By Julie Yacyshyn and Dan Parsons
The Cayman Islands have emerged as a leading jurisdiction for structuring digital asset projects, thanks to their innovative Foundation Company structure. Introduced in 2017, the Foundation Company offers unique features that make it particularly attractive for digital asset related projects.
What is a Cayman Foundation Company?
A Cayman Foundation Company is a hybrid corporate vehicle that combines elements of both companies and trusts. It has a separate legal personality and limited liability, similar to a traditional company, but it can also function like a trust or foundation. One of its most distinctive features is that it can cease to have members, making it an “ownerless” entity. This characteristic aligns well with the decentralized ethos of many digital asset projects, particularly Decentralized Autonomous Organizations (DAOs).
Benefits for Digital Asset Projects
- Ownerless Structure: The ability to operate without shareholders or members makes the Foundation Company ideal for DAOs and other decentralized projects. This structure supports the decentralized control and governance models that are central to many blockchain-based initiatives;
- Legal Personality: As a separate legal entity, a Foundation Company can enter into contracts, hold assets, and open bank accounts. This is crucial for digital asset projects that need to interact with traditional financial systems and legal frameworks;
- Flexible Governance: The governance structure of a Foundation Company can be tailored to the needs of the project. Control mechanisms can be built in, allowing for the establishment of supervisory or advisory committees. This flexibility is beneficial for projects that require a high degree of customization in their governance models;
- Regulatory Compliance: The Cayman Islands have a robust regulatory framework for digital assets, including the Virtual Assets (Service Providers) Act (VASP Act). This legislation provides clarity and legal certainty for digital asset projects, making the jurisdiction attractive for compliance-conscious initiatives;
- Speed and Efficiency: Foundation Companies can be established quickly, often within 24 hours, once the necessary onboarding and Know Your Customer (KYC) processes are completed. This speed is advantageous for projects that need to move rapidly to capitalize on market opportunities
Highvern’s Offered Roles
Registered Office: Apart from being the registered address of the entity, we will complete the necessary regulatory filings such as the annual return, economic substance and beneficial ownership filings as well as holding the statutory records of the Foundation.
Secretary: Obligated to be the same entity as the Registered Office, the secretary is an officer that ensures the Foundation complies with the Proceeds of Crime Law, Terrorism Law and Money Laundering Regulations.
Supervisor: With the absence of shareholders, the supervisor acts as a shareholder without the benefit of being a shareholder, an officer that can hold the director accountable. The role is flexible and can be adapted for the clients’ needs.
Why HIGHVERN
We aim to make the process of setting up and running a Cayman Foundation as seamless as possible, using our strong relationships with other service providers within the marketplace to make an efficient and collaborative effort. Our experience with ordinary companies and the trust sector places us in a unique position to assist with queries that may arise and having set up similar structures for many different types of projects in the digital asset industry has provided valuable knowledge that can make a difference when choosing your service provider.
