As an independent service provider, we enjoy good relationships with all of the major law firms both in the Cayman Islands and on-shore.
The Cayman Islands benefits from a form of regulation which benefits both investors and fund managers alike, with the result that funds are easy to establish and easy to maintain in the Islands.
The law governing Cayman domiciled investment funds is the Mutual Funds Law (as revised from time to time) (the “Law”). Closed-ended funds (i.e., where the equity interests may not be redeemed or repurchased at the option of the investor) and funds which issue only debt instruments are not subject to the Law, but all open-ended funds are accordingly covered by the Law and regulated by the Cayman Islands Monetary Authority (“CIMA”), unless the equity interests are held by not more than 15 investors and the majority of those investors have the power to appoint or remove the fund’s operators.
The three types of regulated funds under the Law are Licensed Funds, Administered Funds and Registered Funds.
Registered Funds require that either (a) the minimum subscription per investor must be at least U.S.$100,000 (or its equivalent in any other currency), or (b) its equity interests be listed on a stock exchange approved by CIMA. These are by far the most utilized and straightforward form of regulated fund.
Administered Funds – A mutual fund having more than fifteen investors and not being a licensed or registered mutual fund will be an administered mutual fund (an “Administered Fund”) if its principal office in the Cayman Islands is provided by a mutual fund administrator licensed in the Islands. The licensed administrator has a duty to satisfy itself of matters similar to the matters CIMA requires in relation to licensed funds (see below) and file a declaration with CIMA confirming that it is so satisfied.
Licensed Funds – Unless a mutual fund is an administered, registered or is subject to an exemption, it must not carry on business in or from the Cayman Islands unless it has a mutual fund license and has either a registered office in the Cayman Islands or, in the case of a unit trust, has a trustee which is a local licensed trust company. In order for a fund to obtain a license, CIMA must be satisfied that each promoter and the administrator of the fund is of sound reputation and have sufficient expertise and that the fund’s business and any offer of equity interests will be carried out in a proper way. CIMA will require such information and documentation in its discretion to so satisfy itself.
There are various continuing obligations in relation to regulated funds, which include the requirement to submit a fund annual return (FAR), file current offering documents and prescribed particulars with CIMA, file accounts audited by an auditor approved by CIMA within 6 months of each financial year end. Precise details are beyond the scope of this page – we recommend that legal advice is taken in this regard.
The latest revision of the Mutual Funds Law can be found on the Cayman Islands Monetary Authority Website, which can be accessed by clicking here.
To find out more about our fund services, and how IMS can assist you, please email us at firstname.lastname@example.org.
PO Box 61
Harbour Centre, Grand Cayman
KY1-1102, Cayman Islands
T: +1 (345) 949 4244
F: +1 (345) 949 8635
IMS attends a number of relevant industry events in various jurisdictions, from private banking and family office forums, to hedge fund and captive insurance conferences. To find out where you can next meet us, please click here.