1. Cayman SPC (independent portfolio companies) Core statutory structure
Statutory Segregation of SPC Umbrella Funds
SPC as an independent legal entity，Multiple independent portfolios (SPs) can be created。Assets and liabilities between each SP，and the assets and liabilities between the SP and the general assets of the SPC.，Be legally completely independent (principle of separation)。
Limitations on creditor recourse
Portfolio assets may only be used to satisfy the SP’s creditors。Debt of any SP does not extend to other SPs，Creditors have no right to recover assets from other separate investment portfolios。This provides multi-level hedge funds and umbrella funds with extremely high statutory protection。
Personality non-separation and cross-restriction
The SPC is not separate from the internal SPs in corporate personality。Common case law states that a company cannot subscribe for its own shares，so，A Portfolio cannot invest in another Portfolio under the same SPC。
Efficient and cost-effective operations
The cost of setting up an SPC is relatively higher than that of a single fund.，But if the management team has 3 Manage more than one project simultaneously，SPCs are cheaper than separate funds。And after the SPC is established，Adding an SP is very fast，Avoid the tedious process of setting up from scratch。
2. Cayman Islands Investment Fund 4 Comparison of major statutory organizational forms
| organizational form | Legal characteristics and independent legal personality | Responsibility allocation and funding mechanism | Main applicable scenarios |
|---|---|---|---|
| exempt company (EC) | Have independent legal personality。Flexible share issuance and organizational structure (different rights for the same shares are allowed)、AB shares)。 | Shareholders have limited liability limited to the amount of their capital contribution。 | Regulated funds are most commonly used；Overseas financing and listing entities of Chinese-funded enterprises。 |
| independent portfolio companies (SPC) | Have independent legal personality。Each sub-fund (SP) Assets and liabilities are segregated from each other，But not separated from the main SPC personality。 | Debts of each SP can only be repaid by the assets of that SP，Creditors have no recourse against other SPs。 | Umbrella Fund、multi-level hedge funds、exclusive insurance (PICs)。 |
| exempted limited partnership (ELP) | No independent legal personality。All deeds must be signed by the general partner (GP) On behalf of ELP implementation。 | GP has unlimited liability；limited partner (LP) Limited liability limited to the amount of capital subscribed。 | private equity funds (PE) and venture capital (VC) Commonly used。 |
| limited liability company (LLC) | Have independent legal personality。Integrating the best of EC and ELP，Internal governance mechanisms are extremely autonomous。 | Members are protected by limited liability implied by law。The form of investment can be cash、property and even services。 | Benchmarking with Delaware LLC，Matching offshore and onshore fund structures。 |
3. The statutory definition and 3 Major regulatory categories
mutual fund definition：Refers to pooling investor funds to spread risks，and a vehicle that issues equity shares “that can be redeemed or repurchased by investors”。Closed-end funds (such as PE funds，Investors have no right to redeem) In principle, this law does not apply。
[Statutory exemptions]：Investors shall not exceed 15 people，And can appoint or remove the fund manager (director/general partner) by majority decision；And the fund is not a fund of funds，Full exemption from special regulation by the Cayman Monetary Authority (CIMA)。
Register a mutual fund (Registered Mutual Fund)：The minimum subscription amount required for investors is 10 million dollars，or listed on a recognized stock exchange。No license required，Simply submit offering documents to CIMA、Auditor's consent letter and annual fee payment。
managed mutual funds (Administrated)：Suitable for unreachable 10 “Retail Fund” with a threshold of 10,000 US dollars。No license required，But must be provided by a Cayman licensed administrator with a head office located in Cayman，and perform supervision and violation reporting obligations.。
licensed mutual funds (Licensed Mutual Fund)：Minimum quantity、The most stringent supervision。Funds that cannot meet the above registration requirements and do not intend to hire a licensed administrator，Need to apply for a mutual fund license，and has its own registered office in Cayman。
