MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and constitutes attorney work product. It is intended solely for the use of the addressees and authorized members of the engagement team. Any unauthorized disclosure, distribution, or copying of this memorandum or its contents is strictly prohibited.
TO: Leonard Cross, Responsible Partner, Tax Sylvia Hartwell, Billing Partner, Tax
FROM: Robert Jansen, Lead Associate, Tax Garrett Simmons, Working Associate, Tax
DATE: June 16, 2025
RE: Cayman Islands Tax and Regulatory Considerations — Cross-Border Fund-Platform Reorganization of Solara Digital Infrastructure LP
ENGAGEMENT: Calderwood & Harkness LLP, Engagement No. 20250527-SDILP-PLR
CLIENT: Solara Digital Infrastructure LP
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I. Executive Summary
This memorandum analyzes the Cayman Islands tax status and regulatory implications arising from the proposed five-step cross-border reorganization of Solara Digital Infrastructure LP's fund platform (the "Reorganization"). The purpose of this memorandum is to provide a comprehensive assessment of the Cayman Islands tax and regulatory framework applicable to each step of the Reorganization and to identify the regulatory action items and compliance obligations that must be addressed to effectuate the transaction within the target timeline.
The scope of this memorandum covers two principal categories of Cayman Islands considerations:
(A) The deregistration and dissolution of two existing Cayman Islands exempted limited partnerships: (i) Solara Digital Partners Fund IV-A (Cayman) LP (CIMA Registration No. MF-72491) and (ii) Solara Digital Partners Fund V-A (Cayman) LP (CIMA Registration No. MF-89103); and
(B) The formation and registration of two new Cayman Islands exempted limited partnerships: (i) Solara International Feeder (Cayman) LP and (ii) Solara Tax-Exempt Feeder (Cayman) LP.
Summary Conclusion. The Cayman Islands is a tax-neutral jurisdiction. No income tax, capital gains tax, withholding tax, stamp duty, or other direct taxes will be imposed on any step of the Reorganization at the Cayman entity level. The contributions of portfolio assets by the legacy Cayman fund vehicles to the Consolidated Master Fund LP (Steps 2 and 4), the dissolution and liquidating distributions by those legacy vehicles (Step 5), and the formation and ongoing operations of the new feeder entities are all free from Cayman Islands tax consequences. From a regulatory perspective, the Cayman Islands Monetary Authority ("CIMA") imposes registration and compliance obligations on private funds under the Private Funds Act, 2020 (as amended). Orderly deregistration of the two legacy Cayman vehicles and timely registration of the two new feeder entities with CIMA are required. Additionally, the economic substance requirements under the International Tax Co-operation (Economic Substance) Act (as revised) (the "ES Act") must be evaluated for the new feeder entities to confirm that they are not themselves conducting "fund management" as a relevant activity in the Cayman Islands. The FATCA and CRS reporting obligations applicable to the legacy vehicles must be transitioned to the new feeders, and AML/CTF and data protection compliance must be maintained throughout the process.
This memorandum has been prepared in coordination with Meridian Offshore Legal, the engagement team's Cayman Islands counsel. The primary contact at Meridian Offshore Legal is Fiona McAllister, Partner, located at Caledonia House, 69 Dr. Roy's Drive, George Town, Grand Cayman KY1-1103. Calderwood & Harkness has consulted extensively with Ms. McAllister and her team regarding the matters discussed herein. Importantly, Calderwood & Harkness does not opine on Cayman Islands law. This memorandum summarizes the advice received from Meridian Offshore Legal and integrates that advice with the U.S. federal income tax analysis being prepared in connection with the Private Letter Ruling ("PLR") request to the Internal Revenue Service. All conclusions as to Cayman Islands law set forth in this memorandum should be understood as reflecting the views of Meridian Offshore Legal, not as independent conclusions of Calderwood & Harkness.
This memorandum should be read in conjunction with the Master Tax Analysis Memorandum — Overview of Reorganization and the individual Internal Revenue Code section memoranda (covering, among other provisions, IRC §§ 721, 731, 752, 704(c), 1446, 367, and 897), which together constitute the complete tax analysis supporting the PLR request.
II. Background and Factual Context
A. The Solara Fund Platform
Solara Digital Infrastructure LP ("Solara" or the "Platform") is a Delaware limited partnership formed on March 17, 2014. As of March 31, 2025, Solara manages approximately $14.7 billion in assets under management ("AUM") across its fund platform. Solara sponsors private equity funds targeting investments in digital infrastructure, including data centers, fiber-optic networks, edge computing facilities, and enterprise software-as-a-service ("SaaS") platforms. The Platform has grown substantially since its formation and has established a diversified portfolio of investments spanning multiple sectors within the broader digital economy.
The key principals and officers of the Solara organization relevant to this engagement are as follows:
• Managing Partner & Founder: Viktor Raines
• General Counsel: Priya Narasimhan
• Head of Tax: Stefan Dalmqvist
The general partner of Solara Digital Infrastructure LP is Solara Digital Infrastructure GP LLC, a Delaware limited liability company (EIN 82-4917365). Solara Digital Infrastructure GP LLC exercises management authority over the Platform and its constituent fund vehicles in accordance with the respective limited partnership agreements governing each fund.
The Solara fund platform currently operates through six parallel fund vehicles organized across three jurisdictions: the State of Delaware (United States), the Cayman Islands, and the Grand Duchy of Luxembourg. This multi-jurisdictional structure was established to accommodate the diverse tax and regulatory requirements of Solara's investor base, which includes U.S. taxable investors, U.S. tax-exempt investors (such as pension funds and university endowments), non-U.S. sovereign wealth funds, and other non-U.S. institutional investors. The proposed Reorganization is designed to consolidate the platform into a streamlined master-feeder structure while preserving the tax efficiencies historically provided to each investor category.
