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Pursuant to the recent amendments to the PFL, a law regulating the registration of closed-ended funds in the Cayman Islands, a new definition of ‘private funds’ has been introduced. The main emphasis in the law is now placed on extending loans to the said funds & practical steps lenders should follow to ensure compliance with the amended law.


Applying to all private funds, the law targets primarily closed-end funds, excluding various “no-target agreements” from its scope, such as:

  • securitization instruments;
  • structured finance;
  • mechanisms for managing individual investments;
  • debentures.

Cayman Islands: Registering Closed-Ended Funds

Registering a private fund in the Cayman Islands must now be done within a 3-week transition period counted from the date a financial commitment is made by investors. It’s not yet clear how funds that haven’t received contributions from investors & failed to register within the said period will be regulated by the law.

Transition Period

No registration is required to receive contributions; however, contributions can only be made until a specific deadline. Once the deadline is over, it’ll be necessary to register a closed-end investment fund in the Caymans by filing an application with CIMA.


The fact that funds are prohibited from receiving contributions until they’re registered with CIMA means that failure to comply with such a requirement could jeopardize the creditor's ability to rely on the obligations of funds’ investors to repay the debt.

Failure to comply with the PFL may also lead to:

  • imposition of fines on funds or their founders;
  • appointment of individuals (one or more) charged with exercising control over funds;
  • CIMA's appeal with the High Court.

Practical Steps

In view of the above, we recommend that lenders consider taking the following steps:

  • including new funds in future contracts to obtain documentary evidence regarding the registration of funds in the Cayman Islands.
  • reviewing existing portfolios to determine the extent to which they have extended & are ready to extend credits to funds in the Cayman Islands.
  • contacting fund representatives to find out:
    • whether funds representatives have made a decision on whether the PFL will be applicable;
    • when registration will be completed & how funds representatives intend to ensure compliance with the PFL.
  • examining any decisions made by funds which are outside the scope of the PFL & seeking legal advice.
  • ensuring that the standard agreement provides for compliance with the PFL & requires the registration of a closed-end investment fund in the Cayman Islands prior to the deadline. 
  • given that registration isn’t required prior to receipt of contributions, funds that haven’t  done so may proceed beyond the specified deadline without registering; however, it should be kept in mind that the receipt of contributions after the deadline would be tantamount to breaking the law; lenders should, therefore, make sure that the terms of the transaction allow funds to use such a mechanism.
  • ensuring that the PoA issued to creditors enables them to correct any registration-related errors committed by funds.

Please note that IQ Decision UK provides assistance with registering investment funds in the Cayman Islands. Also, our team of experts can advise on any matters pertaining to the activities of private funds from the perspective of international law.