The Court of Appeal has unanimously allowed every ground of an appeal by the liquidators of Argyle Funds SPC Inc. The key takeaway for the Cayman Islands professional services industry is that where work is delegated to be carried out by related entities outside the Cayman Islands, any attempt to contractually limit clients' rights to bring claims against those entities must be expressly articulated within the contract.
Along with the growth and maturity of the fund finance market, funds and their counsel have become increasingly familiar with lenders' limited partnership agreement (LPA) requirements. Therefore, newer LPAs often include the provisions that lenders require in order to provide financing under a capital call facility. Lenders and their counsel should consider several key due diligence points when reviewing LPAs, investor subscription documents and related side letters.
The Special Trusts (Alternative Regime) (STAR) Law introduced so-called 'STAR trusts' into Cayman Islands law to overcome some of the difficulties arising from more conventional offshore trusts. One of the most challenging aspects of establishing a STAR trust is the drafting of the purposes for which it is established. While the STAR Law contains rules to prevent STAR trusts from failing (eg, failure resulting from object and beneficiary uncertainty), there are a number of traps for the unwary.
Foundation companies are a unique structuring option in the Cayman Islands for wealth planning and also serve as holding and special purpose vehicles for commercial transactions and cryptocurrency offerings. Although a foundation company may be used as an alternative to a Cayman trust, a number of features specific to Cayman trust law have been incorporated into the foundation company vehicle which should prove beneficial to investors and private clients.
The Cayman Islands has become a popular choice for many businesses conducting initial coin offerings (ICOs) due to its tax neutrality, its reputation as a pre-eminent jurisdiction for investment funds and its securities law regime, which is generally more permissive than those of other jurisdictions. However, before any steps towards conducting an ICO are taken, it is critical that comprehensive legal and tax advice is obtained for each business before any token is sold or any entity is formed.