Modern family offices arise in various guises and some may evolve over time or in respect of the persons managing the family office. Some family offices may also open to multiple families or even third-party investors. In the Cayman Islands ("Cayman"), single family offices ("SFO's") are variously defined and regulated (or exempted from being regulated) under a range of statutes and regulations.
The Securities and Investment Business Act
The Securities and Investment Business Act ("SIBA") includes the following definitions:
"Single family", in relation to a single family office, means an individual or a group of individuals who are connected in at least one of the following ways:
spouse;
the descendants of the individual and their spouses;
parents, including step-parents;
grandparents;
parents-in-law, including step-parents-in-law;
brother, step-brother, sister, step-sister and their spouses;
spouse's grandparents;
spouse's brother, step-brother, sister, step-sister and their spouses and children;
parent's brother, step-brother, sister, step-sister and their spouses;
children of the brother, step-brother, sister or step-sister of the individual's parents, both present and future, including stepchildren, and their spouses; and
children of the individual's brother, step-brother, sister or step-sister, both present and future, including step-children, and their spouses.
For any of the relationships listed above that may be established by blood, that same relationship may also be established by adoption. The term "descendants of the individual" means the individual's children, the children of that individual's children, the children of those children, and so on and "children" includes step-children.
"Single family office" means a legal entity or legal arrangement formed in Cayman by a single family to conduct securities investment business for or on behalf of that single family where:
the securities are not beneficially owned by a third party; and
the legal entity or legal arrangement does not hold itself out to the public as conducting securities investment business for any person except members of the single family.
"Securities investment business" ("SIB") includes being "engaged in the course of business of" dealing in, arranging deals in, managing and advising on securities and managing, marketing and acting as depository of EU Connected Funds (as those terms are further defined).
If a Cayman company (being the typical entity through which an SFO exists) conducts SIB, it is required to be licensed or registered under SIBA unless it is a "non-registerable person" (an "NRP").
The Private Funds Act
Under the Mutual Funds Act or the Private Funds Act, a "single family office" is a "non-fund arrangement" and, accordingly, is not required to be registered as either a Mutual Fund or a Private Fund. "Single family office" is not defined but it may be reasonable to suppose that it has the same meaning as under SIBA.
However, if other solutions are offered by the family office or the adviser on behalf of a family office then they may create additional requirements.
Bell Rock Family Office Services
As a licensed and regulated firm, Bell Rock routinely works with family offices seeking to establish Cayman activities. From legal formation of entities to ongoing support from our offices in Cayman such as advice on regulatory requirements to provision of professional staff, independent directors, compliance officers and other support. For further information, please contact us in confidence: info@bellrockgroup.com
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