Cayman Islands Monetary Authority Releases New Procedures for Deregistration of Cayman Mutual Funds and Private Funds

The Cayman Islands Monetary Authority (“CIMA”) issued an updated rule and regulatory procedure on August 17, 2022 regarding the cancellation of certificates of registration (“Unsubscribe”) of the two mutual funds regulated under the Mutual Funds Act (2021 Revision) (“MFA”) and private funds governed by the Private Funds Act (2021 Revision) (“APF”).

A mutual fund or a private fund (“Fund”) is required to notify CIMA when it intends to cease or has ceased to carry out its activities as an investment fund under the AMF or IFP (as the case may be) within 21 days of the date on which it ceases to carry on business. to do business (“Notification deadline”). However, after the initial notification, a Fund may only submit a delisting request to CIMA in accordance with the conditions set out in the updated regulated procedure, as indicated below.

What changed?

The updated regulatory procedure for mutual funds and private funds has removed the concept of “licensed in liquidation” (“LUL”) and “License terminating” (“LUTs”).

Previously, a Fund could (i) provide liquidation as a reason for delisting and be granted LUL status pending the closing of the Fund’s liquidation, or (ii) apply to CIMA for delisting by paying the required redemption fee of $731.71. , returning the original of the registration certificate (if issued instead of an electronic certificate) and a certified copy of the resolution of the operators and be placed in LUT, pending receipt of all required documents by CIMA to confirm the write-off (for example, submission of audited accounts or confirmation of an audit waiver by CIMA).

Instead, a Fund can now only request delisting if it is in good standing (i.e. all fees have been paid, audited financial statements have been submitted, or an audit waiver has been granted). been obtained and there are no outstanding questions from the CIMA). In addition, the Fund must respect the notification period in order to avoid incurring administrative fines.

This change also impacts regulated UCITS which operate as master funds (“Master Funds”), because a master fund cannot complete its de-registration until its regulated feeder fund has been completely terminated by CIMA (i.e. until the regulated feeder fund is also in good standing with the CIMA).

The updated Regulatory Procedures further provide details on a “non-fund disposition” ground for delisting, where a fund does not meet the definition of a “mutual fund” under the AMF or a “private fund” under the PFA.

What is the implication for Cayman-domiciled funds?

Previously, a Fund could submit a delisting request before December 31, be placed in LUL or LUT status and benefit from either a reduction or an exemption from the annual CIMA fees due on January 15 of the following year, provided that the Fund performed all actions necessary to complete the deregistration within a prescribed period set by CIMA.

The revised two-step notification and delisting request process means that, in order to avoid incurring a CIMA renewal fee for the following financial year, a Fund will need to schedule the completion of all Fund liquidation actions (c i.e. the final distributions, the establishment of the final accounts or the request and obtaining of an audit exemption from CIMA) in good time before December 31 of the year concerned.

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