The Cayman Islands enacted its first Mutual Funds Law in 1993, becoming one of the first offshore jurisdictions to codify legislation to govern its hedge fund industry. As a result, the Cayman Islands is, and has been, the leading domicile for the establishment of hedge funds. Recent figures show that some 75% of all hedge funds are established and remain registered in Cayman, despite the global economic conditions. The hedge fund industry has experienced phenomenal growth since it was regulated and the reasons the Cayman Islands is viewed as a jurisdiction of choice include:

  • market access;
  • the availability of professional services;
  • the flexibility afforded by the range of structures used to operate investment funds;
  • positive investor perception;
  • local infrastructure;
  • availability of listing on the Cayman Islands Stock Exchange;
  • geographic location and time zone; and
  • the legal, regulatory and tax environment.
 

Investment Fund Trends

Frequently, Cayman investment funds are established as part of a wider product structuring and it is common to see master feeder and side by side structures connected with one or more onshore funds. Fund of funds are very much a feature of the Cayman funds industry and there is also increasing use of segregated portfolio companies in the case of umbrella structures where there is a diversity of risk profiles as between the various sub-funds or leveraging. The United States remains a significant source of business for Cayman service providers but Europe and the Far East are of increasing importance. In fact, the firm has considerable expertise in Shariah compliant investment funds, establishing its first such fund in 1989.

Solomon Harris is able to advise on all aspects of both the structuring and the establishment of a Cayman investment fund, working alongside your onshore counsel as appropriate. We are also able to make introductions to other service providers, in particular, administrators, auditors and professional directors. Typically, a Cayman fund can be established within 4-6 weeks depending on the complexity of the structure.

Members of the Solomon Harris funds team originate from firms such as Appleby, Allen & Overy, Cromwell & Moring, Eversheds, Freshfields, Glovers, Slaughter & May, Stikeman Elliot and State Street.

Notable clients include Société Générale, Lyxor Asset Management, Banco Itau, Unibanco and Harcourt.

Solomon Harris was a founding member of the Cayman Islands Chapter of AIMA and our funds team regularly participates in AIMA events.

How to Set Up a Cayman Hedge Fund

 

Here we take a straightforward look at the process of starting a hedge fund from first principles of the various vehicles available in the Cayman Islands, through its management and regulation and the eventual winding up of the fund.

1.          Why Cayman? Getting the best from a hedge fund.

You need to obtain the best possible independent advice on how you set up your Alternative Investment Fund (AIF). To attract high calibre institutional investors it is important to recognise investors’ expectations for best practice in corporate governance and fund administration. They expect independent valuations from non-affiliated administrators, the appointment of truly independent directors (i.e. independent of the manager and of any other service provider) who are sufficiently experienced and available to offer effective supervision and the hiring of auditors experienced with alternative investment products.

Here at Solomon Harris we have well over a decade of experience in setting up hedge funds, legal and regulatory issues arising from their management, restructurings and transactional matters, and all aspects and means of their dissolution. We have long established relationships with a range of professionals, both based in the Cayman Islands and other relevant jurisdictions, who provide key non-legal services to funds, including experienced directorship providers, independent administrators and industry knowledgeable auditors.

Setting up a hedge fund in the Cayman Islands requires legal advice specific to the proposed AIF, its investment strategy and target investors which aspects are beyond the scope of the general information in this article. Also, you will need advice on the laws, including tax laws, of your home jurisdiction applicable to the proposed AIF. We at Solomon Harris are happy to collaborate with legal counsel in your home jurisdiction in setting up your fund structure or recommend such counsel if required.

Why base a fund in the Cayman Islands?

