The attraction of the trust
concept is straightforward: the
trust is the most flexible
financial instrument for making
estate planning arrangements,
short term or long term, free
from the restrictions of the
legislation of the domicile of
the settler. Whatever the
individual's wishes may be for
the future ownership,
management, and enjoyment of his
property, they can almost
certainly be achieved by using a
trust? The trust is also
increasingly used in commercial
structures such as mutual funds
and structured debt. The
attraction of Cayman as a
jurisdiction in which to
establish a trust is also clear:
in recent years, as the
popularity of the trust concept
has grown worldwide, so have the
cadres of experts in trust
formation and administration in
the Cayman Islands.
Consequently, that expertise
and, more importantly, the
legislation which has grown out
of it, have attracted more trust
business to the Islands to the
extent that there are now more
trust assets under management in
the Cayman Islands (633) than
there are deposits in Cayman
banks (389). The increasing
complexity of the investment
world and the difficulty in
preserving wealth have made the
trust particularly important as
a means by which the individual
can provide financial security
for his family after his death
even though they may not be
knowledgeable in investment
matters. The Special Trusts
(Alternative Regime) Law 1997
(STAR), substantially extends
Cayman's trust planning
framework. STAR allows for
trusts for any purpose
(charitable trusts, person
trusts, and purpose trusts) as
well as mixed trusts, provided
they are lawful and not contrary
to public policy.
The Cayman Islands enacted its
Mutual Funds Law in 1993 and
subsequently, funds have become one
of Cayman's fastest-growing sectors
with over 2,000 funds and assets
estimated at some US $200 billion.
What attracts so much fund business
to the Cayman Islands? Cayman offers
asset managers and fund promoters
with ideal market access, highly
favorable investor perception,
developed infrastructure,
professional services and secure
regulatory environment. One of the
key advantages of doing
international business in Cayman is
that the intellectual resources in
all disciplines relating to global
finance (and the establishment of
mutual funds, in particular) are
readily available from experienced
practitioners. In fact, few other
international financial centers come
close to matching Cayman's
professional resources. The aim is
to ensure that the client's
requirements are translated into a
structure that derives maximum
advantage in the jurisdiction of the
investor and of the investment.
Therefore, if fund marketing is to
be undertaken by private placement
to sophisticated investors, the
Cayman Islands is and will continue
to be the jurisdiction of choice.
Factors contributing to this include
the flexibility afforded by the
wide, permissible range of
structures available to operate
funds and the clarity of the Cayman
Islands Mutual Funds Law. The
legislative framework allows for
sophisticated investment techniques
which may include leveraging the
portfolio to a substantial extent,
making loans of securities on and
unlimited basis and investing
without restriction in any currency
or instruments, among other
techniques. In 1997, with the
establishment of the Cayman Islands
Stock Exchange, the funds industry
was further enhanced, and Cayman is
able to offer a first class listing
facility for funds.
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