B. Existing Cayman Islands Fund Vehicles
1. Solara Digital Partners Fund IV-A (Cayman) LP
Solara Digital Partners Fund IV-A (Cayman) LP ("Fund IV-A Cayman") is a Cayman Islands exempted limited partnership formed to serve as a parallel fund vehicle for non-U.S. investors and U.S. tax-exempt investors alongside Fund IV LP, a $4.2 billion Delaware limited partnership (vintage 2021). The key details of Fund IV-A Cayman are as follows:
• Entity Type: Cayman Islands exempted limited partnership
• CIMA Registration Number: MF-72491
• Registered Office: Harborstone Corporate Services Ltd., P.O. Box 2714, 94 Solaris Avenue, George Town, Grand Cayman KY1-1111
• General Partner: Solara Offshore GP Ltd. (a Cayman Islands exempted company)
• Fund Size: Approximately $1.85 billion in committed capital
• U.S. Employer Identification Number (EIN): 98-6241503
• Primary Purpose: Parallel investment vehicle to Fund IV LP for non-U.S. and U.S. tax-exempt investors, structured to avoid the generation of effectively connected income ("ECI") for non-U.S. investors and to mitigate unrelated business taxable income ("UBTI") for U.S. tax-exempt investors
Fund IV-A Cayman has attracted a significant base of institutional investors. Among the most notable is the Nordhaven Sovereign Wealth Fund, a non-U.S. sovereign wealth fund established by the Kingdom of Nordhaven, which has committed $380 million to Fund IV-A Cayman. The Nordhaven Sovereign Wealth Fund is represented by Anders Bjørkman, Head of Alternative Investments. The Nordhaven commitment represents the single largest limited partner allocation in Fund IV-A Cayman and is a material consideration in the structuring of the Reorganization, particularly with respect to the rollover of non-U.S. LPs into the new International Feeder.
The representative portfolio company holdings of Fund IV-A Cayman are as follows:
• NovaBright Data Systems Inc.: Fund IV-A Cayman holds 60% of NovaBright, a data center operating company. The current fair market value ("FMV") of the NovaBright interest held by Fund IV-A Cayman is approximately $890 million, with an adjusted tax basis of $520 million, resulting in a built-in gain ("BIG") of $370 million.
• Thorngate Fiber Networks LP: Fund IV-A Cayman holds 100% of Thorngate, a fiber-optic network infrastructure company. The current FMV of the Thorngate interest is approximately $670 million, with an adjusted tax basis of $490 million, resulting in a BIG of $180 million.
In the aggregate, the portfolio assets held by Fund IV-A Cayman have an aggregate FMV of approximately $2.31 billion, an aggregate adjusted tax basis of approximately $1.62 billion, and an aggregate built-in gain of approximately $690 million. These figures are based on the most recent internal valuation as of March 31, 2025, subject to adjustment at the time of the actual contribution to the Consolidated Master Fund LP.
2. Solara Digital Partners Fund V-A (Cayman) LP
Solara Digital Partners Fund V-A (Cayman) LP ("Fund V-A Cayman") is a Cayman Islands exempted limited partnership formed to serve as a parallel fund vehicle for non-U.S. investors and U.S. tax-exempt investors alongside Fund V LP, a $5.6 billion Delaware limited partnership (vintage 2023). The key details of Fund V-A Cayman are as follows:
• Entity Type: Cayman Islands exempted limited partnership
• CIMA Registration Number: MF-89103
• Registered Office: Harborstone Corporate Services Ltd., George Town, Grand Cayman
• General Partner: Solara Offshore GP Ltd. (same entity serving as general partner of Fund IV-A Cayman)
• Fund Size: Approximately $2.45 billion in committed capital
• U.S. Employer Identification Number (EIN): 98-7891234
• Primary Purpose: Parallel investment vehicle to Fund V LP for non-U.S. and U.S. tax-exempt investors
Fund V-A Cayman has likewise attracted significant commitments from institutional investors. The Nordhaven Sovereign Wealth Fund has committed $500 million to Fund V-A Cayman, an increase from its $380 million commitment to the Fund IV-A Cayman vintage, reflecting the sovereign wealth fund's growing allocation to the Solara platform.
The representative portfolio company holdings of Fund V-A Cayman are as follows:
• Veridian Edge Computing Corp.: Fund V-A Cayman holds 55% of Veridian, an edge computing infrastructure company. The current FMV of the Veridian interest held by Fund V-A Cayman is approximately $1.12 billion, with an adjusted tax basis of $780 million, resulting in a BIG of $340 million.
• Helix SaaS Holdings Ltd.: Fund V-A Cayman holds 100% of Helix, a Cayman Islands exempted company engaged in the enterprise SaaS sector. The current FMV of the Helix interest is approximately $445 million, with an adjusted tax basis of $310 million, resulting in a BIG of $135 million. We note that Helix SaaS Holdings Ltd. is itself organized as a Cayman Islands exempted company, which raises a specific stamp duty inquiry addressed in Section VIII of this memorandum.
In the aggregate, the portfolio assets held by Fund V-A Cayman have an aggregate FMV of approximately $2.89 billion, an aggregate adjusted tax basis of approximately $2.34 billion, and an aggregate built-in gain of approximately $550 million. As with Fund IV-A Cayman, these figures are based on the most recent internal valuation as of March 31, 2025 and are subject to adjustment at the time of the actual contribution to the Consolidated Master Fund LP.
