If you intend to establish a hedge fund in the Cayman Islands, IQ Decision UK specialists give you a nod in support of your choice of jurisdiction. After all, it is common knowledge that the Islands are the world leader in the establishment of offshore hedge funds. Such success and demand for the Caymans is primarily due to the favorable tax climate, but not only. You can also write a whole list of undeniable advantages that businessmen receive when opening a hedge fund in the Caymans. Here are just a few of them:
- Stable economy;
- Advanced banking system;
- Confidentiality of data including about founders.
For a better understanding of how to set up a hedge fund in the Cayman Islands, our company's experts have prepared an introductory article for you.
A potential investor can become a member of the hedge fund in the Caymans in several ways. He can join the organization directly and transfer part of the money with the further receipt of a package of documents on the amount of his share participation, or he can buy a certain number of shares as part of trading on the exchange. Whichever way the investor chooses, the earnings include a number of features:
- contributions to global markets;
- trading in securities using short direction strategies;
- contribution to the assets of developing countries;
- the application of price fluctuations within related assets;
- application of various methods of arbitration;
- the use of so-called distressed assets and debt etc.
As you can see from the list, the hedge funds are carefully thought-out financial instruments that allow an experienced investor to receive high returns while being exposed to low risk.
An additional advantage of establishing a hedge fund in the Cayman Islands is that they are open-ended funds, which means that investors have the opportunity to withdraw investments, if they wish to do so. Therefore, the fund must always have sufficient cash or liquid assets to meet these requirements.
When you decide to establish a hedge fund in the Cayman Islands, you should be aware that these funds are generally organized in the form of the Cayman Exempted Company. However, due to different preferences, factors and needs of investors, there may be other organizational forms, for example, LLC or Segregated Portfolio Company.
The Caymans’ open-ended hedge funds are regulated by the Monetary Authority (CIMA). However, if you have a small fund with 15 or fewer investors, then your fund will not be subject to close regulatory oversight.
Which form to choose for the registration?
For those interested in registering a hedge fund in the Caymans, we recommend establishing an open-ended fund as the Cayman Exempted Company. It is also possible that such a company will be registered as an investment manager in the Cayman Islands.
You will need to open a local office with an official address. The registration itself takes, as a rule, very little time – only two days after the submission of all the necessary documents. But the preparation of the registration certificate and the charter of the foundation takes much more time, which can be reduced by seeking help from competent specialists.
If you want to register a hedge fund in the Cayman Islands, our experts are ready to advise you on all the necessary documents for hedge funds, such as:
- Charter and memorandum of the foundation;
- Memorandum of private placement;
- Application for registration;
- Agreement on the provision of services between the participants of the fund;
- Affidavit for electronic documents;
- Charter for the manager.
If you are looking to buy a hedge fund in the Caymans, legal experts at IQ Decision UK point out that you should do serious work on recruiting the necessary personnel, namely:
- two directors (not necessarily residents);
- trustee / broker.
Get it started
As in all other areas of investment, hedge funds in the Caymans have their own structure and their own characteristics. The emergence of the fund is accompanied by the initiative of the management company, which attracts potential depositors, negotiates with banks and individual brokers, and also carries out all other actions related to securities trading. As soon as the fund has its first investors, it starts its work. The investor contributes his own funds and transfers them to the management of the fund organizers.
Learn more about the procedure for establishing a hedge fund in the Caymans from experienced IQ Decision UK specialists by filling out the form below.