The Cayman Islands enacted its first Mutual Funds Law in 1993, becoming one of the first offshore jurisdictions to codify legislation to govern its hedge fund industry. As a result, the Cayman Islands is, and has been for some time, the leading domicile for the establishment of offshore hedge funds. Specific benefits include:

  • Tax:  Cayman is a "no-tax" jurisdiction; it has no history of direct taxation whatsoever and the country has no mechanism for direct taxation in existence. The Cayman Islands have no direct taxes of any kind. There is no corporation tax, no capital gains tax, no inheritance tax, no income tax or any profit or withholding taxes payable in the Cayman Islands.
  • Stability:The Cayman Islands’ is a politically stable jurisdiction affiliated with the UK as a British Overseas Dependent Territory which adheres to the rule of law andhas a well-developed and sophisticated legal and court system with dedicated commercial judges. The ultimate appeal Court is the Privy Council in London.
  • Freedom of investment:In the Cayman Islands the rules governing the financial services sector are soundly based on a fundamental principleof keeping the burden of regulation proportionate to its benefit.  There are no restrictions on investment strategies of hedge funds, or their use of techniques such as leverage or shorting. Nor is there a concept of an "eligible investor". Provided that the fund is not marketed to the public within the Cayman Islands, anyone is free to invest into a Cayman AIF. The legal framework allows flexibility, which enables Cayman funds to participate in sophisticated investment techniques. These may include leveraging the portfolio, short-selling, investing in all types of securities and derivatives, and investing, without restriction, in any currency or instruments. When investors redemand/or once the fund has served its purpose and it is time to repatriate the investors’ money, they can be assured that there are no exchange controls or currency restrictions.
  • Success: In terms of world market share of hedge funds, according to analysis by Oliver Wyman Financial services in 2011 the Islands are home to 45% of the world’s hedge funds (by number of funds), and 52% of the world’s assets under management in hedge funds. As of December 31, 2013 the Cayman Islands has 11,379 Mutual Funds registered with the Island’s financial services regulator, the Cayman Islands Monetary Authority (CIMA). Of these 8,235 are Registered, 2,635 are Master Funds, 398 are Administered and 111 Licensed.
  • Professionals: As a leading centre for investment funds, Cayman has a concentration of legal, accounting and fund management professionals (such as directors or administrators) needed to set up, run and ultimately close investment funds. This gives fund promoters the assurance that they have access to high quality services regardless of the complexity of their products. If you plan to list your investment company on the Cayman Islands Stock Exchange (CSX), the Cayman Islands also offers a 'one stop shop' of local legal advisors who are also listing agents, saving you time and money. Solomon Harris is a listing agent and can assist you with a listing of the fund on the CSX.
  • International recognition: The experience and expertise of the local financial services industry and the intelligent approach of the regulator, CIMA, combine to create a regime which is both competitively “light-touch” on regulation, but which is also in step with the high international expectations on transparency and regulatory standards. In 2013, the Islands’ legal and regulatory regime was praised as “robust and transparent” in the Organisation for Economic Co-operation and Development’s (OECD’s) Global Forum Peer Review report.
  • Fast and efficient regulation:The Cayman Islands is well known for its close working relationship between government and private sector. This has created a business environment that is efficient and free oftime-consuming bureaucracy. Registering funds with CIMA is fast and efficient. Under CIMA’s Form MF1 regime (which is the most common route used in establishing hedge funds in Cayman and where the minimum initial investor subscription is US$100,000), registration of the fund with CIMA has immediate effect and the fund can start accepting subscriptions and trading upon registration. Otherwise, it takes generally four to six weeks for CIMA to approve an application to license a fund once all documentation has been received.  Cayman’s Mutual Funds Law is designed to be a user-friendly regulatory framework for fund managers underpinned by a principles-based approach.
     

Getting the best from a Cayman AIF

A great deal of care and attention needs to be given to the type of vehicle(s) used to hold the fund’s assets and the fund’s constitutional documents which control the fund’s investment strategy and the way each investor can make (and ultimately withdraw) their investment. The fund’s structure and documentation will also need to take into account the regulations imposed in the last few years by the USA and/or the European Union (EU) on investments held by their citizens and/or in relation to marketing the fund. For more information on those regulations, you will find links to our articles on FATCA, Dodd Frank, and AIFMD in section 5 below.

2          Getting started

A hedge fund is simply a collective investment vehicle with an actively managed investment program. Hedge funds are often referred to as “alternative investments” as they are able to follow investment strategies which are not available to traditional retail investment managers. With a Cayman Islands hedge fund, the only restrictions on strategy will be those set out in the individual fund’s constitutional documents.

