Valsen Fiduciaries Funds

Cayman Registered Fund

The Cayman Islands Monetary Authority (CIMA) regulates mutual funds under the Mutual Funds Law (Revised 2019). This Act sets out the guidelines pertaining to the application and licensing of mutual funds and other collective investment entities in Cayman.

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About Cayman Registered Fund

A registered mutual fund is a fund that meets criteria under Section 4(3) of the Mutual Fund Laws.

This is the most common type of investment fund registered with CIMA. Registered mutual funds are exempt from the requirement to be licensed or administered locally on the basis that either;

  • each investor must subscribe for equity interests in an amount not less than US$100,000 or
  • the equity interests of the fund are listed on a stock exchange recognized by CIMA.

Cayman Registered Fund Legal Requirements

Requirements

Description

  1. Applicable legislation

Mutual Funds Law (Revised 2019)

  1. Supervising Authority

Cayman Islands Monetary Authority (CIMA)

  1. Corporate vehicle permitted

Exempted Company

Segregated Portfolio Company

Unit Trust

Exempted Limited Partnership

  1. Share capital or equivalent

    • Minimum subscription

USD 100,000 by each investor

    • Minimum investors

None

  1. Directors / Partners / Trustees

    • Minimum number

2

    • Corporate Directors / Partners / Trustees allowed

Yes

    • Local Directors / Partners / Trustees required

No

  1. Fund functionaries required

    • Custodian

      • Custodian required

Yes

      • Local custodian required

No

      • Eligible custodian

A licensed bank or a trust company in Cayman or in any other jurisdiction.

    • Fund manager / Investment manager

      • Fund manager required

Yes

      • Local fund manager required

No

      • Fund manager requires to be licensed

Yes

      • Eligible fund manager

Must be a licensed fund manager in Cayman; or

A fund manager licensed in any other jurisdiction.

    • Fund administrator

      • Fund administrator required

Yes

      • Local fund administrator required

No

      • Eligible fund administrator

The fund administrator can be licensed as:

Full administrator having its principal office in Cayman; or

Restricted administrator having its registered office in Cayman and approved by CIMA; or

A fund manager registered in any other jurisdiction

    • External auditor

      • Local external auditor required

Yes

      • Eligible external auditor

Qualified auditor approved by the Authority (CIMA)

  1. Asset Requirements

 
    • Restriction on type of asset class invested

None

    • Asset diversification requirements

None

    • Limitation on size of the fund or total assets under management

Minimum aggregate equity interest of CI$80,000 (US$100,000) per investor

  1. Local physical office required

No

  1. Prospectus / Offering Memorandum required to be filed

No

  1. Eligible for listing

Yes

  1. License fees

    • License application fee

USD 4,268.29

    • Annual license fee

USD 4,268.29

  1. Estimated license processing duration

3 months

Ongoing Obligations

Requirements Description
Monthly obligations
Office Required
Quarterly obligations
None
Annual obligations

A Registered Fund must submit audited financial statements annually.

A custodian must be independent of the CIS Manager and must have a licence issued by the FSC.

Other obligations

The Fund must appoint an Operator who is charged with validating the Fund Annual Return (FAR), which is filed electronically together with the annual audited financial statements.

The Fund’s Operator will submit a completed form MF1 for a Registered Fund together with the following documents:

  • Certificate of Incorporation,
  • Fund Offering Memorandum,
  • Fund Administrators’ Consent letter,
  • Fund Auditors’ Consent Letter, and
  • Registration fee.
Tax Obligations and Other Exemptions
Requirements Description
Business Tax
0% of Net Profit
Withholding Tax
No withholding tax is payable on dividends and/or interest payable.
Value Added Tax (VAT)
VAT is not applicable to mutual funds in its entirety.
Stamp duty Act
None
Trades Tax Act
None
Immovable Property Transfer Restriction Act
None
Immigration Decree
None
Exchange Control Act
None
Foreign Earnings Act
None

Benefits of a Cayman Registered Fund:

  • Ease and speed of establishment
  • Flexible structuring of the entity
  • Favourable compliance restrictions
  • Friendly regulatory environment
  • No exchange controls restrictions
  • Cayman is on the OECD “White List” and has signed tax information exchange agreements (TIEA) with 19 countries