Segregated Portfolio Company (SPC) in the Cayman Islands

Updated on Wednesday 31st May 2017

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Segregated Portfolio Company (SPC) in the Cayman Islands Image
The Cayman Islands is an attractive jurisdiction and a great number of foreign investors have taken an interest in how to start a fund here. The jurisdiction provides numerous instruments for investment purposes, including the exempted companies, which offer advantageous tax policies. In the Cayman Islands, investors can also set up a segregated portfolio company, a type of exempted company which is incorporated following the regulations applicable under the Companies Law. 

What is a segregated portfolio company? 

Following the regulations of the Companies Law in the Cayman Islands, the segregated portfolio company (SPC) refers to a type of legal entity which has as a main characteristic the fact that the investors may set up internal porfolios

An important trait of the internal portfolios refers to its assets and liabilities, which are separated from the ones of the company’s general assets. At the same time, the company may also have segregated portfolios which can also have separate assets and liabilities

The assets or liabilities of the segregated portfolios in the Cayman Islands will belong to the owner of the respective segregated portfolio. According to the Part XIV of the Companies Law, the SPC was created to provide a high level of protection to the investors who are carrying out different business strategies trough the same legal entity. A similar strategy is available for fund domiciliation.

For example, investors who want to start a hedge fund may set up compartments within the fund, which will allow them to carry out multiple investment strategies

Registration of a SPC in the Cayman Islands  

According to the regulations of the Companies Law, any exempted company registered in this jurisdiction may apply for the SPC statute. The procedure is handled by the Registrar of Companies. Previous to this action, the company should be also registered with the Cayman Islands Monetary Authority

The registration should be completed by two directors of the company, through an application in which they will provide relevant information on the assets and liabilities of the company, the transactions of the company and other similar aspects. 

Investors interested in starting a hedge fund or a segregated portfolio company in this country are welcomed to contact our team of affiliates in the Cayman Islands for more details on the legal requirements.