Deciding on an appropriate structure

The first decision when setting up a fund in the Cayman Islands is which structure best suits your needs. You will need to consider factors such as the type of investment strategy to be pursued and the jurisdiction/location of the investors which the fund is looking to attract. Money spent on legal advice at this point repays itself in the time it saves later in managing, and eventually closing, the fund.

Structure options

The laws of the Cayman Islands allow a high degree of flexibility for establishing hedge funds. The three vehicles commonly used for operating hedge funds are the exempted company, the unit trust and the exempted limited partnership.

Exempted Company

Registering a Cayman Islands exempted company is a fast, inexpensive and relatively straightforward process. This makes it the most popular vehicle for new hedge funds. A particular benefit for collective investment schemes is that a Cayman exempted company can issue multiple classes of shares with different terms (including as to rights of redemption), and which can be issued in different currencies. Share rights are set out in the company’s Articles of Association and Memorandum of Association (bylaws) and explained further in the fund’s offering memorandum. Initially, shares will be offered to investors at an initial fixed price which will then fluctuate according to the performance of the fund. Subsequent share offers will be at either a fixed price or more commonly a price per share calculated by reference to the net asset value (NAV) of the fund. The Cayman Islands Companies Law also allows re-domiciling of companies, statutory mergers and corporate reconstructions.

 Benefits of a Cayman exempted company include:

- a Tax Concessions undertaking, whereby the Cayman Islands Government (CIG) provides a written undertaking that the company will be exempt from taxes for a minimum of 20 years;

- freedom to appoint directors from any jurisdiction;

- the registers of members, directors and officers of the company are private.

Segregated portfolio company (SPC)

An SPC is a particular Cayman creation. Essentially a corporate structure, it allows a fund manager who is looking to establish an “umbrella” fund to create sub-funds within the SPC in the form of individual segregated portfolios.  Although each portfolio is not a separate legal entity but exists within the SPC entity, the assets and liabilities of each portfolio are legally ring-fenced from the others.  Because these sub-funds are not individually regulated a manager can create new, legally separate sub-funds within the umbrella fund for a fraction of the cost of setting up an entirely new hedge fund. It also allows investors to employ a single vehicle with discrete funds, each managed by a different, specialised manager. In addition to the segregation of assets and liabilities, a segregated portfolio company structure also has the benefits listed above for an exempted company.

Exempted Limited Partnership

Registering a Cayman Islands Exempted Limited Partnership (ELP) is a quick and straightforward process. An ELP is governed by a partnership agreement where one partner (the general partner or GP) holds the assets of all the partners, transacts on behalf of the limited partners, and either makes investments on behalf of the partners, or appoints third parties to do so on its behalf. There can be more than one GP, but at least one must be either resident or incorporated in the Cayman Islands. The GP has unlimited liability for the obligations of the partnership (and if more than one they will have joint and several liability for the partnership debts), but the limited partners are only liable up to the amount that they invested under the terms of the partnership agreement (provided they have not held themselves out as if they were the GP).

Unlike a company, the partnership does not itself have separate legal personality - it is simply a contractual relationship between the parties. As the terms of the partnership agreement are mainly only limited by the terms agreed by the parties this is a particularly flexible investment vehicle.

Benefits of an ELP structure include:

- the register of the ELPs interests is private- only open to the GP, partners, and anyone the GP agrees to allow access;

- the structure is a creature of contract and therefore more flexible than a corporate structure. It can be more adaptable to meet specific investment strategies;

- the GP can also act as the fund’s investment manager in which case it will not normally need to register as an “excluded person” under the Securities Investment Business Law on the basis that it will be trading in its own name.

 

Unit trust

A unit trust is where a Cayman Islands trust, controlled by a trust deed, is the holding vehicle for the collective investment. Each investor buys “units” in the trust, which depending on the provisions of the trust deed, can be transferred, and redeemed (like shares in a company).  The trustee (generally a specialist professional Cayman Islands trust company) invests the trust’s assets using a strategy which is consistent with the purposes and restrictions set out in the trust deed or delegates that role to an investment manager. As the trust deed is a private agreement it can be tailored to meet specific investment objectives.

