On 15 February, the Cayman Islands Government issued a Financial Services Industry Advisory regarding Cayman Islands 'master funds' which had only one regulated feeder fund. For the full text of the advisory click here.

The Advisory stated that the Government and the Cayman Islands Monetary Authority (CIMA) both disagree with an interpretation held by some practitioners that a 'master fund' with only one regulated feeder fund is not required to be registered with CIMA and that they will issue amending legislation shortly for consultation.

Subject to a review of the amending legislation, a consequence of such a change is likely to be that pooling of funds by more than one investor in a master fund will no longer be a prerequisite to registration, which will mean that a master fund whose only investor is a regulated feeder fund will need to be registered.

The Government expects that this further amendment will be passed before the current 21 March 2012 deadline by which master funds that were in existence prior to 22 December 2012 are currently required to register with CIMA (master funds that were created after 22 December 2012 should have already been registered).

We intend to issue a further e-Alert as soon as we receive the text of the amending bill.

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