The segregated portfolio company (“SPC”) is a type of exempted company that remains a single legal entity but it can create segregated portfolios (“Portfolios”) such that the assets and liabilities of each Portfolio are legally separate from the assets and liabilities of any other Portfolio and from the SPC's general assets and liabilities. Transaction or arrangements for a Portfolio must be executed by the SPC on behalf of the relevant Portfolio clearly specifying that is in the name of, or by, or for the account of, that Portfolio.
Cayman SPC's are a popular vehicle for use by investment funds, particularly in the context of multi-class funds in which one or more portfolios uses, as part of its investment strategy, leverage, short sales and other tools that potentially create substantial liabilities to third parties. The relatively low cost of creating new portfolios and the statutory segregation between portfolios make an SPC ideally suited for this kind of structure.