4. [Statutory application process] for establishing a Cayman investment fund
step 1：Establishing the structure and establishing the main entity
Selected EC、SPC、ELP or LLC form。Cayman Co., Ltd. to establish the fund entity and Cayman Co., Ltd. (GP Co.) as the manager。Submit the Memorandum of Association (MA) and Articles of Association (AOA) of the company。
step 2：Drafting core fund and offering documents
Drafting Private Placement Memorandum (PPM)、Fund Term Sheet (TS)、Subscription Agreement/Subscription Book、Investment Management Agreement。The ELP also needs to draft an exempted limited partnership agreement (LPA)。
step 3：Appoint compliance team and anti-money laundering (AML) person in charge
According to Cayman’s Anti-Money Laundering Law，Reporting Officer must be appointed、Deputy Reporting Officer 及 Compliance Officer。Sign the agreement between the auditor and the fund administrator at the same time。
step 4：CIMA Director Registration and SIBL Filing
The fund management company (GP Co.) needs to be an "exempt person" (Excluded Person)” Submission of annual report to SIBL for exemption from securities trading license。at the same time，Requires registration with CIMA as Registered Directors。
step 5：Submit to Cayman Monetary Authority (CIMA) Form filing
Submit MF1 to CIMA、MF2、Form MF3 or MF4 and all preceding documents。Once approved, the fund can be officially put into operation.，The establishment period is usually 5-7 Weeks (including bank account opening)。
5. CIMA Continuous Compliance Audit and the Red Line of the Economic Substance Law
CIMA Annual Audit Requirements：Fund accounts must be audited annually by an auditor approved by the Cayman Monetary Authority，and end of the financial year 6 Submit to CIMA within 3 months for filing (along with FAR form)。
2020Three new regulations for regulated funds in 2020：CIMA introduces new regulations，Requires Cayman private equity funds to develop calculation policies based on net asset value rules、Appoint an administrator to monitor cash flow，and appoint a custodian to hold the fund assets (unless not applicable and exempted)。
economic substance law (EN法) Influence：Investment funds are expressly excluded from being “relevant entities” under the ES Regulation。However, if the fund’s GP is a Cayman company and engages in “fund management” activities (such as earning separate management fees)，then the GP will fall within the scope of the economic substance test (must have full-time employees in Cayman、operating expenses and premises)。
FATCA and CRS automatic tax exchange：Most Cayman funds are “reporting financial organizations”，Must register with the U.S. Internal Revenue Service (FATCA)，and declare investor tax-related information through TIA’s AEOI system。
6. Civil claims and criminal liability for misrepresentation in offer documents
civil liability：Any share subscription that relies on any misrepresentation in the offer document (including unintentional、negligent or fraudulent)，Subscribers have the right to cancel the placement contract。Fund company、director、Professionals and securities issuers who publish fraudulent reports may be defendants。
criminal offense (Criminal Law Article 257 strip)：as an officer (or purported officer) of the company，Intent to defraud shareholders or creditors，Publication is misleading on important matters、false statements or accounts，It is an offense，Can be sentenced 7 years in prison。
Anti-money laundering joint liability (Proceeds of Crime Act)：If you know or have reasonable grounds to suspect that any property is the proceeds of a crime，to conceal or transform，or failure to disclose to a financial reporting unit，The maximum penalty is fine and imprisonment 14 Year。
7. Hong Kong Huitong's one-stop Cayman fund and SPC structure construction service
Establishment of fund entities and organizational structure
Accurately build a Cayman exempted company for you(EC)、Separate investment portfolio(SPC)、limited partnership(ELP)or LLC structure。Complete company registration on your behalf (RO) Registration and legal address establishment。
Drafting issuance and full set of compliance documents
Drafting private placement memorandum(PPM)、limited partnership agreement(LPA)、Subscription book and internal anti-money laundering(AML)manual。Appointment of Cayman Compliance Officer (AMLCO) and Anti-Money Laundering Reporting Officer (MLRO)。
CIMA Registration and Continuous Audit Services
Fully authorized to submit fund registration to CIMA on your behalf，Apply for SIBL exempt person declaration。Connect Cayman’s local licensed auditors and administrators，Ensure compliance with CIMA’s cash flow monitoring and annual FAR audit filing requirements。