C. Proposed New Cayman Islands Entities
1. Solara International Feeder (Cayman) LP
Solara International Feeder (Cayman) LP (the "International Feeder") is a Cayman Islands exempted limited partnership to be formed as part of Step 1 of the Reorganization. The International Feeder will serve as the dedicated feeder vehicle for non-U.S. investors, investing substantially all of its assets into the Solara Consolidated Master Fund LP, a Delaware limited partnership to be formed concurrently. The International Feeder is intended to replicate the tax-efficient structure historically provided by the legacy Cayman parallel funds for non-U.S. investors while achieving the operational and governance simplifications that are among the primary objectives of the Reorganization.
For U.S. federal income tax purposes, the International Feeder is intended to be classified as a partnership under Treas. Reg. § 301.7701-3. Calderwood & Harkness will prepare and file a Form 8832 (Entity Classification Election) on behalf of the International Feeder to confirm this classification, consistent with the treatment of the International Feeder as a flow-through entity for U.S. tax purposes.
2. Solara Tax-Exempt Feeder (Cayman) LP
Solara Tax-Exempt Feeder (Cayman) LP (the "Tax-Exempt Feeder") is a Cayman Islands exempted limited partnership to be formed as part of Step 1 of the Reorganization. The Tax-Exempt Feeder will serve as the dedicated feeder vehicle for U.S. tax-exempt investors, including pension funds, endowments, and foundations, investing substantially all of its assets into the Consolidated Master Fund LP. The Tax-Exempt Feeder is specifically designed to address the UBTI concerns of U.S. tax-exempt investors by structuring the investment so that the tax-exempt investors participate through a separate feeder entity that can interpose a blocker or employ other UBTI-mitigation strategies as appropriate.
For U.S. federal income tax purposes, the Tax-Exempt Feeder is also intended to be classified as a partnership under Treas. Reg. § 301.7701-3.
The key investors expected to participate in the Tax-Exempt Feeder upon the completion of the Reorganization include:
• Pinnacle State Employees' Retirement System: Margaret Faulkner, Chief Investment Officer. Pinnacle has committed $275 million to Fund IV (allocated between the Delaware and Cayman parallel vehicles) and $340 million to Fund V. These commitments are expected to roll into the Tax-Exempt Feeder upon completion of Step 5.
• Grandview University Endowment: Harold Kingsley, Director of Investments. Grandview has committed $120 million to Fund IV and $185 million to Fund V. These commitments are likewise expected to roll into the Tax-Exempt Feeder.
The interests and tax sensitivities of these institutional investors have been important factors in the design of the Reorganization and in the decision to maintain a separate Tax-Exempt Feeder rather than consolidating all investors into a single feeder vehicle.
D. The Multi-Step Reorganization — Overview
The Reorganization consists of five integrated steps, planned for execution during Q4 2025, with a target effective date of December 1, 2025 for the final step. The five steps are summarized below. A more detailed analysis of the U.S. federal income tax consequences of each step is set forth in the separate IRC section memoranda that accompany this memorandum.
Step 1: Formation of New Entities (Target: September 15, 2025). Step 1 involves the formation of the following new entities:
(a) Solara Consolidated Master Fund GP LLC, a Delaware limited liability company, which will serve as the general partner of the Consolidated Master Fund LP;
(b) Solara Consolidated Master Fund LP, a Delaware limited partnership, which will serve as the master fund vehicle into which all portfolio assets will be consolidated;
(c) Solara International Feeder (Cayman) LP, a Cayman Islands exempted limited partnership; and
(d) Solara Tax-Exempt Feeder (Cayman) LP, a Cayman Islands exempted limited partnership.
Step 2: Contribution by Fund IV-A (Cayman) LP (Target: October 1, 2025). Fund IV-A Cayman will contribute all of its portfolio assets, with an aggregate FMV of approximately $2.31 billion and an aggregate adjusted tax basis of approximately $1.62 billion, to the Consolidated Master Fund LP in exchange for a limited partnership interest in the Consolidated Master Fund LP. This contribution is intended to qualify for nonrecognition treatment under IRC § 721(a).
Step 3: Contribution by Fund IV-B (Luxembourg) SCSp (Target: October 15, 2025). Fund IV-B (Luxembourg) SCSp, the Luxembourg parallel vehicle for Fund IV, will contribute all of its portfolio assets to the Consolidated Master Fund LP. The Luxembourg tax implications of this step are addressed in a separate memorandum prepared in coordination with Veldhuis & Gérard S.à r.l., Luxembourg counsel.
Step 4: Contributions by Fund V-A (Cayman) LP and Fund V-B (Luxembourg) SCSp (Target: November 1, 2025). Fund V-A Cayman will contribute all of its portfolio assets, with an aggregate FMV of approximately $2.89 billion and an aggregate adjusted tax basis of approximately $2.34 billion, to the Consolidated Master Fund LP. Concurrently, Fund V-B (Luxembourg) SCSp will contribute its portfolio assets to the Consolidated Master Fund LP. The Cayman Islands considerations of Fund V-A Cayman's contribution are the subject of this memorandum; the Luxembourg considerations are addressed separately.
Step 5: Dissolution of Legacy Offshore Vehicles and LP Migration (Target: December 1, 2025). The legacy Cayman vehicles (Fund IV-A Cayman and Fund V-A Cayman) will dissolve and distribute their respective limited partnership interests in the Consolidated Master Fund LP to their existing limited partners as liquidating distributions. Upon receiving such distributions, non-U.S. limited partners will subscribe for interests in the International Feeder, and U.S. tax-exempt limited partners will subscribe for interests in the Tax-Exempt Feeder. The new feeder entities will, in turn, contribute the Consolidated Master Fund LP interests received by the limited partners (or, alternatively, the limited partners will contribute such interests directly) into the respective feeder vehicles.
