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Mutual funds registered with the Cayman Islands Monetary Authority (CIMA) are required to file audited accounts on an annual basis. A fund may, in certain circumstances, apply for its registration with CIMA to be terminated. Where an application for deregistrations financial year, it has been s policy to waive the requirement for audited accounts to be filed for the partial year of operation, although CIMA has always been entitled to exercise discretion in this regard.
In March 2015 CIMA issued an updated Regulatory Procedure on the cancellation of mutual fund licenses and registration. At the same time, CIMA announced that, with immediate effect, it would no longer be granting waivers in respect of the requirement to file audited accounts for the stub period prior to the application for deregistrations operations through to its deregistration.
Strict application of the requirement for a stub audit has created difficulties for some funds. Funds that have previously paid out investors but have not completed their deregistration may not have provided for the resulting audit costs. Other issues have arisen as a result of the lag between the end of a given period and the time it takes to produce audited financial statements for that period.
In response to industry feedback, CIMA has therefore confirmed to Cayman Finance that it will delay the implementation of its new approach until 1 October 2015.
Funds considering deregistration with CIMA should have this date in mind when determining when to initiate the deregistration process. As things stand, in order to be eligible to apply for a waiver of the requirement to file audited accounts for the 2015 stub period, a deregistration application must be submitted prior to 1 October 2015.
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