2 minute read 15 Jan 2020
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How the Cayman Islands regulatory update will impact investment funds

By

EY Americas

Multidisciplinary professional services organization

2 minute read 15 Jan 2020

The Cayman Islands Government (CIG) has issued the Private Funds Bill, 2020 and proposed the Mutual Funds (Amendment) Bill, 2020.

The legislative changes are in response to an increase in global regulations, driven by the Organisation for Economic Co-operation and Development, the European Union and the Caribbean Financial Action Task Force. As it has regularly done in the past, the CIG continues to respond to global changes like these with a thoughtful, reasonable and balanced approach enabling prompt compliance with key global regulatory and anti-money laundering standards.

The Private Funds Bill

Which entities will require registration?

Private funds that a) are established for the purpose of pooling investor funds to spread investment risks and enable the investors to receive profits; b) are managed by or on behalf of the operator of the entity for reward and where the holders of investment interests do not have day-to-day control over the investments; and c) have interests that are not redeemable or repurchasable at the option of the investor will need to be registered with CIMA.

What are the key considerations as part of ongoing regulation?

Private funds will be required to pay an annual registration fee, retain accessible records, comply with an annual audit by a CIMA-approved Cayman-based auditor, submit an annual return and adhere to certain ongoing obligations in relation to valuation, safekeeping of fund assets, cash monitoring and identification of securities.

When will this go into effect?

The CIG is currently evaluating the transition period.

The Mutual Funds Bill

What has changed?

Clause 4(4)(a) of the Mutual Funds Law, which allowed mutual funds with 15 or fewer investors to be exempt from regulatory obligations, has been removed.

What are the key considerations as part of ongoing regulation?

Mutual funds impacted by the removal of clause 4(4)(a) will be required to pay an annual registration fee, retain accessible records, comply with an annual audit by a CIMA-approved auditor and submit an annual return.

When will this go into effect?

It is anticipated that upon approval of the Mutual Funds Bill, there will be a six-month transitional period during which impacted Mutual funds will require registration.

Summary

This article outlines the primary points of the Private Funds Bill and enhancements to the Mutual Funds Law in the Cayman Islands.

About this article

By

EY Americas

Multidisciplinary professional services organization