Early action to reduce costs and minimise 2017 fees
If you are considering winding up a Cayman Islands
regulated mutual fund (a "Fund"), it would be prudent to
start the process now with a view to completing it by year-end and
minimising and/or precluding 2017 annual fees. Delays in commencing
the deregistration and winding up process may ultimately hinder the
Fund from maximising cost savings in relation to regulatory and
service provider fees.
Prior to 1 October 2015, where an application for deregistration
of a Fund was made to the Cayman Islands Monetary Authority
("CIMA") before the end of the Fund's financial year,
CIMA routinely waived the requirement for audited accounts to be
filed for the partial year of operation (known as the "stub
However, since 1 October 2015, it is no longer possible to
receive an audit waiver for the stub audit period. Further, there
are very limited circumstances when CIMA will exercise its
discretion to exempt a Fund from submitting audited financials. The
strict application of the requirement to file a stub audit with
CIMA means that, in addition to filing the core deregistration
requirements and supporting affidavit before 31 December, the Fund
must file the stub audit with the accompanying Fund Annual Return
("FAR") Form and pay to CIMA the FAR filing fee on or
before 31 December in order to complete the deregistration
application. In this regard, it is imperative that the Fund engages
with its auditors to address the stub audit preparations and timing
to complete such filings with CIMA in conjunction with the
A Fund wishing to cancel its licence or certificate of
registration with CIMA must also be in good standing with CIMA on
the date of the cancellation of the licence or certificate of
registration. Good standing requires that a Fund must have paid all
prescribed fees, submitted all required audited financial
statements and that there be no outstanding queries or regulatory
filings with CIMA, including, with regard to a company, that the
Fund directors are current with their registration filings under
the Director Registration Licensing Law, 2014.
Once CIMA has confirmed that deregistration of the Fund is
complete, the Fund can begin the administrative wind down process
of the Fund vehicle which can take many weeks to complete. The Fund
should also ensure that relevant contracts are terminated with
service providers to minimise Fund expenses. If all necessary
documents relating to the wind down of the Fund vehicle are not
filed before the end of January, following the relevant calendar
year end, the Fund will be liable for full annual Government fees.
The Fund may also continue to incur fees related to director
services and registration, registered office services and other
service providers of the Fund. For the upcoming calendar year end,
it would be prudent to commence the winding up process by
mid-December at the latest in order to ensure that there is
sufficient time to conduct the wind down and dissolution
Accordingly, while a decision to cease and wind down a Fund is a
significant assessment, it is important once such a determination
has occurred, that sufficient time is allocated by the Fund to
allow for the finalisation and filing by the auditors of the
audited financials and FAR Form, in addition to all of the usual
deregistration requirements, so that the deregistration can be
completed with adequate time to close the Fund vehicle and to
minimise and/or preclude annual fees for the following year.
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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