The Cayman Islands (the "Caymans"), one of the world's premier offshore financial centers, has long been attractive to investors due to its tax incentives, mature legal system, and corporate secrecy, and has become one of the most popular places for establishing international private equity funds. The 2016 Limited Liability Companies Law ("Cayman LLC Law") , effective on July 8, 2016, provides for a new alternative entity form for organizing Cayman funds-the limited liability company ("Cayman LLC") -in addition to the exempted company, exempted limited partnership ("Cayman ELP"), and unit trust. In the past two years, an increasing number of Cayman LLCs have come into public view.
A highlight of the Cayman LLC is that it adopts features of the Cayman exempted company to be recognized as an independent legal person and to afford limited liability protection to its members. In addition, the Cayman LLC adopts corporate governance and profit and loss sharing mechanisms by reference to the Cayman ELP, which provides for more flexibility than the Cayman exempted company. The Cayman LLC is derived from the U.S. Delaware limited liability company ("Delaware LLC") and has been modified based on the existing Cayman legal system.
