Cayman Regulatory Update – The Mutual Funds (Amendment) Law, 2020 and Section 4(4) Investment Funds

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The Mutual Funds (Amendment) Law, 2020 of the Cayman Islands (the “MF Amendment Law”) was brought into law on 7 February 2020. The MF Amendment Law provides that Section 4(4) Investment Funds which have its equity interests held by fifteen (15) or fewer investors, a majority of which have the ability to appoint or remove the fund’s operator* will no longer be exempt from registration and regulation by the Cayman Islands Monetary Authority (“CIMA”).

What are the New Requirements for Section 4(4) Investment Funds

Following the passing of the Amendment Law, Section 4(4) Investment Funds will be required to:

(i) register with CIMA and be subject to regulation;

(ii) pay an annual registration fee;

(iii) file copies of the fund’s constitutional documents with CIMA which show that a majority of the holders of equity interests have the ability to appoint or remove the fund’s operator. There is still no requirement to file an Offering Document with CIMA or to have any specified minimum initial investment;

(iv) have a minimum of two (2) individual directors so as to comply with CIMA’s “four eyes policy”;

(v) have each of its directors register with CIMA under the Directors Registration and Licensing Law, 2014 of the Cayman Islands. This registration is an online filing process which is done on the director portal of CIMA’s website;

(vi) have the fund’s accounts audited annually by a CIMA approved auditor and file audited financial statements with CIMA within six (6) months of the fund’s financial year end. The MF Amendment Law provides that accounts should be prepared in accordance with International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP) of US, Japanese, Swiss or any other non-high risk jurisdiction;

(vii) file a fund annual return with CIMA; and

(viii) inform CIMA of any material changes to the information submitted in the registration application within twenty-one (21) days of making any such change.

Registration Deadline

1. Existing Section 4(4) Investment Funds:

– Comply with the MF Amendment Law by 7 August 2020.

2. Section 4(4) Investment Funds which commence carrying on business after 7 February 2020:

– comply with the new requirements immediately.


* “operator” mean its director, general partner or trustee as the case may be.

What Should You Do Now

Section 4(4) Investment Funds which were in existence prior to the commencement of the MF Amendment Law should prepare for registration by reviewing their fund governance structure, director registration status and constitutional documents.

If you have any questions regarding the above, please feel free to contact your Sertus Client Services Representative or contact us at

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