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On 8 June 2016, the Cayman Islands enacted the Limited Liability Companies Law, 2016 (“LLC Law”), which provides for a new type of Cayman Islands vehicle: the limited liability company (“LLC”).

The Registrar of Limited Liability Companies in the Cayman Islands (“Registrar”) confirmed the first available registration date on 13 July 2016. From this date, it will be possible to:

  • form and register a new Cayman LLC;
  • transfer by way of continuation into the Cayman Islands and transfer by way of continuation out of the Cayman Islands are also permitted for LLCs;
  • convert an existing Cayman Islands exempted company into an LLC. However, there are no mechanism for an exempted limited partnership to convert to an LLC; and
  • merge with or consolidate with either one or more LLCs, one or more Cayman Islands exempted companies, or one or more foreign entities having separate legal personality.
What is Cayman LLC?

An LLC is essentially a hybrid vehicle, combining certain characteristics of a Cayman Islands exempted company with those of a Cayman Islands exempted limited partnership. The LLC Law takes many key features of the current Delaware Limited Liability Companies Law and those familiar with the Delaware concepts will recognise many of these characteristics. Basically, an LLC is a body corporate with separate legal personality, like a Cayman Islands exempted company, but without the constraint of having share capital.

Based on its features and flexibility, an LLC may be an appropriate vehicle for a range of uses in investment funds, joint venture companies, private equity transactions vehicle, securitisation SPV, holding companies and other corporate transactions and international structures.


Registration of the LLC is straightforward. Only one member is required in order to register an LLC and will be effected by the filing of a Registration Statement with the Registrar together with payment of the initial registration fee.

The certificate of registration issued by the Registrar (“Certificate of Registration”) is conclusive evidence of compliance with all the requirements of the LLC Law in respect of formation and registration. An LLC is deemed to be registered on the date of filing. The Certificate of Registration is generally issued by the Registrar between 3 and 5 working days (or 24 hours if expedited for an additional fee) following the payment of the initial registration fee and the filing of the Registration Statement.

The LLC must have a written LLC agreement (“LLC Agreement”) of the member or members of the LLC as to the business or affairs of the LLC. Although the LLC Agreement may be entered into at any time before, after or at the time of the filing of the Registration Statement, if it is filed before the filing of such statement, it is deemed effective on the date of the Certificate of Registration. Such agreement may be referred to as an LLC agreement, operating agreement or otherwise. The Registration Statement can serve as the LLC Agreement for this purpose.

The LLC Agreement is not required to be filed with the Registrar except where the Registration Statement also serves as the LLC Agreement.

Key Features of an LLC
  • An LLC is a body corporate with separate legal personality.
  • An LLC may be formed for any lawful business, purpose or activity.
  • An LLC may but not compulsory, to use one of the following suffixes in its name "Limited Liability Company", "LLC" or "L.L.C.".
  • An LLC needs to maintain a registered office in the Cayman Islands for the service of process and to which all notices and communications may be addressed.
  • An LLC may be formed for an unlimited duration or a specific term.
  • An LLC requires at least one (1) member. Generally, unless specified to the contrary in the LLC Agreement, a member's liability is limited to:
    • the amount that the member has undertaken to contribute to the assets of the LLC, whether in the LLC Agreement or otherwise;
    • making such other payments or performing such services as set out in the LLC Agreement or otherwise agreed between the member and the LLC; and
    • such other amounts as set out in the LLC Agreement.
  • Members have no duties (fiduciary or otherwise) when exercising their rights or authorities or performing any of their obligations as members under the LLC Agreement.
  • Admission of new member, transfer of a member's interest and cessation to be a member are in accordance with such provision in the LLC Agreement or the LLC Law.
  • An LLC affords considerable flexibility to its members to agree among themselves the internal workings and management arrangements of the LLC (subject to certain statutory minimums), which is recorded in an LLC Agreement. This may include agreeing mechanisms such as capital accounting and capital commitments, allocations of profits and losses, allocations of distributions, voting rights (including negative consents) and classes of interests. Members may have capital accounts and make capital contributions, with profits and losses allocated among those members as provided in the LLC Agreement.
  • There are no capital maintenance requirements imposed on an LLC that limit the ability of the LLC to make distributions, only a cash-flow based solvency test.
  • The management of the LLC shall either vest in its members acting by a majority in number or, if the LLC Agreement provides, by one or more managers. The LLC Agreement may provide for classes of managers having such rights, powers and duties for the relevant class as specified therein. The LLC agreement may provide for the appointment of persons who need not be members to be manager(s) of the LLC.
  • Unless otherwise provided in the LLC Agreement, written resolutions may be passed by members having not less than the minimum number of votes that would be necessary to authorise or take such action at a meeting at which all members entitled to vote thereon were present and voted.
  • Under the LLC Law, a member may act in its own best interests and not the best interests of the LLC itself or any other member. Similarly, under the LLC law, a person serving on a board or committee of the LLC may if so provided for in the LLC Agreement, act in the best interests of a particular member and not necessarily the best interests of all of the members of the LLC as a whole.
  • The LLC Law provides that, subject to anything in the LLC Agreement to the contrary, a manager does not owe any duty (fiduciary or otherwise) to the LLC "other than a duty of good faith in respect of the rights, authorities or obligations which are exercised or performed, or to which such manager is subject in connection with the management of the LLC, provided that such duty of good faith may be expanded or restricted by the LLC Agreement". The duties of a manager, however, are partly a matter of statute and partly a matter of contract. Therefore, there is considerable flexibility to determine the scope of duties that will be owed by the manager to the LLC, subject to a minimum duty to act in good faith. Depending on the drafting of the LLC Agreement, a manager may or may not have fiduciary duties akin to the directors of an exempted company or the general partner of an exempted limited partnership under Cayman Islands law but will always have a minimum duty to act in good faith.
  • A manager may resign as a manager of an LLC at the time and as specified in the LLC Agreement or any other document pursuant to which the manager is appointed or with the consent of the members. If a manager wishes to resign in circumstances other than those provided for, he may do so by written notice to the LLC and all of its members but the LLC may seek remedies for breach of contract, including damages, which may be offset against any payments due to the resigning manager.
  • No law enacted in the Cayman Islands imposes any tax to be levied on profits, income, gains or appreciation shall apply to the LLC.

