As at 7 February 2020 (the “Commencement Date“), the exemption from registration for Limited Investor Funds i.e. funds which have its equity interests held by fifteen (15) or fewer investors, a majority of which have the ability to appoint or remove the fund’s operators[1], was removed following the passage of the Mutual Funds (Amendment) Law, 2020 of the Cayman Islands (the “Amendment Law“).
Existing Limited Investor Funds will have until 7 August 2020 to comply with the registration requirements of the Amendment Law. Limited Investor Funds which will begin carrying on business after the Commencement Date (7 February 2020), will be required to comply with the new requirements immediately.
Limited Investor Funds must now:
- register with the Cayman Islands Monetary Authority (CIMA);
- pay an annual registration fee[2];
- file copies of the fund’s constitutional documents with CIMA which show that a majority of the holders of equity interests have the ability to appoint or remove the fund’s operators;
- have a minimum of two (2) individual directors so as to comply with CIMA’s “four eyes policy“;
- have each of its directors register with CIMA as required by the Directors Registration and Licensing Law, 2014 of the Cayman Islands[3];
- have the fund’s accounts audited annually by a CIMA approved local auditor and file audited financial statements with CIMA within six (6) months of the fund’s financial year end. Accounts should be prepared in accordance with International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP) of US, Japanese, Swiss or any other non-high risk jurisdiction;
- file a fund annual return (FAR) with CIMA; and
- inform CIMA of any material changes to the information submitted in the registration application within twenty-one (21) days of making any such change.
As the deadline approaches, existing Limited Investor Funds should review their governance structure, director registration status and constitutional documents in preparation for meeting the registration deadline of 7 August 2020.
This briefing has been provided as a general guide and is not a substitute for specific legal advice. To discuss how the new requirements may apply to you or for assistance with the registration process please contact:
Janet Francis
Partner
FrancisGrey
- +1 345 815 2807
Mark-Paul Cowan
Associate
FrancisGrey
- +1 345 815 2809
© FrancisGrey 2020
[1] Operator being its director, general partner or trustee as appropriate to the structure of the fund.
[2] Limited Investor Funds which register with CIMA by 7 August 2020 will have the 2020 registration fee waived and will pay its first registration fees in January of 2021.
[3] Registration is an online process which is done via the Director Gateway of CIMA’s website.
