The use of offshore companies and fund vehicles in Islamic finance and investment is driven by many of the same factors as in the conventional space, as tax-efficiency, bankruptcy-remoteness and privacy are considerations common to most cross-border transactions.
The Cayman Islands and the British Virgin Islands are preferred jurisdictions for Islamic financing structures originating in the Middle East and the UK. Whilst the main focus in Cayman is on Sukuk and investment funds, Caymanian and BVI SPVs are also commonly used in other Shariah-compliant transactions, for example as a holding company or financing vehicle in a Murabaha arrangement.
At Harneys, we have a team of practitioners who are well-versed in Cayman, BVI and Cyprus corporate, finance, dispute resolution, funds, and trust law and knowledgeable as to the complexities of drafting documents so as to comply with Shariah requirements. We are extremely responsive, commercially-aware and are able to offer time-sensitive advice from our offices in Europe, Asia, Africa, the Caribbean and Latin America. Areas of expertise include:
Banking and Finance
Cayman and BVI companies can provide significant benefits to Shariah structures, the features of which can be combined and varied according to the transaction in question. We advise on all types of syndicated and bilateral financing, including asset finance (aircraft and ships), trade finance, restructuring, structured finance, property, projects and acquisition finance. We have experience across a wide range of Islamic products, including Murabaha, Musharaka, Istisna’a, Ijara, Wakala and Sukuk.
Islamic and conventional funds share common objectives, such as pooling investors, preserving capital and optimising returns, but Islamic funds adopt certain conventions in order to adhere to the requirements of Shariah. We have an excellent understanding of the issues relevant to Islamic investors, underpinned by over 20 years of experience of establishing offshore funds. We work directly with managers and leading onshore law firms to establish Cayman and BVI fund structures for the largest institutional managers through to start-up managers with seed capital.
We are experienced in structuring investment funds using all forms of legal entities, including limited partnerships, companies, unit trusts and segregated portfolio companies. We are also proud to be at the forefront of designing innovative structures to suit the needs of our clients and their investors.
Cayman has always been a popular jurisdiction for incorporating Sukuk issuers and there are currently over 100 Sukuk companies registered in the jurisdiction. Our Cayman and BVI lawyers have been involved in the structuring and issue of Sukuk in the Middle East and Malaysia. For Sukuk originators wishing to pursue a listing for the issuer, we have an excellent relationship with the Cayman Islands Stock Exchange and we can act as a listing agent if required.
Shariah scholars often require parties to a transaction to deal at arm’s length, and trust structures can be useful in this instance. Cayman STAR trusts or BVI VISTA trusts are commonly used, as they afford sufficient flexibility for these types of transactions. Our trusts team plays a leading role in creating new and innovative trust solutions that seek to complement and safeguard the holding of assets. We are frequently instructed by leading international law firms, professional trust companies, private banks and wealthy individuals and families on all matters relating to BVI, Cayman and Cyprus trust law.
On the family trusts side, our team is able to provide solutions that are tailored to a client’s individual needs and range from a simple trust to hold assets for one family generation, to a complex trust designed to last for multiple generations.