On 7 February 2020, the Cayman Islands Government published the Private Funds Law, 2020 and the Private Funds (Savings and Transitional Provisions) Regulations 2020 (together, the "Law").
The Law provides for the registration of certain closed-ended funds (termed "private funds") with the Cayman Islands Monetary Authority ("CIMA"). The main provisions of the Law, including what constitutes a private fund, are summarised in the update1 we published when the Law was in draft bill form.
The Law will commence on 7 February 2020 (the "Commencement Date").
When will private funds need to register?
The regulations provide certain transitional provisions for private funds that have commenced carrying on business at any time prior to the date which is six months after the Commencement Date (each a "transitional private fund").
For these purposes, a private fund will be carrying on business if it has received capital contributions from investors for the purpose of investment.
A transitional private fund will have six months from the Commencement Date to register with CIMA and comply with the Law.
No registration fee will be payable upon the initial registration of a transitional private fund but an annual fee will be payable in January of each following year.
Any private fund which commences carrying on business after this six month transitional period will need to register with CIMA in accordance with the timing requirements set out in the Law.
When will transitional private funds be required to file audited accounts?
A transitional private fund will be required to file audited accounts with CIMA with respect to its first full financial year following registration and for each financial year thereafter.
For example, if a transitional private fund has a 31 December year end and registers with CIMA in June 2020, it would first be required to file audited accounts with CIMA in respect of its financial year ending 31 December 2021.
Audited accounts that are filed with CIMA must be audited by an approved Cayman Islands-based auditor.
Lawyers from the Maples Group will be reaching out to clients in due course to discuss how the Law may affect them and the process required to register their private funds.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.