Cayman Islands: Alternative Investment Funds Guide 2018

1. REGULATORY FRAMEWORK

1.1 What legislation governs the establishment and operation of Alternative Investment Funds?

The Mutual Funds Law (2015 Revision) (the "MF Law") provides for the regulation of open-ended investment funds and mutual fund administrators. Responsibility for regulation under the MF Law rests with the Cayman Islands Monetary Authority ("CIMA").

In addition, the Retail Mutual Funds (Japan) Regulations (2018 Revision) (the "Japan Regulations") provide a regulatory regime for retail mutual funds that are marketed to the public in Japan.

Although not Cayman Islands law, the broad scope and extra-territorial effect of the EU Directive on Alternative Investment Fund Managers ("AIFMD") will capture most types of Cayman Alternative Investment Funds, regardless of whether they are open-ended or closed-ended and regardless of their legal structure and investment strategy, with very few exceptions, to the extent that they are being marketed or managed in Europe (as such terms are defined for the purposes of the AIFMD). The Cayman Islands has published regulations creating two new AIFMD-consistent regulatory regimes, which will enable Cayman Islands AIFs and AIFMs to take full advantage of the AIFMD if and when the AIFMD passport is extended to the Cayman Islands. The new AIFMD regulations can be brought into force by way of a separate commencement order at the appropriate time.

1.2 Are managers or advisers to Alternative Investment Funds required to be licensed, authorised or regulated by a regulatory body?

A manager or adviser which is established in or, in the case of a foreign company, registered in the Cayman Islands and which conducts "securities investment business", whether or not that securities investment business is carried on in the Cayman Islands, will fall within the scope of the Securities Investment Business Law (2015 Revision) ("SIBL").

"Securities investment business" is defined as being engaged in the course of business in any one or more of the activities set out in Schedule 2 to SIBL. Those activities include managing securities belonging to another person on a discretionary basis and advising in relation to securities, but only if the advice is given to someone in their capacity as investor or potential investor or in their capacity as agent for an investor or a potential investor and the advice is on the merits of that person (whether acting as principal or agent) buying, selling, subscribing for or underwriting a particular security or exercising any right conferred by a security to buy, sell, subscribe for or underwrite a security. "Securities" are defined to include most forms of shares and stock, debt instruments, options, futures, contracts for differences, and derivatives.

Schedule 3 to SIBL specifically excludes certain activities from the definition of securities investment business, although those exclusions are unlikely to apply to a person conducting discretionary investment management or investment advisory activities.

Any person within the scope of SIBL conducting securities investment business must be licensed by CIMA, unless that person is exempt from holding a licence. A licence may be restricted (meaning that securities investment business may only be transacted with particular clients) or unrestricted. A licence may also be issued subject to conditions or may be unconditional.

A person carrying on securities investment business may be exempt from the requirement to obtain a licence but will still be subject to certain provisions of SIBL. In the case of the exemptions referred to below, which are the exemptions likely to apply to fund managers or advisers, an "Excluded Person" is required to register with CIMA by filing a declaration and paying a fee of CI$5,000 (approximately US$6,097.56), prior to carrying on securities investment business and annually thereafter, confirming that they are entitled to rely on the relevant exemption.

An "Excluded Person" includes:

  1. a company carrying on securities investment business exclusively for one or more companies within the same group;
  2. a person, whose registered office in the Cayman Islands is provided by a licensee under the law, carrying on securities investment business exclusively for one or more of the following classes of person:

    1. a sophisticated person (a person regulated by CIMA or a recognised overseas regulatory authority or whose securities are listed on a recognised securities exchange or who by virtue of knowledge and experience in financial and business matters is reasonably to be regarded as capable of evaluating the merits of a proposed transaction and participates in a transaction with a value or in amounts of at least US$100,000 in each single transaction); or
    2. a high-net-worth person (an individual whose net worth is at least US$1,000,000 or any person that has any assets of not less than US$5,000,000); or
    3. a company, partnership or trust of which the shareholders, limited partners or unitholders are all sophisticated persons or high-net-worth persons; or
  3. a person who is regulated by a recognised overseas regulatory authority in the country or territory (other than the Cayman Islands) in which the securities investment business is being conducted.

1.3 Are Alternative Investment Funds themselves required to be licensed, authorised or regulated by a regulatory body?

Subject to the section 4(4) fund exception described below, an investment fund qualifies as a "mutual fund" and is required to be regulated under the MF Law if:

  1. it is a company, partnership or unit trust carrying on business in or from the Cayman Islands;
  2. it issues "equity interests" to investors (i.e. shares, partnership interests or trust units that carry an entitlement to participate in profits or gains and which may be redeemed or repurchased at the option of those investors prior to winding up); and
  3. its purpose or effect is the pooling of investor funds with the aim of spreading investment risks and enabling investors to receive profits or gains from investments.

There are three categories of mutual funds:

  1. a licensed fund under section 4(1)(a) of the MF Law;
  2. an administered fund under section 4(1)(b) of the MF Law; and
  3. a registered fund under section 4(3) of the MF Law.