It is possible to establish multiple funds within a single trust by creating sub-trusts. The unit trust structure has been traditionally the preferred structure for Japanese managers due to Japanese tax reasons.

Benefits of a Unit trust structure include that if it is registered as an exempted trust (whereby the Registrar of Trusts accepts that the investors under the trust (either individuals or companies) are not and will most likely not be resident or domiciled in the Cayman Islands), then it can apply for a Tax Concessions undertaking, whereby the CIG provides a written undertaking that the exempted trust will be exempt from taxes for a minimum of 50 years.

3          Setting up the hedge fund

Documentation

Once you have decided on the type of vehicle to use for the hedge fund, the fund’s lawyers will draft the fund’s constitutional documents. These are complex documents and a lot of time and effort goes into detailed analysis of the provisions. They generally go through a number of drafts before being finalised.

The main constitutional documents of the fund will be:

- for a company, the Memorandum of Association and the Articles of Association;

- for a unit trust - the trust deed ; and

- for an exempted limited partnership, the limited partnership agreement.

In most cases the fund will also have a disclosure document, referred to as a prospectus, offering memorandum, private placement memorandum or confidential information memorandum.  The disclosure document will set out the operational details of the fund including information about subscriptions and redemptions, the investment objectives and strategies and the particular risk factors associated with them, details of the services providers and fees payable by the fund, the method and frequency of valuations and other important matters that investors will have to consider before deciding whether to make an investment.

Stand alone/Master-Feeder

A fund can be established as a stand alone fund (a single vehicle). Managers looking to attract a mixture of US taxable, US tax-exempt and non-US investors will often be advised to set up a master/feeder structure. Typically this consists of two feeder funds – one onshore, through which US taxable investors can invest, and an offshore fund based in the Cayman Islands, through which non-US and US tax-exempt investors can invest. The feeder funds then invest in a Cayman-based master fund which carries out all trading activity.

Investor and Professional Agreements

The fund’s legal advisers will also draft other ancillary documents. These include the subscription agreement, redemption request form, and the agreements to appoint the various service providers the fund will need, such as the fund manager, administrator, and investment advisor. In many cases, some of the service providers will have their own standard form documents that they wish to use and these forms are often subject to some negotiation.

The fund’s legal counsel will form the fund vehicle either by incorporating the company, or registering the partnership or trust, and then take steps to register or licence the fund with CIMA (if required), as to which please see section 4 below.

Migrating a company to and from the Cayman Islands

Another option to setting up an entirely new structure is to migrate an existing investment company to the Cayman Islands. At Solomon Harris we would advise you on all aspects of migrating a company to the Cayman Islands.  For more information on this process see our pieces on our website:  How to migrate a company in to the Cayman Islandsand How to migrate a company out of the Cayman Islands.

4          Cayman Islands Regulation: the Mutual Funds Law (2013 Revision)

The principal law governing the Cayman Islands investment funds industry is the Mutual Funds Law (2013 revision) (‘MFL’). Regulatory supervision is dealt with by the Islands’ regulator – the Cayman Islands Monetary Authority (CIMA).

Mutual Funds

The MFL classes a mutual fund as "any company, trust or partnership either incorporated or established in the Cayman Islands, or if outside the Cayman Islands, managed from the Cayman Islands, which issues equity interests redeemable at the option of the investor, the purpose of which is the pooling of investors' funds with the aim of spreading investment risk and enabling investors to receive profits or gains from investments." If your fund gives its investors an ‘equity interest’ and gives them a right to redeem it at their option, and if those pooled equity interests are held in a collective investment vehicle which is a Cayman Islands company, unit trust or partnership then your fund will fall within the MFL. The term “equity interest” does not include funds which only issue debt instruments such as bonds or notes.

Regulated Funds

There are three types of mutual funds that are regulated under the Mutual Funds Law:

- a Licensed Fund under Section 4(1)(a);

- an Administered Fund under Section 4(1)(b); and

- a Registered Fund under Section 4(3).

