cayman mutual funds act

Mergers & Acquisitions. Its laws and regulations applicable to investment funds are geared mainly towards attracting institutional investors. In practice, where no offering document has been prepared (as is often the case for multi-generational funds), a statement of terms satisfying the PF Content Rule will be required for purposes of the funds registration with CIMA. Exempted limited partnerships (ELPs) are most commonly used for closed-ended funds and, to the extent that they fall within the scope of the Private Funds Act, are required to be registered with CIMA. The investment manager entity that provides managed account services may itself be a Cayman-domiciled entity and be regulated by the Cayman Islands Monetary Authority. DITC also has the power to impose administrative penalties of up to CI$50,000 (approx. What regulations are in place to protect the funds assets? In this Act "accountant" means a person who has qualified as an accountant by The vast majority of open-ended funds will qualify as mutual funds under the Mutual Funds Act (as amended), which requires mutual funds to be licensed or regulated as such. The Private Funds Act also applies to non-Cayman Islands private funds carrying on business or attempting to carry on business in or from the Cayman Islands. A private fund is required under the Private Funds Act to notify CIMA of any change that materially affects any information submitted to CIMA and of any change of its registered office or the location of its principal office. Understand your clients strategies and the most pressing issues they are facing. Fed Chair Powell made the case for another quarter-point hike amid the banking turmoil. Our advisers are well-versed in this legislation, as well as the Cayman Islands Companies Act and can guide you through the process and the documentation requirements for establishing your fund in the appropriate category. Law stated - 23 May 2020. All funds regulated under the Cayman Islands' Mutual Funds Act (as revised) (the "MFA") must submit, to CIMA, the following documents covering the fund's financial year, within six months of the fund's financial year-end: Audited annual accounts (audited financial statements or AFS) as required by Section 8 (2) of the MFA. Open-ended Cayman funds are regulated under the Mutual Funds Act. In general, only open-ended funds are regulated and must be registered with CIMA. Supporting the large concentration of offshore funds domiciled in the Cayman Islands is a distinguished group of expert service providers including administrators, attorneys, auditors, bankers and directors which comprise the Cayman national group. Minor breaches can result in a CI$5,000 (approx. There are no updates at this time. The term public in the Islands excludes certain entities and residents, including other Cayman Islands exempted companies, LLCs, exempted limited partnerships, any exempted or ordinary non-resident companies, foreign companies registered in the Cayman Islands and foreign limited partnerships. The use of the title Partner is merely to denote seniority. Corporate Regulatory applications and filings are made through CIMAs secure Regulatory Enhanced Electronic Forms Submission (REEFS) web portal, which is only accessible to authorised service providers, such as Carey Olsen. A limited liability company (LLC) is a corporate entity that has separate legal personality to its members. Which authorities have primary responsibility for regulating funds, fund managers and those marketing funds? Become your target audiences go-to resource for todays hottest topics. PRIVATE FUNDS ACT CAYMAN ISLANDS PRIVATE FUNDS ACT (2021 Revision) Supplement No. However, there is no legal requirement for a local entity to be involved in the fund marketing process. The following information relates to the enactment of The Mutual Funds Act (2019 Revision) and the subsequent commencement of related sections of The Mutual Funds (Amendment) Act 2015. Some cookies are essential, whilst others help us improve your experience by providing insights into how the site is being used. Private funds would most likely qualify as sophisticated persons or high net worth persons, or both. Incorporation is effected by filing the companys memorandum and articles of association and an affidavit sworn by the subscriber to the memorandum of association with the Registrar of Companies. Private funds would most likely qualify as sophisticated persons or high net worth persons, or both. Mutual Funds (Amendment) Act, 2020. This, together with the presence of sophisticated and professional . If a mutual or private fund's investment manager is a Cayman Islands entity (or is registered in the Cayman Islands) and carries on securities investment business, the investment manager must be licensed or registered as a 'registered person' under the Securities Investment Business Act (2020 Revision) and its The exempted company (which includes the segregated portfolio