8. Core Q&A on Cayman Fund Establishment and SPC License (FAQ)
Cayman is permanently exempt from tax obligations，No income or capital gains tax；Developed financial services industry，The legal system is extremely perfect；Quick fund establishment。There are currently more than 100 regulated open-ended funds established in Cayman 11,000 branch，Total assets exceed US$2 trillion，of global offshore funds 80% That's all。
An SPC is a special type of Cayman exempted company。An SPC can set up multiple independent investment portfolios (SP)。The most significant advantage is "asset and liability segregation"：Debts between SPs are only repayable by the assets of that SP，Creditors have no right of recourse against other SP or SPC general assets。
If the management team has 3 Manage more than one project simultaneously，The price of SPC is much cheaper than setting up multiple funds individually (the official maintenance fee is only charged at most 6 project fee)。And after the SPC is established，Adding a new SP is very fast。
Mutual funds refer to pooling investors' funds to spread risk，A company that issues equity shares "that can be redeemed or repurchased by investors"、trust or partnership。therefore，Closed-end private equity investment funds (PE funds) where investors do not have the right to redeem are generally not regulated by this law.。
The minimum subscription amount for investors must reach 10 Thousands of U.S. dollars (or equivalent in other currencies)；Or the equity shares of the fund are listed for trading on a stock exchange designated by CIMA.。
If the fund investors do not exceed 15 people，And can appoint or remove the manager (director/general partner) of the fund in an absolute majority of cases，And the fund is not a fund of funds，are completely exempt from registration or annual fees with CIMA。
Cayman’s Economic Substance Law requires entities to have substantial local operations。Although "investment funds" are specifically exempted，However, if the fund manager (such as a GP company) engages in "fund management" activities and receives separate remuneration，You must meet economic substance requirements (you need to have full-time employees and office space in Cayman)。
in practice，Chinese-funded enterprises usually use fund managers registered in Hong Kong (obtained Hong Kong No. 9 license) or Singapore，Not being a tax resident of the Cayman Islands，Legally bypassing SIBL registration and Cayman economic substance test (ES Test)。
Any entity conducting securities transactions in Cayman、Matchmaking or providing investment advice，Must obtain SIBL license issued by CIMA。However, due to the extremely high application costs，Fund managers usually apply to be registered as "exempt persons" (Excluded Persons)” to avoid having to hold a license。
2020New regulatory requirements for the year：Cayman private equity funds must appoint a custodian to safeguard fund assets；An administrator must be appointed to monitor the fund’s cash flow；and must be audited annually by a Cayman local auditor approved by CIMA。
GP must be a Cayman resident、Cayman registered company or foreign company、or Cayman ELP。It has unlimited liability for the debts of the partnership；And limited partners (LP) Limited liability only to the amount of capital subscribed，And LP cannot participate in daily management of business。
Funds must comply with Cayman 2017 Anti-Money Laundering Regulations。An Anti-Money Laundering Compliance Officer (AMLCO) must be appointed in writing、Money Laundering Reporting Officer (MLRO) and Deputy Reporting Officer (DMLRO)，Perform strict KYC due diligence on all investors。
The vast majority of Cayman funds are “reporting financial organizations”，Requires registration with the U.S. Internal Revenue Service (FATCA)，And submit the investor’s tax-related information (CRS declaration) through the AEOI system of the Cayman Tax Information Authority (TIA)。
A statement (setting out the asset transfer plan) must be filed with the Registrar by at least two directors；Pass a special shareholder resolution；Must obtain the consent of all creditors (or receive notice after 95% Creditor agrees)。If regulated，Still subject to CIMA approval。
With all KYC information complete，From the establishment of the entity to the registration of the fund with CIMA，Funds across Cayman are being set up very quickly，The quickest way is to 5-7 It can be put into formal operation within a few weeks.。
