There comes a time in a registered Cayman fund's life when
it needs to de-register from the Cayman Islands Monetary Authority
(CIMA). This could be early on, if the
fund launches but never carries on business, or much later on the
fund's winding up. It could also be anytime in between if the
fund is no longer carrying on business as a regulated mutual fund,
merges with another fund or transfers to another jurisdiction. A
fund can also choose to de-register if it no longer meets the
definition of a mutual fund, because it has become a single
investor fund or a closed—ended fund, or it has become an
exempted mutual fund, where the fund's shares are held by not
more than 15 investors, a majority of whom are capable of
appointing or removing the directors of the fund.
CIMA recently issued an updated and expanded rule and regulatory
procedure (Rule), setting out their
requirements for de-registering a regulated fund / master fund,
which vary depending on the reason for de-registration. Under the
new Rule, a fund must apply to de-register from CIMA on the earlier
of 21 days from the date the fund ceases to carry on business or
before 31 December of the year the fund ceases to carry on
business. Funds which have never carried on business, for example
because they did not raise as much funding as expected or needed to
be financially viable, must apply to de-register within 21 days of
the date of a resolution of the directors acknowledging those
In each case, there are various core requirements which apply
– the fund must be in good standing with CIMA having paid all
fees due and submitted all filings required, it must submit the
original licence or registration certificate issued by CIMA, pay a
fee (currently c.US$730) and submit a certified copy of a
resolution of the directors confirming the date the fund will cease
or has ceased to carry on business as a fund in or from the Cayman
Islands. Further documents are then required under the new Rule
depending on the reason for de-registering.
Unless a fund qualifies for an audit waiver, it also has to
provide audited accounts from the last financial year end. Before
CIMA issued its revised Rule, market practice was to apply for a
part-year audit waiver, however CIMA has indicated that it will
limit waivers after 1 October 2015 when the new Rule comes into
effect. Funds which apply to de-register before 1 October 2015 will
however still be able to ask for a part-year audit waiver under the
old procedure, if they also pay a waiver fee of c.US$610 to
So if you're a manager of a fund that's stopped business
but you haven't quite got round to de-registering it, and
you'd rather spend a few thousand dollars on something other
than a part-year audit, you may want to act quickly and apply to
de-register the fund before 1 October 2015.
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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