A segregated portfolio company ("SPC") is a form of exempted company that is registered under section 213 of the Companies Act (2021 Revision) of the Cayman Islands (the "Act").
Under the Act, the following entities may apply for registration as a SPC:
The following documents are required to be submitted to the Registrar of Company (the “Registrar”) for registration of a SPC by an exempted company:
Where an exempted company has been registered prior to an application for registration as a SPC, the company shall convert to an SPC by filing the following documents with the Registrar:
Creation of segregated portfolios
Under the Act, a SPC may create one or more segregated portfolios in order to segregate the assets and liabilities of the SPC held within or on behalf of a segregated portfolio from the assets and liabilities of the SPC held within or on behalf of any other segregated portfolio of the SPC or the assets and liabilities of the SPC which are not held within or on behalf of any segregated portfolio of the SPC.
Subject to the terms of the constitutional documents, the creation or designation of the above segregated portfolios may be achieved by the passing of resolutions of the directors of the SPC.
Status as a single legal entity
A SPC is a single legal entity. Any segregated portfolio of or within a SPC shall not constitute a legal entity separate from the SPC.
A SPC shall include in its name the letters “SPC” or the words “Segregated Portfolio Company”.
Each segregated portfolio shall be separately identified or designated and shall include in such identification or designation the words “Segregated Portfolio” or “SP” or “S.P.”.
Assets of each segregated portfolio must be kept separate
The assets of a SPC shall be either segregated portfolio assets or general assets.
The segregated portfolio assets comprise the assets of the SPC held within or on behalf of the segregated portfolios of the company. The assets of a segregated portfolio comprise-
The general assets of a SPC comprise the assets of the company which are not segregated portfolio assets.
Statutory duty of directors to keep assets segregated
It shall be the duty of the directors of a SPC to establish and maintain (or cause to be established and maintained) procedures:
Where the SPC is an investment fund and a fund administrator is appointed in respect of a segregated portfolio, the above segregation procedures are normally undertaken by the fund administrator (by way of delegation of the tasks by the directors to the fund administrator).
Issue of shares
A SPC may create and issue shares in one or more classes or series (including different classes or series relating to the same segregated portfolio), the proceeds of the issue of which shall be included in the segregated portfolio assets of and accounted for in the segregated portfolio in respect of which the segregated portfolio shares are issued.
The proceeds of the issue of shares, other than segregated portfolio shares, shall be included in the segregated portfolio company’s general assets.
A SPC may pay a dividend or other distribution in respect of segregated portfolio shares of any class or series and whether or not a dividend is declared on any other class or series of segregated portfolio shares or any other shares.
Segregated portfolio dividends or other distributions shall be paid on segregated portfolio shares by reference only to the accounts of and to and out of the segregated portfolio assets and liabilities of the segregated portfolio in respect of which the segregated portfolio shares were issued and otherwise in accordance with the rights of such shares.
Treatment of claims in relation to segregated portfolios
Under the Act, segregated portfolio assets:
Segregation of Liabilities
Where a liability of a SPC to a person arises from a matter, or is otherwise imposed, in respect of or attributable to a particular segregated portfolio-
Where a liability of a SPC to a person arises or is imposed otherwise than from a matter in respect of a particular segregated portfolio or portfolios, such liability shall extend only to, and that person shall, in respect of that liability, be entitled to have recourse only to, the company’s general assets.
Execution of agreements, limited recourse language and indemnities
The registration fee for an SPC is on sliding scale based on the authorized share capital. The fee ranges between US$1,341.46 (for authorized share capital not exceeding US$50,000) to US$3619.52 (for authorized share capital of exceeding US$2,000 0001).
Annual fees and requirements
A SPC shall pay an annual fee of based on the authorized share capital. An SPC with an authorized share capital, the annual fee is US$3,292.68 plus $365.85 in respect of each segregated portfolio it has created (other than those in respect of which notice of termination has been given under the Act) up to a maximum of US$1,829.
At the same time as it tenders the fees in accordance with the above, a SPC shall furnish to the Registrar a notice containing the names of each segregated portfolio it has created (other than those in respect of which notice of termination has been given hereunder in a prior year) and indicating those which have been terminated under since the date of the last notice under the Act.
Termination of a segregated portfolio
Where a segregated portfolio has no segregated portfolio assets or liabilities of the SPC attributable to it, the SPC may by resolution of its directors (or such other authority as may be provided for in, and subject to the provisions of, its articles of association) terminate such segregated portfolio.
A SPC may by resolution of its directors (or such other authority as may be provided for in, and subject to the provisions of, its articles of association) reinstate a segregated portfolio which has been terminated.
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Please note that this briefing is intended to provide a very general overview of the matters to which it relates and is not intended as legal advice and should not be relied upon as such.
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