Cayman Islands exempted limited partnerships
(ELPs) are an important feature of the Cayman
Islands' financial services industry and funds business, and
remain one of the most widely used vehicles selected by fund
sponsors setting up private equity and real estate structures, tax
transparent master funds and single investor vehicles. However, an
ELP is effectively no more than a contract between parties, it has
no separate legal personality, and its general partner holds the
ELP's assets on statutory trust, including legal claims, and
conducts all of its business and affairs (to the exclusion of the
limited partners). Whilst this balance of power facilitates passive
investment and limits the liability of investors; it begs the
question: how are the interests of its limited partners protected?
The recent judgment discussed in this note provides some answers to
this question.
