launching a small or large fund, there is a comprehensive knowledge base to support the entity throughout its lifecycle. 
5. Global Recognition: The Cayman Islands are home to approximately 80% of all new offshore fund formations and their underlying SPVs. Fund managers from the US, Europe and Asia find the jurisdiction appealing due to its flexibility and accessibility to sophisticated global investors.
    

Why is good governance important?

All fund managers and Operators are required by Cayman Islands law to conform to local standards and regulations. This means all corporate administration and filings must be kept current and performed correctly in order to avoid penalties and fines. These functions will often be outsourced to an experienced third party to take advantage of local expertise. 

 

Why use a third-party provider in the Cayman Islands?

Locally based service providers are often necessary to establish a compliant and sustainable investment infrastructure. They can assist in upholding principles like:

• Greater transparency and accountability: Service providers can help funds provide clear information about their investment strategies as well as support regular reporting disclosures to help investors make informed decisions.
• Independent oversight: By outsourcing fiduciary oversight, funds can limit any conflicts of interest and provide their investors with additional protection.  An experienced professional director can sit on boards or committees to oversee fund operations and ensure compliance with local regulations.
• Managing risk: An independent third party like Ocorian can help to identify, assess, and manage risks to help reduce them. Robust risk management processes protect both the managers interests and the underlying investors’ capital.
• Ensuring fair treatment of investors: All investors should be treated equally and outsourcing means there are measures in place to avoid favouritism. By setting up a robust compliance and legal framework, funds can help ensure investor protection and promote market integrity. 
   

How can Ocorian help?

Ocorian has built an excellent reputation in the Cayman Islands as a trusted partner, thanks to our local expertise and dedicated staff. Our service offering allows for the smooth running and administration of any type of investment vehicle, while prioritising investor protection through independent oversight. 

We have an experienced team in the Cayman Islands providing services like a registered office, director and trustee services, regulatory reporting, board support and anti-money laundering compliance officers. Our strong Corporate and Fund Governance offering is complimented by our Ocorian Law colleagues – qualified legal professionals who can advise on a broad range of funds, insurance, corporate, capital markets’ structures.

Contact us to see how we can support you.