company) is the most commonly used legal vehicle for open-ended funds and the exempted limited partnership is the most commonly used legal vehicle for closed-ended funds. This applies to both private funds which were carrying on business on An overseas investment fund that wishes to make an offering of its securities to the public in the Cayman Islands will need to either (1) register with CIMA as a mutual fund under the Mutual Funds Act or a private fund under the Private Funds Act or (2) market its securities through a person who is appropriately licensed or authorised by CIMA under the terms of the SIB Act (provided that the securities being offered to the public in the Cayman Islands are listed on a stock exchange approved by CIMA or the investment fund is regulated by a recognised overseas regulatory authority approved by CIMA). As at June 2022, there were 12,935 investment funds (predominantly hedge funds) registered with the Cayman Islands Monetary Authority under the Mutual Funds Act (as amended). This phenomenal growth has been due in part to the use of innovative legislation and the absence of taxation and exchange controls. ARTICLE 26 May 2023. Investment and borrowing restrictions What are the investment and borrowing restrictions on retail funds? Law stated - 23 May 2020. The Private Funds Act requires a custodian: (1) to hold the private funds assets that are capable of physical delivery or capable of registration in a custodial account except where that is neither practical nor proportionate given the nature of the private fund and the type of assets held; and (2) to verify title to, and maintain records of, fund assets. Reporting What are the periodic reporting requirements for retail funds? Law stated - 23 May 2020. This type of fund is often referred to as a retail fund. The Mutual Funds Act (for open-ended funds) and the Private Funds Act (for closed-ended funds) are the two main statutes relevant to the regulation of investment funds in the Cayman Islands. Marketing Who can market retail funds? EU Connected Funds that are not regulated will be required to provide further information, including the justification for the fund not being already regulated. Blockchain Technology The following information relates to the enactment of The Mutual Funds Act(2019 Revision) and the subsequent commencement of related sections of The Mutual Funds (Amendment) Act 2015. However, there is no legal requirement for the custodian to be located in the Cayman Islands. Overview The changes require certain funds to notify the Cayman Islands Monetary Authority if they are active in EU jurisdictions. Managers and operators Are there any special requirements that apply to managers or operators of retail funds? For more details see our Privacy Policy, How Bitcoin ETFs Work in the Cayman Islands. Such requirement becomes effective since 7 February 2020. Law stated - 23 May 2020. 2.1.4 Disclosure Requirements Every mutual fund registered with CIMA (unless that fund is a "master fund" as defined under the Mutual Funds Act) is Overseas vehicles Is it possible to redomicile an overseas vehicle in your jurisdiction? Short title 1. Specialist advice should be sought about specific circumstances. the funds manager or operator, provided: (i) the title verification function is independent of the portfolio management function; or (ii) potential conflicts of interest are properly identified, managed, monitored and disclosed to investors. Directors of mutual funds structured as exempted companies, managers of investment funds structured as LLCs and directors of general partners of investment funds structured as an exempted limited partnership (in each case, wherever in the world these persons are located, not just to Cayman Islands-based directors) regulated by CIMA are required to register with CIMA under the Directors Registration and Licensing Act (DRLA). There are no specific Cayman Islands legal requirements to be determined when structuring a separately managed account unless the managed account is structured using a Cayman legal vehicle, in which case the same issues applicable to a mutual fund or a private fund may apply. Both types of legal vehicles are formed by filing formation documents with the Companies Registry and paying the requisite government fee. A unit trust is formed through a declaration of trust by the trustee alone or by a trust deed executed by both the trustee and the investment manager. How are they formed? Read More Managers and operators Are there any special requirements that apply to managers or operators of non-retail funds? Those EU Connected Funds that opt not to apply for a licence will be required to notify CIMA of certain particulars, as mentioned above. Cayman funds must identify their AMLCO, MLRO and DMLRO to CIMA when they register and notify CIMA of any changes. This restriction on the public offer of securities is contained in the Companies Act and the Limited Liability Companies Act, but there are no similar restrictions in the laws governing limited partnerships or unit trusts. Are any exemptions available? to hold the private funds assets that are capable of physical delivery or capable of registration in a custodial account except where that is neither practical nor proportionate given the nature of the private fund and the type of assets held; and. These cookies enable core website functionality, and can only be disabled by changing your browser preferences. 