If your immediate plans are to establish a licensed fund in the Cayman Islands, register a managed fund in the Cayman Islands, or create a limited investor fund in the Cayman Islands, this blog post will be of interest to you. Given below are term-wise actions you can take to make your plans fulfil.
The activities of investment funds are to be governed due to the significant volume of securities issued by them, the impact on other companies in whose securities the funds of investment companies are invested, as well as on the economy as a whole.
The activity of investment funds should be aimed at reducing the risks of investors through the creation of collective investment mechanisms. The Cayman Islands Monetary Authority also known as CIMA governs not only investment funds but the activities of their managers as well.
Types of funds
Based on the redemption of securities, funds are divided into open-end and closed-end companies. The former offer for sale or have in circulation securities to be redeemed, the issuers of which they are.
Most of open-end funds are mutual funds.
The Law on Collective Investment Funds requires that all open-end funds in the Caymans be regulated. The exception is the collective investment fund, in which the shares are distributed among no more than fifteen investors, most of whom can appoint or remove the fund operator. Who is the fund operator? This is a director in the case of a company fund, a principal partner in the case of a partnership, or a trust. The operator does not include a manager who has a contractual relationship with a collective investment fund.
A foreign fund manager may provide services to an investment fund in that jurisdiction. Licensing of a unit investment fund manager in the Cayman Islands and a private fund operator, such as a director, is carried out in accordance with the Law on Registration and Licensing of Directors.
Regardless of the form, all investment funds must obtain a license from CIMA and comply with its instructions. A legal entity wishing to obtain a Cayman Investment Fund Manager's license must be authorized with CIMA.
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