Significant changes introduced for Cayman funds

The Private Funds Law, 2020 and the Mutual Funds (Amendment) Law, 2020 came into force in the Cayman Islands on 7 February 2020. These laws introduce new regulation for Cayman Islands private funds and previously unregulated mutual funds respectively.

What are the changes for private funds?

The Private Funds Law, 2020 requires closed-ended Cayman fund vehicles to apply for registration with the Cayman Islands Monetary Authority (CIMA) within 21 days of accepting capital commitments from investors. Such fund vehicles must be registered prior to accepting capital contributions from investors for the purposes of investments.

What are the changes for mutual funds?

The Mutual Funds (Amendment) Law, 2020 removes the exemption from regulation for investment funds where the equity interests in the fund are held by 15 or fewer investors and a majority of those investors have the power to appoint or remove the fund's operator (section 4(4) funds). Section 4(4) funds will now be required to register with CIMA.

What is the timing for the changes?

All new and existing private funds will need to comply with the Private Funds Law, 2020 by 7 August 2020, or such further period as may be specified by CIMA.

Existing section 4(4) funds will need to comply with the Mutual Funds (Amendment) Law, 2020 by 7 August 2020, or such further period as may be specified by CIMA. All new section 4(4) funds will need to comply immediately.