 

Mutual Funds Licence (s 4(1)(a) of the MFL)

A Cayman hedge fund can apply to CIMA for a Mutual Funds Licence, but this is rare (there are only 111 Licensed Funds as at 31 December 2013).This is because the regulatory and reporting requirements for a licensed fund are considerably more onerous than for the other options available under s4 of the MFL. The other options allow hedge funds to operate in the Cayman Islands without holding an MFL licence.

Application for a mutual fund under Section 4(1)(a) of the Mutual Funds Law (2012 Revision) (Form MF3)

Administered Fund (s 4(1)(b) of the MFL)

This regulation applies where a fund has a “principal office” in the Cayman Islands. Administered Funds are required to appoint an administrator (which does not have to be local) and a local auditor. Audited financial statements must be submitted to CIMA annually within six months of its financial year end. All mutual fund administrators in the Cayman Islands must be licensed by CIMA, which allows them to offer a “principal office” service in addition to the normal fund administration services. Where the administrator acts as your principal office it will register the fund with CIMA, giving it copies of the current offering documents, and will certify to CIMA that it is acting as the fund’s principal office. Although this is a useful way of operating a fund, it is not particularly popular, with only 398 Administered Funds registered with CIMA as at 31 December  2013. The benefit of this option is that there is no investor minimum initial subscription requirement.

Application for a mutual fund under Section 4(1)(b) of the Mutual Funds Law (2012 Revision) (Form MF2/MF2A)

 

Registered funds: Minimum Initial Investment of US$100,000 (s4(3) MFL)

This is the most common type of Cayman Islands fund, with 8,235 Registered mutual funds as at 31 December  2013. To fall within s4(3) of the MFL the fund needs to have a minimum initial investment by each investor set at US$100,000 (or its equivalent in any other currency). The fund will still need to be registered with CIMA which will need to have copies of the current offering document. Registered funds are required to appoint an administrator (which does not have to be local) and a local auditor. Audited financial statements must be submitted to CIMA annually within six months of its financial year end.

Application for a mutual fund under Section 4(3) of the Mutual Funds Law (2012 Revision)  (Form MF1)

 

Application for a master fund: (s 4(3)(a)(iii) of the MFL)
Where the fund is structured as a master-feeder structure, the master fund must be registered with CIMA. This application form, duly completed and accompanied by the relevant supporting documentation and the prescribed fee, is used when applying to be registered as a master fund under section 4(3)(a)(iii) of the MFL.

Application for a master fund under Section 4(3)(a)(iii) of the Mutual Funds Law (2012 Revision) (Form MF4)

Not all funds must be registered with CIMA. Under section 4(4)(a) of the MFL, a fund is exempted from the regulatory requirements if its equity interests are held by 15 or fewer investors, a majority of whom are capable of appointing or removing the fund’s operator (either the trustee, general partner or directors). Unlike other exemptions, a fund operating under section 4(4)(a) does not have to register with CIMA or submit audited accounts. However, a master fund in a master-feeder structure where the feeder is a registered fund will still have to register with CIMA as a master fund.

The above regulatory options are summarised in the chart below

Listed on Approved Exchange

If the fund’s equity interests are listed on a CIMA approved stock exchange, which includes CSX, then there is no need for that fund to be regulated by CIMA.   The fund will still need to be registered with CIMA and provide copies of the current offering documents, appoint an administrator (which does not have to be local) and appoint a local auditor. Audited financial statements must be submitted to CIMA annually within six months of its financial year end.  As a practical matter the Cayman Islands Stock exchange will impose additional listing requirements on any fund that has a minimum initial investment below US$100,000 or its equivalent in another currency.For more information on the Cayman Islands’ stock exchange, you might like to read the following articles on our website.The Cayman Islands Stock Exchange: Introduction; The Cayman Islands Stock Exchange: the listing process; Cayman Islands Stock Exchange Changes to the listing Rules 13;

Changes to the CSX listing Rules 13: Part 2: Investment Funds; Changes to the CSX listing Rules 13: Part 3

CIMA registration

To register a fund with CIMA, you need to send it:

-          the offering circular;

-          a statement of statutory particulars;

-          consent letters from the fund’s administrator and auditor confirming that they act as such on behalf of the fund and payment of the registration fee.