4 published with Legislation Gazette No.16 dated 19th February, 2021. Mutual Funds Act (2021 Revision) Section 1 c Revised as at 31st December, 2020 Page 7 CAYMAN ISLANDS MUTUAL FUNDS ACT (2021 Revision) PART I - Preliminary 1. Cayman Islands tax treatment is the same for both retail funds and non-retail funds. Can an overseas manager perform management activities or provide services to clients in your jurisdiction without authorisation? The term public in the Islands excludes certain entities and residents, including other Cayman Islands exempted companies, LLCs, exempted limited partnerships, any exempted or ordinary non-resident companies, foreign companies registered in the Cayman Islands and foreign limited partnerships. Registered Mutual Funds Streamlined registration procedures are available for mutual funds where: (i) the initial minimum equity interest purchasable by an investor is US$100,000; or (ii) whose equity interests are listed on an approved stock exchange such as the CSX. Directors of mutual funds structured as exempted companies, managers of investment funds structured as LLCs and directors of general partners of investment funds structured as exempted limited partnerships (in each case, wherever in the world these persons are located, not just to Cayman Islands-based directors) regulated by CIMA are required to register with CIMA under the DRLL. Both corporate directors and professional directors are subject to minimum insurance requirements. Mutual funds that are established for a sole investor and do not involve the pooling of investor funds fall outside the regulatory framework of the Mutual Funds Act. The Mutual Funds Act defines a mutual fund as a company, unit trust or partnership that issues equity interests, the purpose or effect of which is the pooling of investor funds with the aim of spreading investment risks and enabling investors in the mutual fund to receive profits or gains from the acquisition, holding, management or disposal of investments The reference to equity interests means that debt instruments (including warrants, convertibles and sukuk instruments) are excluded and funds issuing such instruments will not be required to register with CIMA as a mutual fund. There is no requirement for the manager of a Cayman Islands fund to be resident or domiciled in the Cayman Islands. Exempt companies are the most common legal vehicle for open-ended funds. Mutual funds are regulated by the Cayman Islands Monetary Authority ("CIMA") under the Mutual Funds Law (2015 Revision) (the "MF Law"). A fund is open-ended if it issues participating equity interests (whether shares, interests or units) that are redeemable by investors on a specified period of notice. Governance What are the main governance requirements for a non-retail fund formed in your jurisdiction? These regimes are intended to facilitate onshore tax compliance by requiring the automatic exchange of information for tax purposes (AEOI). An entity that is performing marketing activities for an investment fund from within the Cayman Islands is required by the terms of the SIB Act to obtain a licence from, or otherwise register with, CIMA, prior to engaging in such activities. Closed-ended funds that fall within the scope of the Private Funds Act are required to be registered with, and regulated by, CIMA. There is currently no requirement for registration of directors with CIMA under the DRLL who are directors of closed-ended funds that fall within the scope of the Private Funds Act. Carey Olsen in the Cayman Islands is the business name of Carey Olsen Cayman Limited, a body corporate recognised under the Legal Practitioners (Incorporated Practice) Regulations (as revised). Where valuations are not carried out by an independent third party, CIMA may require the fund to have its valuations verified by an auditor or other independent third party. Overview On February 7, 2020 the Cayman Islands enacted new legislation for collective investment vehicles. All private funds within the scope of the Act are required to register with CIMA and be subject to its regulation . Closed-ended funds (ie, funds that issue investment interests that are not redeemable at the option of the investor of record), which fall within the scope of the Private Funds Act, are required to register with, and consequently become regulated by, CIMA. Exempt Companies are the periodic reporting requirements for a non-retail fund formed in jurisdiction! 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