As with any new entity, the Cayman Islands LLC will inspire curiosity and uncertainty in the business community. There is ample reason for optimism, however, based on similar entities and on the reputation of the Cayman Islands for fostering a climate favorable to offshore businesses.

Similar and compatible

Perhaps the most reassuring aspect of the Cayman LLC is its similarity and compatibility with a known entity, the Delaware LLC.

The Delaware LLC is well known in the legal field. What are also well known are the advantages that come with this choice of entity. For example, they offer excellent liability protection, shielding members’ assets from creditors. This is because the law treats limited liability companies as separate legal entities from their owners. Partnerships do not experience the same protection, as the law does not recognize them as independent corporate bodies. This results in members’ exposure to liability from creditors.

Additionally, Delaware LLC operating agreements allow members to structure the company in ways tailored to the unique needs of the entity. They allow for flexibility in the tax treatment of the business. They are easy to form, easy to maintain and easy to dissolve when the business has run its course.

Delaware law also specifically allows for the creation of a type of LLC known as the Series LLC. Series LLCs are an arrangement by which the members and managers of an LLC can subdivide their interests into a number of separate divisions. Each division is an LLC of its own, with the asset protection and other business rights and powers of any LLC. Series LLCs allow groups to pursue various business strategies without exposing the entire enterprise to risk. One division can fail without destroying the others.

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