If you've decided that a section 4(3) Cayman fund is the
best structure for your fund (
see our earlier blog for an Introduction to Cayman Fund
Products), you'll need to register it with the Cayman
Islands Monetary Authority (CIMA) before
you launch. The process is well established and fairly
straightforward, involving your Cayman lawyers filing the following
with CIMA via their online registration system.
This is the main document which sets out details of the interests
in the fund that are being offered to investors, also referred to
as the private placement memorandum or offering memorandum. Under
the Mutual Funds Law this document must describe the equity
interests (shares, partnership interests or trust units, depending
on type of fund vehicle you're using) in the fund in all
material respects. It must also contain such other information as
is necessary to enable a prospective investor to make an informed
decision whether to buy interests in the fund.
Although not required by law, CIMA will expect the offering
document to include details of the fund's investment objectives
and strategies and any restrictions, subscription and redemption
policy and procedures, names and biographical details of the
directors, net asset valuation policy calculation, risk factors,
details of the investment manager and all main service providers
including their fees, conflicts of interest, a statement confirming
the fund's regulation under section 4(3), anti-money laundering
procedures and dividend / distribution policy. Remember that for a
4(3) fund the minimum initial investment level is US$100,000 for
each investor, or the equivalent in another currency, or the equity
interests must be listed on a stock exchange recognised by
Registration form MF1
This is a standard CIMA form which requires summary details of the
fund, its equity interests, investment policy, directors and
service providers. A certified copy of the fund's certificate
of incorporation / registration with the Cayman Registrar of
Companies and a CIMA Connect affidavit signed by a director of the
fund authorising the fund's Cayman lawyers to file the
registration documents must also be included with the form.
The registration fee payable to CIMA to register a section 4(3)
fund is currently US$4, 268, plus a fee of US$365 for filing the
Auditor's consent letter
The fund's auditor will be familiar with the form of this
letter, which confirms that they accept their appointment as
auditors of the fund, they will comply with the Mutual Funds Law
obligations for auditors, the date of the financial statements of
the fund and the accounting principles adopted. The auditor must be
on a list of approved local auditors published by CIMA, which
includes the Cayman branches of the international accountancy
firms, as well as various Cayman auditors.
Administrator's consent letter
This letter includes a summary of the services the administrator
will provide to the fund and confirms that the administrator
accepts their appointment as administrator of the fund and that
they will maintain records for the fund in compliance with the
anti-money laundering laws and regulations of the Cayman Islands or
of another approved jurisdiction (so called Schedule 3
jurisdictions, please contact us for the current list of
jurisdictions). The fund's administrator will also be familiar
with the form of this letter.
A section 4(3) fund established as a company will also need to
make sure that its directors are registered or licensed with CIMA
under the Directors Registration and Licensing Law
(DRLL). Non-compliance with this law is a
criminal offence for the director and CIMA will not register a fund
whose directors are not appropriately registered or licensed with
earlier blog goes into more detail about registration under the
Once the fund has filed its documents with CIMA, CIMA estimates
that approval can be expected to come through within one week,
although in practice it can take 4-6 weeks.
There are slightly different registration requirements for
registering master funds with CIMA, involving filing a Form MF4
setting out certain prescribed details, the master fund's
offering document (if it has one) and a copy of the master
fund's certificate of incorporation / registration, and paying
the registration fee of US$3,048 plus a fee of US$365 for filing
the Form MF4.
Between the Cayman funds lawyers here at Harneys we've many
years' experience (more like decades...) of registering section
4(3) funds, so just let us know if you'd like any more
information on what's involved or any other advice on your
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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On the 9 September 2016 the MFSA issued feedback to its consultation of the 1 April 2016 in relation to intra-group loans.
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