In structuring a transaction, the selection of the right entity can be compared to choosing a golf club. You can default to your 7 iron for most strokes, use a putter on the green, or pick another stick more suited to the conditions and where the ball lies. But the golfer is always limited by what is in the bag. In transaction structuring, the bag will usually have a company, trust or partnership, depending on which better matches the commercial, regulatory and tax drivers of the parties.
However, the Cayman Islands is introducing a new club for the caddy to carry: the limited liability company (LLC). Limited liability companies are not new, and have been a cornerstone of commerce in the US since the 1970s. In 2014 alone, more than 120,000 LLCs were formed in Delaware. The LLC has a variety of potential uses, from funds and management platforms to estate planning vehicles, incentive plans, joint ventures and charitable foundations.
Like its Delaware cousin, a Cayman LLC is a versatile body corporate that brings together, in one entity, a number of attractive attributes of companies and exempted limited partnerships (ELPs), including separate legal personality, limited liability of members, and the flexibility of using capital accounts. A Cayman LLC is, essentially, a hybrid drawing from statutory rules familiar to those who have dealt with Delaware LLCs, supported by the body of common law and equity applicable to Cayman companies.
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JAMES GADEN is a partner at the Hong Kong office of Maples and Calder
Maples and Calder | Hong Kong
53rd Floor, The Center, 99 Queen’s Road,
Central, Hong Kong
Tel: +852 2522 9333
Fax: +852 2537 2955