The Policy applies to investment funds which are regulated by
CIMA as an administered fund, a licensed fund or a fund registered
under section 4(3) of the Mutual Funds Law (Revised) which is the
most common type of Cayman Islands investment fund registered with
CIMA. Under the Mutual Funds Law, those funds must have their
financial accounts audited annually and file them with CIMA within
six months of the financial year end, or such extended period as
CIMA may allow, and CIMA may also exempt regulated funds from the
obligation to file audited accounts in certain
In what circumstances may an exemption be granted?
Under the Policy CIMA will consider granting an audit exemption
under the following new circumstances:
When a fund is being voluntarily liquidated and a third party
liquidator has been appointed under terms that require a review of
the period since the last financial year end for which an audit has
When all investors in a fund have agreed to forego the audit
for not more than six months of a financial year and no more than
ten investors existed at any time during the part period
When a fund is transferring to another jurisdiction within six
months of its last financial year end, for which an audit has been
filed. For consistency, this links with the updated regulatory
policy on deregistration of regulated funds issued by CIMA in
When a fund is dissolving by way of merger within six months of
its financial year end, for which an audit has been filed. Again,
this also links with CIMA's updated regulatory policy on
de-registration which was issued in 2015
CIMA may also grant an exemption from the audit requirement in
other exceptional circumstances in its absolute discretion, on
submission of such information as CIMA may request.
The Policy confirms that funds can continue to apply for audit
When a fund has not launched but does not wish to be
de-registered from CIMA
When a fund has not launched and is being liquidated or wishes
to be de-registered from CIMA
When a fund has launched but has been unsuccessful in raising
sufficient capital for sustainability
When a fund is unable to obtain audited financial accounts due
to events such as bankruptcy proceedings, legal or regulatory
When a fund has been placed in compulsory liquidation and CIMA
is satisfied with the appointment of the liquidator and scope of
the liquidator's review
The requirements for applying for an exemption in some of these
existing circumstances have been amended and clarified.
Any exemption application is considered by CIMA on a
case-by-case basis and on payment by the fund of a fee of US$610,
with the Policy setting out the documentation required in different
The Policy confirms that CIMA will consider extending a
fund's first audit period for a maximum of 18 months from the
date of registration, and introduces the option of applying for an
extension for a fund's last audit period for a maximum of 18
months from the date of the last financial year for which an audit
has been filed.
The Policy provides a welcome expansion of the circumstances
when a fund can apply for an exemption from the annual audit
requirement, as well as much needed clarity, demonstrating
CIMA's continued responsiveness to feedback from the funds
industry in its policy making.
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Investment funds with high net worth individuals as investors will need to have a client agreement with their high net worth investors.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).