The Cayman Islands Monetary Authority ("CIMA") issued
a new Rule and Regulatory Procedure earlier this year relating to
the cancellation of licences and certificates of registration
issued to Cayman Islands regulated mutual funds.
This client advisory is intended to provide a reminder to Cayman
Islands regulated mutual funds that have ceased to carry on
business, or intend to cease to carry on business, and would like
to apply for an audit waiver from CIMA, to apply for deregistration
prior to 1 October 2015.
The Regulatory Procedure states that unless a regulated mutual
fund qualifies for an audit waiver, it must provide audited
accounts from the date of the last financial year end (for which
audited statements have been filed) either to the date of
commencement of winding up where third party liquidators have been
appointed or the date of the final distribution (if no third party
liquidators have been appointed) (referred to as the "stub
Under CIMA's Regulatory Policy on Exemption from Audit
Requirements for a Regulated Mutual Fund CIMA may, in its
discretion, decide to exempt a Cayman Islands regulated mutual fund
from audit in certain limited circumstances, including (i) where a
fund has not launched but does not wish to be deregistered; (ii)
where a fund has not launched and is being liquidated or wound up;
or (iii) where a fund has launched but has been unsuccessful in
raising the appropriate seed capital for sustainability.
While it has been CIMA's practice before the issuance of
this new Regulatory Procedure to generally grant an audit waiver to
mutual funds in respect of the stub period where a regulated mutual
fund had been active but wished to surrender its mutual fund
licence or certificate of registration prior to the end of its
current financial period, CIMA's practice, with effect from 1
October 2015, will be to require mutual funds to carry out an audit
for any stub period.
How Does this Affect You?
If you are an operator of a Cayman Islands regulated mutual fund
that has ceased to carry on business or intends to cease to carry
on business and do not wish to carry out an audit for any stub
period, please contact your usual Walkers contact as soon as
possible to advise you on how the fund should make its CIMA
deregistration application and application for an audit waiver
before 1 October 2015.
Investment funds with high net worth individuals as investors will need to have a client agreement with their high net worth investors.
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