Any operator1 or liquidator of a regulated mutual
fund placed in Licence Under Liquidation ("LUL") or
Licence Under Termination ("LUT") will need to be mindful
of the Fund's continuing notification and filing obligations to
the Cayman Islands Monetary Authority ("CIMA").
In a notice published on 29 September 2016 (the
"Notice"2), CIMA set out the duties of
operators and liquidators of funds in LUL or LUT, and outlined
certain of CIMA's powers under the Mutual Funds Law (as
Obligations for operators and liquidators
During the six months following a fund being placed into LUL or
LUT, the operator or liquidator will need to provide CIMA
comprehensive and ongoing updates on the status and progress of the
winding down/liquidation of the fund. Failure to do so will result
in CIMA cancelling the Certificate of Registration or Mutual Fund
Licence under Section 30(16) of the MFL (a "Section 30(16)
After this initial six month period, CIMA will contact funds
which remain in LUL or LUT through their Registered or Principal
Office to request outstanding documents and/or fees. Extensions can
be granted by CIMA where warranted. Where such documents and/or
fees are not provided to CIMA within the time stipulated in its
request, CIMA will effect a Section 30(16) Cancellation.
Implications for funds, operators and liquidators
It is expected that CIMA will give adequate notice of a Section
30(16) Cancellation. However, if the fund does not comply with the
obligations outlined above, CIMA may not confirm when Section
30(16) Cancellation has taken place and a fund will not
subsequently be able to obtain a regular de-registration or
cancellation letter from CIMA.
CIMA may take action under any relevant regulatory law where it
determines the fund in LUL or LUT is the subject of wrongdoing or
where there are questions about the fitness and propriety of a
service provide or operator3. In addition, where a
Mutual Fund Licence or Certificate of Registration was subject to a
Section 30(16) Cancellation, CIMA may take this into account when
assessing the fitness and propriety of the fund's
1 An operator in respect of a mutual fund,
(a) where the mutual fund is a unit trust, a trustee of
(b) where the mutual fund is a partnership, a general
partner in that partnership;
(c) where the mutual fund is a company, a director of
that company; or
(d) where the mutual fund is a limited liability company,
a manager of that company.
3 Please note that amendments to the Monetary Authority
Law have been proposed which would give CIMA new powers to impose
fines on individuals and entities for breaches of prescribed
provisions of regulatory laws. A Client Advisory with further
information on the proposed changes will be published
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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