E. Reorganization Rationale
The Reorganization is driven by several interrelated business objectives that have been identified and approved by the Solara management team and the general partner's board of directors.
Operational Cost Reduction. The current six-vehicle, three-jurisdiction fund platform generates significant duplicative costs in the form of offshore administration, regulatory compliance, audit fees, and legal expenses. Solara's finance team has estimated that the consolidation into a master-feeder structure will reduce these costs by approximately $3.8 million annually. These savings will accrue to the benefit of the funds' limited partners and are consistent with the general partner's fiduciary obligations to manage the funds efficiently.
OECD Pillar Two GloBE Rules. The Organisation for Economic Co-operation and Development's ("OECD") Pillar Two Global Anti-Base Erosion ("GloBE") rules, which have begun to be adopted by various jurisdictions, impose a minimum effective tax rate of 15% on large multinational enterprises. While these rules primarily affect the Luxembourg vehicles in the Solara platform, the overall platform simplification facilitated by the Reorganization is designed to position the Solara funds for efficient compliance with the evolving international tax landscape.
Simplified FATCA and CRS Compliance. Reducing the number of offshore reporting entities from four (two Cayman, two Luxembourg) to two Cayman feeder entities will meaningfully simplify the Platform's FATCA and CRS reporting obligations, reducing compliance costs and the risk of reporting errors.
LP-Requested Governance Simplification. Several of Solara's largest institutional investors have requested a simplified governance structure that reduces the number of fund vehicles in which they hold interests and provides a more streamlined reporting and communication framework. The master-feeder structure addresses these investor concerns while preserving the tax efficiencies of the existing platform.
Board and LPAC Approvals. The general partner's board of directors approved the exploration of the Reorganization on March 14, 2025. The Limited Partner Advisory Committee ("LPAC") met on April 22, 2025, and preliminary consent to proceed with the Reorganization was obtained from limited partners representing approximately 78% in interest. Formal consent of limited partners will be solicited in accordance with the terms of each applicable limited partnership agreement prior to the execution of the Reorganization steps.
III. Cayman Islands Tax Analysis
A. Overview of the Cayman Islands Tax Regime
The Cayman Islands is widely recognized as a tax-neutral jurisdiction. The fundamental characteristic of the Cayman Islands tax system is the absence of direct taxation. Specifically, the Cayman Islands does not impose any of the following taxes on individuals or entities:
• Income tax (on individuals or entities)
• Corporation tax or business profits tax
• Capital gains tax
• Withholding tax on dividends, interest, royalties, or other payments
• Estate duty or inheritance tax
• Gift tax
• Net worth or net assets tax
• Any other form of direct tax
This tax-neutral status has been a foundational element of the Cayman Islands' attractiveness as a domicile for international investment fund structures. The absence of direct taxation means that investment returns generated by Cayman-domiciled entities flow to investors without any Cayman-level tax leakage, enabling investors to be taxed solely in their home jurisdictions.
The Tax Concessions Act (as revised) provides an additional layer of assurance for exempted entities. Under this legislation, exempted limited partnerships and exempted companies may obtain undertakings from the Cayman Islands government that no law subsequently enacted imposing any tax to be levied on profits, income, gains, or appreciation shall apply to them, for a period of up to fifty (50) years from the date of the undertaking. These undertakings provide a contractual commitment from the Cayman Islands government regarding the tax treatment of the relevant entities for the duration of the concession period.
We note that both Fund IV-A Cayman and Fund V-A Cayman should hold (or should have obtained upon formation) current tax concession certificates under the Tax Concessions Act. Meridian Offshore Legal has been instructed to confirm the current status and validity of such certificates. If for any reason the tax concession certificates have not been obtained or have lapsed, Meridian Offshore Legal has advised that this would not affect the current tax-neutral treatment of the legacy vehicles (given that the Cayman Islands has no direct taxes in any event) but should be addressed as a matter of best practice.
B. Tax Treatment of Steps 2 and 4 — Contributions of Assets by Cayman LPs
Step 2: Fund IV-A Cayman Contribution to Consolidated Master Fund LP. In Step 2, scheduled for a target date of October 1, 2025, Fund IV-A Cayman will contribute all of its portfolio assets (with an aggregate FMV of approximately $2.31 billion and an aggregate adjusted tax basis of approximately $1.62 billion) to the Consolidated Master Fund LP, a Delaware limited partnership, in exchange for a limited partnership interest in the Consolidated Master Fund LP. From a Cayman Islands tax perspective, this contribution has no adverse tax consequences. The Cayman Islands does not impose tax on capital gains or on the transfer or disposal of assets by an exempted limited partnership. No Cayman-level gain recognition, income inclusion, or tax liability of any kind arises from Fund IV-A Cayman's contribution of its portfolio assets to the Consolidated Master Fund LP.
Step 4: Fund V-A Cayman Contribution to Consolidated Master Fund LP. In Step 4, scheduled for a target date of November 1, 2025, Fund V-A Cayman will contribute all of its portfolio assets (with an aggregate FMV of approximately $2.89 billion and an aggregate adjusted tax basis of approximately $2.34 billion) to the Consolidated Master Fund LP in exchange for a limited partnership interest in the Consolidated Master Fund LP. The Cayman Islands tax analysis for Step 4 is identical to that for Step 2. No Cayman Islands tax of any kind is imposed on this contribution.
Stamp Duty. No Cayman Islands stamp duty is imposed on the transfer of partnership interests or on contributions of assets to a Delaware limited partnership by a Cayman Islands exempted limited partnership. The Cayman Islands Stamp Duty Act (as revised) imposes stamp duty only on instruments transferring or relating to Cayman Islands land or Cayman-situs instruments. Because the assets being contributed consist of equity interests in portfolio companies (none of which hold Cayman Islands land, subject to the confirmation noted in Section VIII below) and the receiving entity is a Delaware limited partnership, no stamp duty applies.
