The Cayman Edge: How To Set Up a Cayman Fund

168 Pages·2014·29.75 MB·English

by  Gordon Casey

HOW TO SET UP A CAYMAN FUND
GORDON CASEY
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Commons
HOW TO SET UP A CAYMAN FUND
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GORDON CASEY
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01
SETTING
UP
A
CAYMAN
HEDGE
FUND
ii.
Introduction
II
19
1.
Cayman
Funds
101
23
a.
Exempted
Funds
24
b.
Registered
Funds
24
c.
Licensed
Funds
25
d.
Administered
Funds
26
e.
01
SETTING
UP 01 02 03
A
CAYMAN
HEDGE
KEY ISSUES
SETIING UP APPENDICES:
FUND
WDRTH NOTING
A CAYMAN HEDGE FUND
ii.
Introduction i. Introduction 09 8. Coq~orate Governance 71 1. Costs 125
II ii. Introduction II 19 a.DirectQ['s Duties 71 II. Resources 133
19 I. Ca~man Funds 101 23 b.Risk Management 75 III. Contact Details 139
c. Shareholder 76
a. Ex:eOll2ted funds 24 IV. Template Documents 145
1. h. Registered Funds 24 Treatment V. AML and KYC 147
9. Different Legal Entities 79
Cayman c. Licensed funds 25 VI. Other Jurisdictions? 151
d. Administered Funds 26 10. Eund Structures 83 VII. A Brief History of 157
Funds
e. £yhli~ Eymb 26 11. Oeerationai Due 89 OffshQ[e Hedge Funds
101 f. Master Funds 27 Diligence VIII. Glossary of Terms 165
23 2. A Ca~man Manag~[ 31 12. Side Pockets 93 & Abb[eyiations
a. 3. Decisions, Decisions 37 13. Listing 99
4. Service Providers 101 41 14. Side Letters 103
Exempted
15. FATCA 109
a. Fund Administrators 42
Funds h. Prime Broker 42 16. AIFMD 115
24 ami Custodian 17. ERISA 119
c. Offshore legal 43 18. Next Steps. 123
b.
Front Shore and the
advisQr
Registered d. Registered Office 44 Companion W!i::bsite
and Newsletter
Funds and Agent
e. Auditor 44
24
f. lndependent 45
c.
Directors
Licensed g. Inv~~lm~nl Manag~[ 46
5. Documentation 101 49
Funds
6. Timelines and 57
25
Expectations
d. 7. What to Ex~ect 61
Administered Wben YQy'[e Ex:pecting
Funds
26
~ 7
e.
A
Starting
Point,
and
a
brief
FAQ
INTRODUCTION
I
So,
you
want
to
set
up
a
fund
in
the
Cayman
Islands?
Here
are
the
five
steps:
decide
on
a
structure,
incorporate
the
fund,
A
Starting
Point,
and
a
brief
FAQ
INTRODUCTION
I
So,
you
INIROOUCIION I
want
A Starting Point, and a brief FAQ
to
set
So, you want to set up a fund in the Cayman Islands? Here are the five steps: decide
up
on a structure, incorporate the fund, prepare your documents, appoint your service
a
providers, launch your fund.
fund
in
Sounds simple right? Well, it is, Front Shore has set up over a manager for fund setups;
the
actually, but the devil is in the dozen funds in the past couple establishing the offshore fund
Cayman
details and with so much going of years. During that time, we is a time-intensive process with
Islands? on between so many people so have constantly refined the a number of different tracks
far away, it's easy for a few things process and procedure. Ili running simultaneously. We
Here
to go wrong and derail the entire hesitate to label our approach can take care of the structure
are project, or at least push your 'lean' management or 'kaizen' while you focus on all of the
launch back by a few weeks or but we pay attention to those other important aspects of
the
months, or go well over budget concepts and best practices actually launching the fund,
five
and we're always tinkering like raising capital and putting
steps: and making Incremental everything Into place to execute
improvements to one or another your strategy. We know the most
decide
aspect of the work that we do. likely places for delays to occur
on in the formation process and can
We primarily act as a project help you establish aggressive, but
a
realistic, timelines.
structure,
incorporate
the
~ 9
fund,
This
book
is
intended
This book is intended as a guide to help anybody that is looking to set up a fuod
as in the Cayman Islands. or is involved in the process in a tangential way and wants
a to get an idea of what is going on. We would love to be your actual guide. but in
guide the absence of Front Shore directly. this book can be the next best thing.
to
help The first half oflhe guide like directors duties, FATCA and The appendices cover helpful
anybody is written as a step-by-step side letters (a perennial issue, infoonation thai you may want to
document to be read sequentially. il seems). Many ofthese lopks access if you deckle to go ahead
that
We slart with the basics of are covered regularly in artkles wilh your fund: cost estimates
is the regulatory playing field both online and offline, and and structures, online resources,
in Cayman. then we move on these chapters should serve as a service provider contact details,
looking
to the players involved (the decent starting point for you to and so on.
to
funds, the managers and the understand further developments
set service providers); and then we and investigate any of these issues AB RIEF NOTE ON STYLE:
look through the process (the in more detail.
up
documentation, the limelines and thi, i, not an "':/ldemit tr~lltile.
a In addition to this guide, you
a detailed walk.through of
nor a Irg/If paper or opinion
can go to iordQn'asey"om,
fund a sample setup projecl).
the companion website where
in We provide reasonable timelines you can download some of I.n fact, for the purposes ofa
for each activity as well as the images and charts used in disclaimer, you should treat this
the
a summary Ganl! chari of the book. some of the sample as if it's complete speculation!
Cayman
the entire process. including documentation we use for Naturally we've made our best
Islands, suggested responsible third standard procedures such efforls to ensure that this gukle is
or parties for each activity. This is as appointing and removing accurate and up-Io-date but our
the same sort of 1001 that we use, directors, and active links to other primary goal was to write
is
but, obviously, is not tailored other online resources such dearly, in plain English, and suc
involved for your specific needs and as ClMA forms and so on cinctly (you may nolice that the
in counterparties. (although we also provide links chapters are short - this is inten
in the Resources Appendix).
tional. I have vigorously resisted
the In the second half of this guide,
We will also use this website to
you'l] find short chapters on efforts to expand the chapters
process post updates in the event that
various issues that have been, are, merely to increase word counl).
any information changes after
in or will soon be hot topics. Things You won't find sentences in here
publication.
a
tangential
way
10 ~
and