Cayman Companies Law extended the scope of the segregated portfolio companies’ provisions by permitting any exempted company to apply to the Registrar of Companies to be registered as an exempted segregated portfolio company (“SPC”).
Once registered, exempted companies can operate segregated portfolios with the benefit of statutory segregation of assets and liabilities between portfolios. The principal advantage of Segregated Portfolio Companies over a standard exempted company is to protect the assets of one account from the liabilities of other accounts.
Furthermore, the use of Segregated Portfolio Companies facilitates a more streamlined offering structure for certain mutual funds.
Structural features of Segregated Portfolio Companies
Segregated Portfolio Companies may create one or more Portfolios in order to segregate the assets and liabilities held by the Segregated Portfolio Companies on behalf of one Portfolio from the assets and liabilities held on behalf of any other Portfolio and from the SPC’s general assets and liabilities.
SPC may pay a dividend or other distribution in respect of Portfolio shares of any class or series regardless of whether a dividend or distribution would be permitted to be paid in respect of any other Portfolio.
The assets of an SPC are either general assets or Portfolio assets. The general assets of an SPC comprise those assets of the SPC that are not assets of any Portfolio. The assets of a Portfolio comprise the share capital and reserves attributable to the Portfolio and all other assets attributable to the Portfolio.
Income and other property and rights of an SPC not attributable to any Portfolio must be applied to, and are comprised in, the company’s general assets. Liabilities of an SPC not attributable to any of its Portfolios may only be discharged from the company’s general assets.