Further to our e-news of 18 February 2020, all private funds that carry on business in or from the Cayman Islands will be required to register with the Cayman Islands Monetary Authority (“CIMA”).
What is a Private Fund?
Private fund is a company, unit trust or partnership whose principal business is the offering and issuance of its investment interests, the purpose or effect of which is the pooling of investor funds with the aim of spreading investment risks and enabling investors to receive profits or gains from such entity’s acquisition, holding, management or disposal of investments, where:
a) the holders of investment interests do not have day-to-day control over the acquisition, holding, management or disposal of the investments; and
b) the investments are managed as a whole,
c) by or on behalf of the operator of the private fund,
d) directly or indirectly,
e) for reward based on the assets, profits or gains of the company, unit trust or partnership.
It does not include:
a) a person licensed under the Banks and Trust Companies Law (2020 Revision) or the Insurance Law 2010;
b) a person registered under the Building Societies Law (2020 Revision) or the Friendly Societies Law (1998 Revision); or
c) any non-fund arrangements.
Registration Deadline
Private funds must be registered by 7 August 2020 which applies both to private funds which were carrying on business on the date of the commencement of the Private Funds Law (being 7 February 2020) and private funds which commence business within the six month transitional period from 7 February 2020 to 7 August 2020.
The Private Funds Law permits a private fund to enter into agreements with investors and accept capital commitments from investors for the purpose of making investments before submitting its registration application to CIMA.
Subject to the transitional period referred to above, a private fund must submit its application for registration to CIMA within 21 days of its acceptance of capital commitments. A private fund must register with CIMA before accepting capital contributions from investors in respect of investments.
What are the requirements for registration as a Private Fund under the Private Funds Law?
CIMA requires the following:
- REEFS Application Form (APP-101-77);
- Application Fee;
- Certificate of Incorporation/Registration (as applicable);
- Constitutive Documents (Memorandum & Articles of Association/Trust Deed/Declaration of Partnership, as applicable);
- Offering Memorandum/Summary of Terms/Marketing Material (as applicable);
- Auditor’s letter of consent (if appointed);
- Administrator’s letter of consent (if applicable); and
- Structure Chart.
Applications are submitted electronically though CIMA’s secure Regulatory Enhanced Electronic Forms Submission (REEFS) web portal.
Concessions to Existing Private Funds (i.e. those funds that were incorporated/ registered prior to 7 February 2020)
In order to expedite the filing of private fund registration applications by the deadline of 7 August 2020, certain changes to the registration form and filing process have been made. Among other things, CIMA may grant the fund registration in the absence of the above items 3 to 8, subject to the receipt of the signed Undertaking to provide the outstanding documents to CIMA by 31 October 2020. The Undertaking is required from each service provider that will be submitting private fund registration applications and must be provided to CIMA no later than close of business on Friday, 17 July 2020.
The concessions are applicable only to existing private funds. All private funds that were registered/incorporated after 7 February 2020 are expected to include all the necessary documents and information with their registration application.
What Should You Do Now?
For existing private funds, please contact your Sertus Client Services Representative to obtain the Undertaking template by close of business on Thursday, 16 July 2020.
For new private funds, please provide us with the required documents and information (items 2 – 8 above) for our further assistance.
If you have any questions regarding the above, please feel free to contact your Sertus Client Services Representative or contact us at info@sertus-inc.com.