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Cayman Funds 2016

MAPLES AND CALDER CAYMAN FUNDS | 2016 55 Shutterstock / Amanda Nicholls can be mixed among different classes of shares, companies, by their very nature, have certain limitations that do not apply to ELPs. Additionally, in response to requests from the investment funds industry for an alternate structuring solution, the Cayman Islands is expected to introduce legislation which will allow for the formation a Cayman Islands limited liability company (LLC). The LLC takes its inspiration, in part, from the Delaware limited liability company and the flexible nature of the vehicle will allow for a broad range of applications. The evolution of corporate governance In the wake of the financial crisis, a number of solutions and possible ways to help mitigate the risks surrounding its causal factors have been proposed. While regulation of the financial markets appears to have been the overarching result, one of the areas that was identified and sharply focused upon following the crisis has been the role of the board of directors. Whereas previously, independent directors were not regarded as significant to the overall structuring of a fund, today a robust board can be critical to the fund’s success and significant decisions in crisis situations (such as gating and suspending redemptions) can rest with the board. In recent years there has been a notable increase in the use of independent directors who are charged with exercising care, skill and diligence in the performance of their duties and applying independent judgement to consider the collective interests of shareholders in the decisions they make. As of July 31, 2015, 76 percent of Cayman funds used two or more independent directors, an all-time high and an increase from 70 percent as of December 31, 2014. Beyond an uptick in the use of independent directors, there has been a significant shift in the manner in which directors engage with the fund, its service providers and investors. The institutionalisation of the industry and the impact of new regulatory initiatives aimed at protecting investors has led to a much greater degree of scrutiny on corporate governance, resulting in more proactive and engaged directors than ever before. Investors have also begun to take a more active role in shaping governance structures with input on considerations such as board composition and the use of other mechanisms for independent oversight. The increase in ELPs serving as master funds in hedge fund structures has been accompanied by an increasing number of launches with independent advisory boards to ELPs, as well as independent directors to the general partner. There has also been growing discussion around the perceived governance gap in a typical


Cayman Funds 2016
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