The Cayman Islands Government passed amendments to the Retail Mutual Funds (Japan) Regulations (2007 Revision) (the "Regulations") on 31 August 2012.

The Regulations were introduced in 2007 to provide for a regulated regime to enable licensed Cayman Islands domiciled funds to offer their securities to the public in Japan ("Retail Funds").

The aim of the changes to the Regulations is to address one or two practical issues and to ensure that they keep in step with changes to the regulatory regime in Japan.

The Regulations had previously provided that the Cayman Islands Monetary Authority ("CIMA") must give prior consent to any change to the directors of an investment adviser of a Retail Fund. Now the investment adviser simply has to obtain prior consent of the operator (eg the trustee of a unit trust) of each Retail Fund it manages and the relevant Retail Fund needs merely to give at least one month's notice to CIMA of the proposed change.

Restrictions on the investment activities of a Retail Fund have been amended and form the bulk of the changes to the Regulations. In particular, a restriction on the acquisition of a majority stake in one company by a Retail Fund which is managed by a single investment adviser will no longer apply if that company is itself an 'investment company'. Restrictions on acquiring an investment which is not listed on an exchange or not readily realisable will now also not apply if the method of valuation is clearly disclosed in the Retail Fund's prospectus.

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