Cayman Imposes New Registration Requirements for Private Equity, Other Closed-Ended Fund Structures

Cayman Imposes New Registration Requirements for Private Equity, Other Closed-Ended Fund Structures

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Greyline Partners has entered into an exclusive relationship with a Cayman onshore provider to assist with the fund registration process. Please contact us immediately if you sponsor and/or manage private funds (or plan to do so) that fall within scope and will need to register by this summer.

Background: On Feb. 7, 2020, the Cayman Islands Government enacted the Private Funds Law, 2020 and an amendment to the Mutual Funds Law. The legislation is a result of certain European Union and other international recommendations and has been developed to align the Cayman Islands’ regulatory structure with other jurisdictions.

The Private Funds Law applies to any Cayman Islands closed-ended fund. If such a fund falls within the definition of a “private fund,” it will need to register with, and be regulated by, the Cayman Islands Monetary Authority (CIMA). Open-ended hedge funds and similarly structured pooled investment vehicles are not caught by this new law and will continue to be regulated by the Mutual Funds Law.

Private funds are companies, unit trusts or partnerships:

  • (i) that are in the principal business of offering and issuing their interests for the purpose or effect of pooling investor funds to share investment risk and enable investors to participate in profits and gains from acquiring, holding, managing, or disposing of investments,
  • (ii) where the investors do not control the day-to-day operation of the private fund (directly or indirectly), and
  • (iii) where the investments of the private fund are managed as a whole by the operator of the private fund for compensation based on the assets, profits, or gains of the entity constituting the private fund.

Relevant Deadlines

  • Existing Cayman Funds: Aug. 7, 2020
  • New Cayman Funds: Within 21 days of accepting capital commitments
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