As the result of a recent amendment to the Cayman Islands Mutual
Funds Law, master funds formed in the Cayman Islands may be
required to register with the Cayman Islands Monetary Authority
(CIMA). Prior to the passage of the Mutual Funds (Amendment) Bill
2011 (the "Amendment") in December 2011, many master
funds were exempt from registration with CIMA in reliance on an
exception for funds with "not more than 15 investors".
With the passage of the Amendment, master funds will no longer be
able to rely on this exception and clients now need to determine
whether any Cayman Islands master funds in their master-feeder fund
structures will be required to comply with the new registration and
The new requirements apply to master funds that (i) hold
investments and conduct trading activities; (ii) issue equity
interests that are redeemable at the option of the investors (for
this purpose, a feeder fund would constitute an investor); and
(iii) have CIMA-registered feeder funds within their structure.
Accordingly, closed-end master funds whose interests are not
redeemable at the investors' option are not subject to the
Amendment. In addition, master funds that have only non-CIMA
regulated feeder funds are excluded from the Amendment's
Master funds subject to the Amendment must file a Form MF4 with
CIMA and pay an annual registration fee of CI $2,500 (approximately
USD $3,048). Such master funds must also file an annual audited
financial statement signed by a CIMA-approved auditor and submit a
Fund Annual Return ("FAR") Form within six months of the
fund's fiscal year end. Any master fund in existence as of
December 22, 2011 which is subject to the new legislation must
register and be in compliance with the new requirements by March
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.
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