Withholding Tax. No Cayman-source withholding tax applies on distributions from a Cayman Islands exempted limited partnership to its partners or on any payments made by a Cayman Islands exempted limited partnership in connection with the contribution of its assets to a foreign entity. The Cayman Islands does not impose withholding taxes on any outbound or inbound payments.
C. Tax Treatment of Step 5 — Dissolution of Legacy Cayman Vehicles
In Step 5, scheduled for the target effective date of December 1, 2025, Fund IV-A Cayman and Fund V-A Cayman will dissolve and distribute their respective limited partnership interests in the Consolidated Master Fund LP to their existing limited partners as liquidating distributions. After completing the contributions described in Steps 2 and 4, the sole remaining asset of each legacy Cayman vehicle will be its limited partnership interest in the Consolidated Master Fund LP. That interest will be distributed in-kind to the limited partners of each legacy vehicle, and the entities will then be wound up and dissolved.
From a Cayman Islands tax perspective, the following conclusions apply to Step 5:
• No Cayman Islands tax on liquidating distributions. The Cayman Islands does not impose any tax on liquidating distributions made by an exempted limited partnership to its limited partners, whether such distributions are made in cash or in kind.
• No Cayman stamp duty on distribution of interests in a Delaware LP. The distribution of limited partnership interests in a Delaware limited partnership (the Consolidated Master Fund LP) to the partners of a Cayman exempted limited partnership does not give rise to Cayman Islands stamp duty, as the instruments in question do not relate to Cayman Islands land.
• No Cayman-level exit tax or deemed-disposition tax. The Cayman Islands does not impose any form of exit tax, emigration tax, or deemed-disposition tax on entities that are dissolving or on partners receiving distributions from a dissolving entity. This is in contrast to certain other jurisdictions (including, potentially, Luxembourg, which is addressed separately) that may impose exit or deemed-disposition taxes upon the dissolution or migration of entities.
Accordingly, Step 5 of the Reorganization is entirely free of Cayman Islands tax consequences. The dissolution and liquidating distributions by the legacy Cayman vehicles will proceed without any Cayman-level tax liability.
D. Tax Treatment of New Cayman Feeder Entities
The formation of Solara International Feeder (Cayman) LP and Solara Tax-Exempt Feeder (Cayman) LP as Cayman Islands exempted limited partnerships does not give rise to any Cayman Islands tax consequences. The Cayman Islands does not impose any formation tax, registration tax, or capital duty on the establishment of exempted limited partnerships.
On an ongoing basis, the operations of the new feeder entities — which will consist primarily of holding and managing their respective limited partnership interests in the Consolidated Master Fund LP and making distributions to their limited partners — will not be subject to any Cayman Islands income tax, capital gains tax, or withholding tax. Distributions received by the feeder entities from the Consolidated Master Fund LP, and distributions made by the feeder entities to their limited partners, will be entirely free of Cayman-level taxation.
We recommend that Meridian Offshore Legal obtain tax concession certificates under the Tax Concessions Act (as revised) for both new feeder entities promptly upon their formation. Although the absence of a tax concession certificate does not result in the imposition of any current Cayman Islands tax (given that no such taxes exist), the certificate provides an additional undertaking from the Cayman Islands government against the future imposition of taxes for a period of up to fifty years. This is considered a best practice for Cayman-domiciled fund vehicles and provides a measure of comfort to investors.
E. Cayman Islands Anti-Avoidance Considerations
The Cayman Islands does not have a general anti-avoidance rule ("GAAR") applicable to its domestic tax framework. Because there are no direct taxes imposed in the Cayman Islands, there is no tax to be avoided and, accordingly, no anti-avoidance doctrines to be applied. The Cayman Islands does not maintain transfer pricing rules, thin capitalization rules, or controlled foreign corporation rules under its domestic law.
This is a significant distinction from other jurisdictions in which the Solara fund platform has operations. In particular, the Luxembourg tax regime includes anti-avoidance provisions that must be evaluated in connection with the dissolution of the Luxembourg vehicles, and the U.S. federal income tax regime includes a robust set of anti-abuse doctrines, including the step transaction doctrine, the economic substance doctrine, and the anti-abuse rule under Treas. Reg. § 1.701-2. The application of these U.S. anti-abuse considerations to the Reorganization is analyzed separately in the Tax Memorandum — Anti-Abuse Considerations, which forms part of the PLR request package. The analysis herein is limited to confirming that no Cayman Islands anti-avoidance rule creates any impediment to the Reorganization.
F. Summary of Cayman Tax Conclusions
Based on the foregoing analysis and on the advice of Meridian Offshore Legal, our conclusions with respect to the Cayman Islands tax treatment of the Reorganization are as follows:
1. No Cayman Islands tax liability arises at any stage of the Reorganization (Steps 1 through 5). The formation of new entities, the contribution of portfolio assets by the legacy Cayman vehicles to the Consolidated Master Fund LP, the dissolution of the legacy Cayman vehicles, the liquidating distributions to limited partners, and the formation and ongoing operations of the new feeder entities are all entirely free from Cayman Islands taxation.
2. No Cayman Islands stamp duty is payable in connection with any step of the Reorganization, as no instruments relating to Cayman Islands land are involved (subject to the confirmation regarding Helix SaaS Holdings Ltd. discussed in Section VIII below).
3. No Cayman Islands withholding tax is imposed on any payment, distribution, or transfer made in connection with the Reorganization.
4. No Cayman Islands exit tax or deemed-disposition tax applies to the dissolution of the legacy Cayman vehicles or to the rollover of limited partners into the new feeder entities.