An LLC is required to maintain and make available upon service of an order or notice by the Cayman Tax Information Authority the:

  • register of members;
  • register of managers;
  • register of mortgages and charges; and
  • register of security interests.

The register of managers must be filed with the Registrar and the Registrar must be notified within sixty (60) days of any change of manager.

Where the register of members is kept at a place other than the registered office of the LLC, the LLC shall maintain or cause to be maintained at its registered office a record of the address at which the register of members is maintained, which record shall be updated within twenty-one (21) days of the date of any change in the particulars therein.

The register of members, register of managers, register of mortgages and charges and register of security interests are not publicly accessible unless provided otherwise in the LLC Agreement or as otherwise permitted by the LLC manager.

Accounting Records

Every LLC shall cause to be kept such proper books of account as are necessary to give a true and fair view of the business and financial condition of the LLC and to explain its transactions. Such books of account and record of contributions are not publicly accessible.

Where the LLC causes such books and records to be kept at any place other than at the registered office of the LLC or at any other place within the Cayman Islands, the LLC shall, upon service of an order or notice by the Cayman Tax Information Authority, cause to make available at its registered office copies of its books of account or records, or any part or parts thereof, as are specified in such order or notice.

An LLC shall cause all such books of account to be retained for a minimum period of five (5) years from the date on which they are prepared.

Tax undertaking certificate

An LLC may apply for a tax undertaking certificate from the Cayman Islands Government in similar terms to an exempted company, exempted limited partnerships or exempted trusts to the effect that, for a period not exceeding 50 years from the date of the undertaking.


An LLC shall be wound up voluntarily when its term as set out in the LLC Agreement expires, or, on the occurrence of a specified event in the LLC Agreement or when the LLC has no members or, unless disapplied by the LLC Agreement, upon the affirmative vote or written consent of at least two-thirds (or such other majority as the LLC Agreement provides) in number of the members of the LLC.

Unless the LLC Agreement expressly provides otherwise, voluntary winding up of the LLC is not caused by the death, retirement, withdrawal, expulsion, bankruptcy, liquidation or dissolution of any member or the occurrence of any event that terminates the continued membership of any member.

Where expressly provided for in the LLC Agreement, a manager or, if no manager has been appointed, a member, shall have authority to present a winding up petition on behalf of the LLC upon the affirmative vote or written consent of at least two-thirds in number of the members or such other alternative vote or written consent as the LLC Agreement.

Where the Registrar has reasonable cause to believe that an LLC is not carrying on business or is not in operation, it may strike the LLC from the Register and the LLC shall thereupon be dissolved.

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The information in this document is not advice of any kind but general information only and should not be relied on as legal advice. Kensington Trust Group recommends seeking professional advice on legal or tax issues affecting you before relying on it. While Kensington Trust Group tries to ensure that the content of this document is accurate, adequate or complete, it does not represent or warrant, express or implied, its accuracy, correctness, completeness or use of any of the information. Kensington Trust Group does not assume legal liability for any loss suffered as a result of or in relation to the use of this document. To the extent permitted by law, Kensington Trust Group excludes any liability for negligence, for any loss, including indirect or consequential damages arising from or in relation to the use of this document.