Currently, the fee to register the fund (either a company or a partnership)with CIMA under the MF1 regime is US$4,268.29, plus a filing fee of US$365.85,payable upon registration. This same fee is also an annual fee payable thereafter, each January. The initial registration fee and annual fee for an SPC is US$4,268 (plus an additional US$305 per segregated portfolio (up to a maximum of 25)).The initial registration fee and annual fee for a master fund is US$3,048. 

5.          Managing your hedge fund

The day to day running of the hedge fund will be controlled by the fund’s constitutional documents. In addition, aregistered fund must provide CIMA with a current offering document upon registration, and each time the offering document is updated or revised.

Your fund may need legal advice if it needs to:

-          restructure;

-          make significant changes to the offering;

-          enter into complex transactions;

-          enter into fund financing arrangements;

-          change or suspend investors rights

-          handle investor disputes.

Annual returns to CIMA

A registered hedge fund is required to have its accounts audited annually by a CIMA-approved auditor with offices in the Cayman Islands, and copies of the audited accounts must be provided to CIMA within six months of the end of the fund’s financial year.

Within six months of the fund’s financial year-end, all funds regulated under the MFL must submit to CIMA, through CIMA’s electronic reporting system, the following documents:

-          Audited annual accounts (audited financial statements or ‘AFS’). s8(2) of the MFL;

-          Fund Annual Return (FAR). Completed by the fund operator with general, operating and financial information on the fund and submitted to CIMA by the local auditor. (The fee for filing a FAR is CI$300 (US$365.85). Fund Annual Return (FAR)

EU and USA regulation

The new regulations introduced and coming into force in the EU and USA are beyond the scope of this piece, but for more information on those regulations, you might like to read the following articles on our website:

US regulation:  A brief look at the impact of Dodd Frank Act on fund management; Cayman Islands and US sign FATCA Agreement; FATCA Extension Granted; FATCA latest - IRS revised timeline moves key; dates; FATCA- The Cayman Government chooses Intergovernmental Agreement Model 1;  FATCA and Cayman Island funds: Ministry Advisory on GIIN

EU regulation:Cayman Islands signs AIFMD Memorandum with Germany; AIFMD Day: But is anybody ready?; AIFMD - The Cayman Islands take another step forward; AIFMD - the UK's HM Treasury and FSA issue further consultation papersThe Alternative Investment Fund Managers Directive: Progress so far; Understanding AIFMD - Disclosure; ESMA's Final draft on types of AIF; AIFMD VoPs: FCA advises get your form in now (and fill in s.9); FCA AIFMD updates: a new date for the diary

6.          Winding up your hedge fund

At some stage in the future it will come time to dissolve the fund. With a Trust or a Partnership, there will usually be privately agreed terms for the dissolution of those structures within the Trust deed or partnership agreement.  If there is no such provision the applicable Cayman Islands law provides a comprehensive mechanism for termination of the Partnership or Trust without Court oversight where they are solvent. A solvent company’s constituent documents will set out the provision for distribution of assets upon its cessation of business. However a company continues in existence until it is removed from the Companies Register. This can be done voluntarily by applying to strike the company’s name from the Register, or by undertaking a voluntary winding up. A company may also be struck offfor failure to comply with annual filing requirements.

