Any Cayman Islands exempted company (the most common Cayman corporate vehicle limited by shares), including those to be established as funds, may be registered as a segregated portfolio company (an SPC). Registration as an SPC can be made either at the point of incorporating the company or subsequently. The concept of an SPC is that the relevant company, which remains a single legal entity, may create separate segregated portfolios (each, a Portfolio) such that the assets and liabilities of each such Portfolio are statutorily ring-fenced from the assets and liabilities of each other Portfolio and the general assets and liabilities of the company. Income and other property of an SPC not attributable to any Portfolio constitute the general assets of the company.
INTRODUCTION TO SPCs -
The principal benefit of using an SPC for establishing segregation of assets and liabilities (as opposed to alternative methods such as contractual limited recourse wording) arises out of the fact that the ring-fencing is embedded in statute rather than contract and so has the benefit of statutory recognition in the place of incorporation of the SPC. The other important benefit of the SPC regime is that as a statutory regime, it also binds non-consensual third parties and so extends the ringfencing concept to parties who would otherwise not be covered by contractual ringfencing.
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Topics: Directors, Fiduciary Duty, Liquidation, Receivership, Ring-Fencing, Segregated Funds, Segregated Portfolio Companies
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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