On 8th January 2020, the Cayman Islands Government introduced a draft Mutual Funds (Amendment) Bill, 2020, and a draft Private Fund Bill, 2020, which seeks to adopt sensible and commercially responsible regulation that has been the mainstay of the Cayman Islands funds regime. The legislation changes intend to modernize current regulations and provide additional surety and transparency for investors and managers of Cayman-based funds.
Do note that as both the Mutual Funds (Amendment) Bill 2020 and Private Funds Bill 2020 will only be considered by the Cayman Islands Legislative Assembly on 30 January 2020, changes to the details of the Bills could be subject to change.
WHAT DOES THIS MEAN FOR MUTUAL FUNDS AND PRIVATE FUNDS?
Mutual Funds that were previously exempted from registration under Section 4(4) of the Mutual Funds Law (“MFL”), specifically funds having 15 or fewer investors capable of appointing or removing operators of the fund, as well as Close-ended funds (“Private Funds”) will now have to comply with the law and registered with Cayman Islands Monetary Authority (“CIMA”) and be subjected to regulations.
KEY TAKEAWAYS FROM THE LEGISLATIVE CHANGES
Mutual Funds (Amendment) Bill, 2020:
- Mutual Funds exempted from registration under Section 4(4) of the MFL based on having 15 or fever investors capable of appointing or removing operators of the funds will now be required to be registered with CIMA.
- Also, Mutual Funds under Section 4(4) will be required to pay an annual fee to CIMA and file an extract of its constitutional documents with CIMA proving that a majority of its investors are capable of appointing or removing operators of the fund.
- Annual audit and annual return filing requirements applying to regulated mutual funds under the MFL will now apply for Mutual funds under Section 4(4) of the MFL – they will now need it’s accounts to be audited annually by Cayman Islands based auditors and file the audit accounts and annual return with CIMA within six months from the end of each financial year.
Private Funds Bill, 2020:
- Private Funds will be required to register with CIMA under the prescribed details in the Private Funds Bill 2020.
- Private Funds will be subject to the payment of an annual fee.
- The Private Funds Bill 2020 also includes provisions for private funds relating to the following items:
- Valuation of assets
- Safekeeping of fund assets
- Cash monitoring
- Identification of Securities
- Annual audit of accounts by Cayman Islands based auditors
REGISTRATION TIMELINE
Under the Mutual Funds (Amendment) Bill 2020, existing mutual funds falling under Section 4(4) of the MFL have to registered with CIMA and comply with the new requirements within 6 months from the date on which the Mutual Funds (Amendment) Bill 2020 is passed into law.
Under the Private Funds Bill 2020, any new private funds has to comply with the law submit its registration application to CIMA within 21 days after acceptance of capital commitments from investors and be registered by CIMA prior to accepting any capital contributions, both in respect for purposes of investments.
For existing private funds, the Private Fund Bill does not contain provisions for such registrations, and it is expected that reasonable timeline for the registration process will be provided to ensure the adoption of the new registration framework be as smooth as possible.
You may obtain the Mutual Funds (Amendment) Bill 2020 and Private Funds Bill by clicking on the links below.
MUTUAL FUNDS (AMENDMENT) BILL, 2020
ABOUT KRYPTON FUND SERVICES
Krypton is an independent administrator with a premium service-based model. We deliver on our obligation to serve our clients and their investors with first-rate market service. Providing this market-leading service by utilizing a unique blend of strategic servicing and market-leading technology. We are committed to the highest standards of service as a strategic business partner; we pledge these same standards for our clients and their investors.
Krypton has offices in Bermuda, Mauritius and Singapore, with strategic plans to expand its offices worldwide to provide a global service solution to its clients.
Krypton Fund Services (Bermuda) Ltd. is licensed by the Bermuda Monetary Authority under the Investment Funds Act 2006. KFS (Mauritius) Ltd. is in the process of being licensed by the Mauritius Financial Services Commission. Krypton offers customized administration services by combining an innovative global service model with expert staff and robust technology. Krypton’s global service model provides a flexible delivery solution enabling Krypton to meet the specialized needs and local responsiveness required by its clients.
For more information, please contact us at the via the contacts below, or visit our website at www.kryptonfs.com
GLOBAL
Roderick White, CEO
Phone: +441.338.5285
Email: [email protected]
MAURITIUS
Irfaan Hossany
Phone: +230.5722 .4786
Email: [email protected]
SINGAPORE
Allen Wu
Phone: +65.9889.8227
Email: [email protected]