Following the recent amendments to the Law on Private Funds (PFL), the definition of “private funds” has been significantly broadened. Also, the list of corporate entities that must be registered with CIMA (the local financial regulator) has been substantially expanded. What this means is that individuals considering registering a private fund in the Cayman Islands will have to comply with a whole new set of rules & regulations.
So, let’s see what they are.
New Rules for Registering Private Funds in the Cayman Islands
Registration with CIMA is now required for:
- enterprises primarily involved in the provision of non-financial services & conduct of business associated with private funds;
- issue & offer of investment interests;
- closed-ended funds that have only one project or investments;
- closed-ended funds levying no fees.
Establishing a Fund in the Caymans: Conflict of Interests
Under the recent amendments to the PFL, individuals associated with the activities of the fund must be engaged in:
- asset valuation;
- safekeeping of funds’ assets;
- managing, monitoring & reporting potential conflicts of interest.
From now on, establishing an investment fund in the Cayman Islands must not only be properly identified but also reported to its investors. Fund managers are also required to put in place policies & procedures for conflict resolution. It is expected that the next amendments will relate to establishing an advisory committee in accordance with the said policies & procedures.
It’s not yet clear how the amendments that have taken effect early this year will affect the operation of private funds in the Caymans. If you need more information on the registration of private funds in the Cayman Islands or seek a consultation on the requirements on foreign investors in the Caymans, you can get in touch with IQ Decision UK. Our legal advisors will be happy to give you a hand with any legal issues that you’re facing in this regard.