5. The Cayman Islands tax-neutral status is confirmed and presents no impediment to the Reorganization from a Cayman Islands tax perspective.
IV. CIMA Regulatory Framework
A. Overview of CIMA Regulation of Private Funds
The Cayman Islands Monetary Authority ("CIMA") is the primary financial regulatory authority in the Cayman Islands and is responsible for the regulation and supervision of investment funds domiciled in the jurisdiction. The regulatory framework applicable to the Solara fund vehicles is primarily governed by the Private Funds Act, 2020 (as amended) (the "PFA"), which was enacted to bring Cayman Islands private fund regulation into alignment with international standards, including the recommendations of the Financial Action Task Force ("FATF") and the EU's assessment criteria for cooperative tax jurisdictions.
Under the PFA, a "private fund" is generally defined as a company, unit trust, or partnership that offers or issues, or has issued, investment interests, the purpose or effect of which is the pooling of investor funds with the aim of spreading investment risks and enabling investors to receive profits or gains from the entity's acquisition, holding, management, or disposal of investments. Exempted limited partnerships that meet this definition must register with CIMA.
The principal registration and ongoing compliance requirements under the PFA include:
(a) Registration: Private funds must register with CIMA by submitting a prescribed registration form, paying the applicable registration fee, and providing specified information regarding the fund's structure, service providers, and operations.
(b) Annual Fee: Registered private funds are required to pay an annual registration fee to CIMA.
(c) Audited Financial Statements: Private funds must prepare and submit audited financial statements to CIMA within six months of the end of each financial year (or such longer period as CIMA may permit).
(d) Ongoing Reporting: Private funds must notify CIMA of material changes to their registration information, including changes to operators, service providers, investment strategy, or the fund's organizational documents.
(e) Compliance with Terms of Registration: Private funds must comply with the terms and conditions of their CIMA registration at all times.
Both Fund IV-A Cayman (CIMA Registration No. MF-72491) and Fund V-A Cayman (CIMA Registration No. MF-89103) are currently registered private funds under the PFA. Their CIMA registrations are in good standing as of the date of this memorandum, based on information provided by Meridian Offshore Legal and Clarendon Fund Services Ltd.
B. Deregistration of Fund IV-A (Cayman) LP — CIMA MF-72491
Upon the completion of Step 2 (contribution of all portfolio assets to the Consolidated Master Fund LP, target October 1, 2025) and Step 5 (dissolution and distribution to LPs, target December 1, 2025), Fund IV-A Cayman will cease to carry on business as a private fund and must be deregistered from CIMA. The deregistration process, as advised by Meridian Offshore Legal, involves the following steps:
(i) Notification to CIMA of Intention to Wind Down. Following the completion of Step 2, Fund IV-A Cayman should notify CIMA of its intention to wind down and cease operations. This notification should describe the nature of the reorganization and the anticipated timeline for dissolution.
(ii) Confirmation that All Investors Have Been Repaid or Interests Transferred. CIMA will require confirmation that all limited partners of Fund IV-A Cayman have received their distributions (whether in cash or in kind) and that no outstanding investor claims remain.
(iii) Submission of Final Audited Financial Statements. Fund IV-A Cayman must prepare and submit final audited financial statements covering the period from the beginning of the current fiscal year through the date of dissolution. These financial statements are expected to be prepared by Caldwell Pierce & Co. LLP (Helen Okamoto, Audit Partner), the fund's current auditor, in coordination with Clarendon Fund Services Ltd. as fund administrator.
(iv) Application for Deregistration on Prescribed Form. A formal deregistration application must be submitted to CIMA on the prescribed form, accompanied by supporting documentation as required by CIMA.
(v) Cancellation of CIMA Registration. Upon CIMA's review and acceptance of the deregistration application, the fund's CIMA registration (MF-72491) will be cancelled and the fund will be removed from CIMA's register of private funds.
CIMA retains the discretion to impose conditions on deregistration or to require additional information before processing the deregistration application. Meridian Offshore Legal has advised that, in practice, deregistration is generally straightforward provided that the fund has met all of its regulatory obligations, including the payment of all outstanding fees and the submission of all required filings.
The deregistration application is expected to be submitted promptly following the completion of Step 5 (i.e., shortly after December 1, 2025). Based on Meridian Offshore Legal's experience, the anticipated processing time for CIMA deregistration applications is approximately three to six months, meaning that the deregistration of Fund IV-A Cayman is expected to be completed by mid-2026. During the intervening period, Fund IV-A Cayman will remain on the CIMA register but will not be conducting any business activities.
Meridian Offshore Legal, under the direction of Fiona McAllister, will be responsible for the preparation and filing of all CIMA deregistration documentation for Fund IV-A Cayman. Calderwood & Harkness will coordinate with Meridian Offshore Legal to ensure that the deregistration timeline is consistent with the overall Reorganization schedule.
C. Deregistration of Fund V-A (Cayman) LP — CIMA MF-89103
The deregistration process for Fund V-A Cayman (CIMA Registration No. MF-89103) is substantively identical to the process described above for Fund IV-A Cayman. The key timing milestones for Fund V-A Cayman are as follows:
• Step 4 (contribution of all portfolio assets to the Consolidated Master Fund LP): target November 1, 2025
• Step 5 (dissolution and distribution to LPs): target December 1, 2025
• Deregistration application: to be submitted promptly following Step 5 completion
• Anticipated CIMA processing time: approximately three to six months (completion expected mid-2026)
Final audited financial statements for Fund V-A Cayman will be required covering the period from the beginning of the current fiscal year through the date of dissolution. Caldwell Pierce & Co. LLP and Clarendon Fund Services Ltd. will coordinate the preparation and submission of these statements.