Applying to strike the company from the register under s. 156 of the Companies Law (2013 Revision) The directors may invite the Registrar to strike the company off the Register pursuant to section 156 of the Companies Law. To do this, one or more of the directors must file an affidavit with the Registrar with a letter stating that the company is no longer active and has no assets or liabilities. The application and affidavit should be approved by resolution of the directors. Once the company is struck from the Register, it is dissolved but can be re-instated at a later time. There are various disadvantages to this route, including that any property which the company still owns at strike off will vest in the Financial Secretary for the Cayman Islands and may be disposed of by the Governor in Council, rather than being distributed among the shareholders. Another disadvantage of this route is that the company’s liabilities are left unchanged, so that if the company were ever re-instated those liabilities could be enforced. The company might end up being reinstated under s159 of the Companies Law, which allows a member of the company or a creditor to apply to the Court for the company to be restored to the register. This route also has no effect on the individual liabilities of the company’s directors, managers, officers or members, which is not the case with a voluntary liquidation (see below). This is also true if the company was removed from the Companies Register for failure in annual filings. Accordingly, removal from the Companies Register, either voluntarily or compulsorily, leaves the company’s directors, managers and officers vulnerable to issues being raised in the future which , even if wholly answerable, is undesirable. It is possible to restore a struck company for up to 10 years from the date it was originally struck off the Register.

Winding up a solvent exempted company limited by shares

Advantages of voluntary liquidation

The advantage of the voluntary liquidation of a solvent Cayman Islands company is that it gives finality to the dissolution and a clean and decisive determination of any remaining liabilities the company’s officers and members may have to third parties such as creditors. This is not the case with a simple striking off the register under s. 156 of the Companies Law (Revised) which leaves such liabilities unchanged and able to be enforced as if the company had not been dissolved if the company is ever re-instated. Details of how to go about appointing a liquidator, what official notices need to be prepared and filed, and the process are set out in  our article on Winding up a solvent exempted company limited by shares under Cayman Islands law. For more information on how winding up solvent or even insolvent companies under Cayman Law you might be interested in the following articles: Restoring a Struck-Off Cayman Company; Changes to Forms for Winding Up Cayman Companies; Cayman Companies New Winding Up Rules - Petitions and Orders; The Appointment of Provisional Liquidators in Cayman after Orchid; Insolvency: Valuing Contingent Claims; Where do redeemed shares rank in a hedge fund's insolvency?; Security for costs in winding up proceedings

Setting up and managing hedge funds with Solomon Harris

Setting up a hedge fund in the Cayman Islands will be an efficient process, provided that you make sure you spend time getting the best legal advice, both in the Cayman Islands and your home jurisdiction. The information we have set out above is general, and should not be relied on in any way for any specific situation. If you would like detailed advice relating to setting up a fund, then we at Solomon Harris would be please to assist with advice on the Cayman Islands legal and regulatory aspects.  We can collaborate with your fund’s legal counsel in your home jurisdiction to make all aspects of setting up your fund efficient and cost effective.  We are a firm with a great, and growing, reputation, as can be seen from the following independent recommendations from the Legal 500 and Chambers Global.

Legal 500 Comments

"Widely regarded as one of the foremost independent firms in the Cayman Islands, Solomon Harris wins praise all round."

"Solomon Harrislawyers really understand the funds industry". The team welcomed Richard Addlestone from Appleby. Paul Scrivener is recommended; and Jonathan Fitzgibbons is ‘outstanding - he applies his legal expertise in a practical way to find the right solutions for businesses’. The practice acted for the sponsors in the establishment and registration of the Physical Hard Assets Fund and Physical Gold Fund with CIMA. Managing partner Sophia Harris and Nick Reid are also well regarded.

Chambers Global comments:

"The Funds Group comprises ten of the firm's attorneys and most spend the majority of their time working with major onshore law firms, fund managers, administrators and other service providers on the set up and ongoing operation of Cayman investment funds, with the main expertise being in hedge funds and private equity funds... The firm is perhaps best known for its niche expertise in investment funds and is able to bring to bear not only comprehensive legal expertise but also a strong working knowledge of the industry itself."

Client service: "They give us exceptional service – they do a fantastic job and are very attentive. I couldn't recommend them more highly."

Nick Reid is head of the firm's Zurich office. Clients say: "He's really responsive and the quality of his work is outstanding. He thinks ahead and his answers go beyond, as he realises his answer may bring on more questions." 

"The Firm has particular expertise in the structuring of investment funds at the outset."

"This steadily expanding firm, which recently opened in Zurich, is building a noticeable profile in investments funds and earning recommendations for its reasonable billing and good levels of support."

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