Partnerships are just one of the ways people can form a small business in the Cayman Islands. It is one of the most popular, and widely used, business structures formed in Cayman and more and more of them are formed every day. This can be a great way to structure your small business in our offshore locale. Traditionally there are three types of partnerships formed in the Cayman Islands and we will go through the basics of those now.
What Are The Specifics Of My Cayman Islands Partnership?
So you’re exploring setting up a small business in Cayman and you think you might want to do so in the form of a partnership. Excellent choice. This is a very common practice between two or more parties wanting to engage in business together but might not necessarily want to engage in all the steps and processes involved in forming a company. A partnership is an excellent and very cost effective way of accomplishing just that. Many different types of business operators choose a partnership for their business formation. Tax advisors, accountants and barristers are just a few examples. Forming a partnership has much less statutory governance required and can greatly limit the partner’s legal and liability responsibility. It is important to note, however, that the partners will be personally liable for any debt the business experiences during its lifetime of operation (and sometimes after!).
What Types Of Partnerships Are There In Cayman?
A standard form of partnership that can be formed in the Cayman Islands is structured so that each partner involved in the small business is a general partner and they all actively take part in the management and operation of the business in question. When the partnership is structured in this manner the only limitations on extracting capital from the business or sharing in the earned profits are those that are agreed upon ahead of time by all the partners. Additionally, The Cayman Islands Partnership laws outline the rules for standard limited partnerships. Specifically, limited partners are not allowed to manage or operate the business and they have a limited share with respect to taking capital out of the business and sharing in the businesses profits. Another type of partnership structure available in Cayman is the Exempted Limited Partnership model. In this structure, the idea is that it is set up to provide greater flexibility – typically for those that want to work in the financial services industry. If this is your chosen field, you should speak to an expert about just how this type of partnership might benefit you and your business.
A third type of partnership available in the Cayman Islands is the LLP or Limited Liability Partnership. Under this type of partnership structure there is created a separated legal aspect to the business that is set apart from the limited liability of the partners. It’s intention, by design, is to place debt liability on the shoulders of the limited partnership versus on the individual partners themselves. In effect, this limits the partner’s personal exposure to the businesses debts. Along those lines, LLP members have limited liability as aforementioned and there exists no joint liabilities for omissions or acts of another partner (save for instances where negligence can be proven). LLPs can be set up for businesses doing business on-island or abroad and are useful for those businesses that engage in overseas financial services and transactions. Again, it is always prudent and wise to speak to a professional before forming any type of partnership in the Cayman Islands.
Forming partnerships in the Cayman Islands is a popular way of conducting domestic and international business from our tiny island nation. You can go to the government website to learn more about the types of partnerships, register your partnership and learn about fees and access online tools to help you navigate through the process. You can also reach out to us with any questions you may have about the partnership process here