Meridian Offshore Legal will handle all aspects of the Fund V-A Cayman deregistration, including notification to CIMA, preparation of the deregistration application, and ongoing communications with CIMA until the deregistration is completed.
D. Registration of Solara International Feeder (Cayman) LP
The International Feeder will be formed as a Cayman Islands exempted limited partnership, with a target formation date of September 15, 2025. As a new entity that will constitute a "private fund" under the PFA, the International Feeder must register with CIMA prior to commencing any investment activities. CIMA registration must therefore be completed before the International Feeder accepts subscriptions from non-U.S. limited partners rolling over from the legacy Cayman vehicles as part of Step 5 (target December 1, 2025).
The registration requirements for the International Feeder include the following:
(i) Completion of Prescribed Registration Form. Meridian Offshore Legal will prepare and submit the CIMA registration application on the prescribed form, providing all required information regarding the fund's structure, investment objectives, and organizational documents.
(ii) Payment of Initial Registration Fee. The applicable CIMA registration fee must be paid at the time of the registration application.
(iii) Identification of Fund Operator(s) and Service Providers. The registration application must identify the fund's general partner (or other operator), investment manager, fund administrator, auditor, custodian (if applicable), and other service providers. For the International Feeder, the expected service provider appointments are as follows:
• General Partner: To be determined (potentially Solara Offshore GP Ltd. or a newly formed Cayman entity)
• Fund Administrator: Clarendon Fund Services Ltd. (Rachel Okonkwo, Client Relationship Director; Windward 3, Regatta Office Park, West Bay Road, George Town, Grand Cayman KY1-1108)
• Auditor: Caldwell Pierce & Co. LLP (or an affiliated Cayman Islands firm)
(iv) Appointment of Auditor. The fund must appoint an auditor at the time of registration. It is expected that Caldwell Pierce & Co. LLP, which currently serves as auditor for the legacy Cayman vehicles, or an affiliated Cayman Islands firm will be appointed as auditor of the International Feeder to ensure continuity and consistency of the audit process.
(v) Identification of Cayman-Based Fund Administrator. CIMA requires that a Cayman-based fund administrator be appointed for registered private funds. Clarendon Fund Services Ltd., which currently serves as fund administrator for all Solara offshore vehicles, is expected to serve in this capacity for the International Feeder.
The registered office of the International Feeder is expected to be Harborstone Corporate Services Ltd., George Town, Grand Cayman, consistent with the existing vehicles. Maintaining the same registered office provider will facilitate administrative continuity and simplify the transition of registered agent services.
Meridian Offshore Legal will handle the formation of the International Feeder and the preparation and submission of the CIMA registration application. The CIMA registration should be completed well in advance of Step 5 (December 1, 2025) to ensure that the International Feeder is fully operational and authorized to accept subscriptions from non-U.S. limited partners at the time of the LP migration.
E. Registration of Solara Tax-Exempt Feeder (Cayman) LP
The formation and CIMA registration process for the Tax-Exempt Feeder is substantially identical to that described above for the International Feeder. The Tax-Exempt Feeder will be formed as a Cayman Islands exempted limited partnership, with a target formation date of September 15, 2025. It must register with CIMA under the PFA before it commences investment activities.
The purpose of the Tax-Exempt Feeder is to serve as a dedicated feeder vehicle for U.S. tax-exempt investors, including pension funds, endowments, and foundations, to mitigate UBTI concerns that would arise if such investors held direct interests in the Consolidated Master Fund LP. As noted in Section II.C.2 above, the key U.S. tax-exempt investors expected to participate in the Tax-Exempt Feeder include the Pinnacle State Employees' Retirement System and the Grandview University Endowment.
The same service provider appointments and registered office arrangements are expected for the Tax-Exempt Feeder as for the International Feeder, and the CIMA registration timeline is the same. Both new feeder entities must be fully registered with CIMA before December 1, 2025 to enable the seamless rollover of limited partners from the dissolving legacy vehicles into the new feeder structure.
F. CIMA Ongoing Compliance for New Feeder Entities
Following their formation and CIMA registration, the International Feeder and the Tax-Exempt Feeder will be subject to the ongoing compliance obligations imposed by the PFA on registered private funds. These obligations include:
• Annual CIMA Registration Fees. Each registered private fund must pay an annual registration fee to CIMA.
• Annual Filing of Audited Financial Statements. Each feeder entity must prepare audited financial statements and submit them to CIMA within six months of the end of each financial year (or such extended period as CIMA may permit).
• Notification of Material Changes. The feeder entities must notify CIMA of any material changes to their registration information, including changes to the fund operator, service providers, investment strategy, organizational documents, or other matters that CIMA deems material.
• General Compliance. The feeder entities must comply with all applicable provisions of the PFA and any rules, guidelines, or directions issued by CIMA from time to time.
The designated fund administrator, Clarendon Fund Services Ltd., is expected to transition from its current role administering the legacy Cayman vehicles to administering the new feeder entities. This transition will include the transfer of NAV calculation, investor reporting, and regulatory filing responsibilities. A notification letter to Clarendon Fund Services Ltd. regarding the transition is being prepared separately by Calderwood & Harkness in coordination with Solara's in-house legal team.
V. Dissolution Procedures Under Cayman Islands Law
A. Exempted Limited Partnership Act (As Revised)
Fund IV-A Cayman and Fund V-A Cayman are governed by the Exempted Limited Partnership Act (as revised) (the "ELP Act"), which provides the statutory framework for the formation, operation, and dissolution of exempted limited partnerships in the Cayman Islands. The dissolution of an exempted limited partnership under the ELP Act may be initiated by the general partner in accordance with the terms of the applicable limited partnership agreement and the provisions of the ELP Act.
