Cayman Islands Investment Fund Changes
The Cayman Islands Private Funds Law, 2020 (PFL) and the Mutual Funds (Amendment) Law, 2020 (MFL) have now been passed into law effective February, 2020. The Cayman Islands is the leading international domicile for global investment funds, both open-ended and closed-ended investment funds. The Cayman Islands government has now further modernized and enhanced the oversight of investment funds through the following updates.
Private Funds Law
The PFL has three key pillars: (a) registration; (b) operational conditions; and (c) supervision and enforcement.
All existing vehicles falling within the scope of the private funds definition and section 3(1) of the PFL must register with CIMA (Cayman Islands Monetary Authority) by August 7, 2020 and, once so registered, will be subject to regulatory obligations.
Once registered, the PFL requires private funds to comply with certain ongoing obligations in order to meet best practices and the needs of sophisticated global institutional investors.
Supervision and Enforcement
The PFL authorizes CIMA to administer the law. CIMA’s duties include examining registration applications and determining application parameters and other informational requirements.
Mutual Funds (Amendment) Law, 2020
The MFL brings within the scope of regulation certain mutual funds not currently covered by the MFL. Funds that meet the 15 or fewer investor criteria exemption set out in section 4(4)(a) of the MFL will now be required to register with CIMA and, once so registered, will be subject to regulatory obligations.
The Cayman Islands government is mindful that a successful transition to the new regulations will require time and adequate preparation. New entities that are within the scope of these new requirements must adhere to the registration process immediately. Existing entities will have a grace period of six months to comply with the registration requirements and should complete the registration requirements by August 7, 2020. Further, the Cayman Islands government has confirmed that the local audit requirement and electronic submission of the Fund Annual Return (FAR) will not be required to be filed with CIMA until six months following the first full fiscal year after registration.
Have questions on how the MFL and the PFL may affect your organization? Please contact the partner in charge of your account or:
Michael A. Provini, CPA, Partner
Victor Peña, CPA, CGMA