Questions relating to Cayman Islands and BVI Law

Questions relating to Cayman Islands’ Law

What is the authorization or licensing process for Cayman Islands funds? What are the key requirements that apply to managers of investment funds in the Cayman Islands?

The vast majority of open-ended investment funds will qualify as mutual funds under the Mutual Funds Law (As Revised), which requires mutual funds to be licensed or regulated as such. Closed-ended funds (i.e., investment funds that issue investment interests which are not redeemable at the option of the investor of record), which fall within the scope of the Private Funds Law (As Revised), are also required to register with, and consequently become regulated by, the Cayman Islands Monetary Authority (CIMA).

The authorization process for an open-ended investment fund will depend on the regulatory category it chooses to register under (e.g., a licensed fund under section 4(1)(a) of the Mutual Funds Law, an administered fund under section 4(1)(b) of the Mutual Funds Law, a registered fund under section 4(3) of the Mutual Funds Law, or a limited investor fund under section 4(4) of the Mutual Funds Law). For closed- ended investment funds, the authorization process requires the investment fund to:

• submit an application for registration to CIMA within 21 days after its acceptance of capital commitments from investors for the purposes of investments;
• file prescribed details in respect of the private fund with CIMA;
• pay a prescribed annual registration fee to CIMA in respect of the private fund;
• comply with any conditions of its registration imposed by CIMA; and
• comply with the provisions of the Private Funds Law.

A Cayman Islands domiciled fund manager will have to either apply to CIMA for a licence to undertake business as such under the Securities Investment Business Law (As Revised) or apply to CIMA to be registered as a Registered Person.

An overseas fund manager can provide services to a Cayman Islands investment fund and there is no requirement for the overseas fund manager to be licensed by or registered with CIMA unless that fund manager establishes itself in the Cayman Islands. Operators of mutual funds registered with CIMA, such as directors, are subject to registration or licensing requirements under the Director Registration and Licensing Law and are required to register with CIMA.

For specific advice, please contact any of:

E: gary.smith@loebsmith.com
E: vivian.huang@loebsmith.com
E: yun.sheng@loebsmith.com
E: elizabeth.kenny@loebsmith.com
E: santiago.carvajal@loebsmith.com
T: +1 345 749 7591

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Camana Bay, Grand Cayman KY1-9006 Cayman Islands