The principal procedural steps required to effect the dissolution of each legacy Cayman vehicle are as follows:
(i) Consent of Limited Partners. The terms of each limited partnership agreement ("LPA") governing Fund IV-A Cayman and Fund V-A Cayman specify the consent requirements for dissolution. In general, the consent of a specified percentage of limited partners (by interest or by number) is required. As noted in Section II.E above, the LPAC meeting held on April 22, 2025 resulted in preliminary consent being obtained from limited partners representing approximately 78% in interest. Formal consent will be solicited in accordance with the specific terms of each LPA prior to the execution of the dissolution steps.
(ii) Filing of Notice of Dissolution with the Registrar. A notice of dissolution must be filed with the Registrar of Exempted Limited Partnerships in the Cayman Islands. This notice formally commences the dissolution process and places the entity in a state of winding up.
(iii) Appointment of Liquidator (If Applicable) or Conduct of Winding Up by General Partner. Depending on the terms of the LPA and the circumstances of the dissolution, a formal liquidator may be appointed, or the general partner may conduct the winding up of the entity's affairs. In the case of Fund IV-A Cayman and Fund V-A Cayman, it is expected that Solara Offshore GP Ltd., as general partner, will conduct the winding up, as the dissolution is part of an orderly reorganization and all assets will have been contributed to the Consolidated Master Fund LP prior to dissolution.
(iv) Settlement of All Liabilities and Distribution of Remaining Assets. The general partner must settle all outstanding liabilities of the partnership and distribute the remaining assets to the limited partners in accordance with the terms of the LPA. In the context of the Reorganization, the only remaining asset of each legacy vehicle at the time of dissolution will be its limited partnership interest in the Consolidated Master Fund LP, which will be distributed in-kind to the limited partners.
(v) Filing of Notice of Termination with the Registrar. Following the completion of the winding up, a notice of termination must be filed with the Registrar of Exempted Limited Partnerships, formally terminating the existence of the entity.
Meridian Offshore Legal will prepare all dissolution documentation, filings with the Registrar, and related instruments required to complete the dissolution of each legacy Cayman vehicle.
B. Coordination with Step 5 of the Reorganization
The dissolution of the legacy Cayman vehicles under the ELP Act must be carefully coordinated with Step 5 of the Reorganization. Step 5, with a target effective date of December 1, 2025, involves the dissolution of the legacy vehicles and the distribution of their limited partnership interests in the Consolidated Master Fund LP to their existing limited partners. Upon receiving such distributions, non-U.S. limited partners will roll into the International Feeder, and U.S. tax-exempt limited partners will roll into the Tax-Exempt Feeder.
The coordination requirements for Step 5 are as follows:
(i) All portfolio assets must have been contributed to the Consolidated Master Fund LP. Steps 2 and 4 must be completed before Step 5 is executed. The contribution of all portfolio assets by Fund IV-A Cayman (Step 2, target October 1, 2025) and Fund V-A Cayman (Step 4, target November 1, 2025) must be fully consummated so that the only asset remaining in each legacy Cayman vehicle at the time of dissolution is its limited partnership interest in the Consolidated Master Fund LP.
(ii) The sole remaining asset of each legacy Cayman vehicle must be its limited partnership interest in the Consolidated Master Fund LP. This ensures a clean dissolution in which the only distribution to limited partners is the in-kind distribution of Consolidated Master Fund LP interests.
(iii) The Consolidated Master Fund LP interests must be distributed in-kind to the limited partners. The dissolution documents must provide for the distribution of the Consolidated Master Fund LP interests to the limited partners in proportion to their respective interests, in accordance with the terms of each LPA.
(iv) The entities must then have no remaining assets and be wound up. Following the distribution of all assets, the entities will have no remaining assets, liabilities, or business to conduct, and the winding up can be completed by filing the notice of termination with the Registrar.
The timing of these steps is critical. If the dissolution of a legacy Cayman vehicle were to occur before the completion of the related contribution step, the dissolution could result in unintended consequences, including the distribution of portfolio assets directly to limited partners rather than through the Consolidated Master Fund LP structure. Calderwood & Harkness and Meridian Offshore Legal will work closely to ensure that the sequencing of steps is strictly observed.
C. Role of Solara Offshore GP Ltd.
Solara Offshore GP Ltd. is a Cayman Islands exempted company that serves as the general partner of both Fund IV-A Cayman and Fund V-A Cayman. In its capacity as general partner, Solara Offshore GP Ltd. will be responsible for executing the dissolution documents, overseeing the winding up of each legacy vehicle, and filing the required notices with the Registrar of Exempted Limited Partnerships and with CIMA.
Following the dissolution of both legacy Cayman vehicles, the future role of Solara Offshore GP Ltd. must be determined by Solara management. Two scenarios are possible:
(a) Retention of Solara Offshore GP Ltd. If Solara Offshore GP Ltd. is to serve as the general partner of one or both of the new feeder entities (the International Feeder and/or the Tax-Exempt Feeder), then no dissolution of Solara Offshore GP Ltd. is necessary. In this scenario, the GP's role would transition from serving as general partner of the legacy vehicles to serving as general partner of the new feeder entities.
(b) Dissolution of Solara Offshore GP Ltd. If a new general partner entity is to be formed for the feeder entities (or if the feeder entities will have a different general partner arrangement), then Solara Offshore GP Ltd. may be dissolved following the completion of the Reorganization. A separate dissolution process would be required for Solara Offshore GP Ltd. as a Cayman Islands exempted company under the Companies Act (as revised), including the appointment of a liquidator, the settlement of liabilities, and the striking off of the company from the Cayman register.