    1. A mutual fund licence will be granted if CIMA considers that the promoter is of sound reputation, there exist persons of sufficient expertise to administer the fund, who are of sound reputation, and that the business of the fund and any offer of equity interests will be carried out in a proper way. Detailed information is required concerning the directors, trustee or general partner ("GP") of the mutual fund (as the case may be) and the service providers. However, few investment funds are fully licensed under the MF Law, as this is generally only necessary for retail funds. From the statistics published on CIMA's website, at the end of 2017 there were only 81 licensed funds.
    2. Registration as an administered fund requires the designation of a Cayman Islands licensed mutual fund administrator as the fund's principal office. The administrator must satisfy itself that the fund's promoters are of sound reputation, that the fund's administration will be undertaken by persons with sufficient expertise who are also of sound reputation and that the fund's business and its offering of equity interests will be carried out in a proper way. The administrator is obliged to report to CIMA if it has reason to believe that a mutual fund for which it provides the principal office (or any promoter, director, trustee or GP thereof) is acting in breach of the MF Law or may be insolvent or is otherwise acting in a manner prejudicial to its creditors or investors. This imposes a quasi-regulatory role and an obligation to monitor compliance on the administrators themselves, and generally higher fees charged by administrators in relation to this category of investment fund. Administered funds have declined in popularity over recent years, from 510 in 2008 to 331 at the end of 2017.
    3. Mutual funds registered under section 4(3) of the MF Law are divided into three sub-categories:

      1. where the minimum investment per investor is at least US$100,000;
      2. where the equity interests are listed on a recognised stock exchange; or
      3. where the mutual fund is a "master fund" (as defined in the MF Law) and either:

        1. the minimum investment per investor is at least US$100,000; or
        2. the equity interests are listed on a recognised stock exchange.

A master fund is a Cayman Islands entity that issues equity interests to at least one feeder fund (either directly or through an intermediate entity established to invest in the master fund) that is itself regulated by CIMA under the MF Law that holds investments and conducts trading activities for the principal purpose of implementing the overall investment strategy of the regulated feeder. Based on CIMA's statistics, at the end of 2017, 2,816 of the 10,147 regulated section 4(3) funds were registered as master funds.

There is also an exception to the need to register with CIMA for funds (other than master funds), known as "section 4(4) funds", that are open-ended "mutual funds" for the purposes of the MF Law but which have 15 or fewer investors, a majority in number of whom have the power to appoint and remove the fund's directors, GP or trustee, as applicable.

1.4 Does the regulatory regime distinguish between open-ended and closed-ended Alternative Investment Funds (or otherwise differentiate between different types of funds or strategies (e.g. private equity v hedge)) and, if so, how?

Yes; closed-ended funds are not subject to regulation under the MF Law. The key distinction between open-ended and closed-ended funds is the ability of investors to voluntarily redeem or repurchase some or all of their investment prior to winding up. Cayman Islands practitioners and CIMA generally consider that a lock-up period must be at least five years for an investment fund to be regarded as closed-ended at the outset.

1.5 What does the authorisation process involve and how long does the process typically take?

CIMA has established an online e-business portal, CIMAConnect, which enables the online submission of mutual fund applications and documentation. An application for a section 4(3) fund involves the submission of:

  1. the fund's offering document, other than in the case of a master fund, which will often not have an offering document separate from that of its feeder fund(s);
  2. the relevant statutory application form;
  3. consent letters from the fund's auditor and administrator;
  4. the relevant fee (currently US$4,268, initially and annually, other than in the case of a master fund which is currently US$3,049 initially and annually);
  5. an affidavit relating to the authorisation of submission of the online application; and
  6. certain information regarding the fund's operator (the directors, GP or trustee, as the case may be).

CIMA's practice with section 4(3) funds is to make the effective date of the application the date on which all application requirements have been submitted and applications must be completed prior to a fund launching in order to be compliant with the MF Law.

The authorisation process is more involved for licensed and administered fund applications.

1.6 Are there local residence or other local qualification requirements?

A Cayman Islands regulated mutual fund must appoint a local auditor approved by CIMA.

The Directors Registration and Licensing Law, 2014 (the "DRLL") requires that the directors (both natural persons and corporate directors) of a corporate mutual fund regulated by CIMA under the MF Law or a certain type of "Excluded Person" registered with CIMA under SIBL be either registered or licensed with CIMA. The registration process is undertaken online at the "CIMA Director Gateway".

1.7 What service providers are required?

Every regulated mutual fund must have an approved local auditor and will generally have an investment manager/adviser and an administrator (which, for an administered mutual fund, must be a licensed mutual fund administrator).

Although not required, it is becoming market practice for corporate regulated investment funds to appoint independent directors. Such independent directors are not required to be based in the Cayman Islands but often are, due to the depth of the Cayman fiduciary services industry. Based on statistical analysis conducted by Maples and Calder, 86 per cent of funds launched in 2017 by managers based in North America had at least one independent director. The trend is lower for Asia-based managers, where 84 per cent had at least one independent director. The trend is higher for funds with Europe-based managers, with 100 per cent of the funds launched in 2017 having at least one independent director.

The statistics compiled by Maples and Calder reflect a snapshot of the regulated funds established during the relevant period for which Maples and Calder acted as Cayman Islands legal counsel. Although this represents a significant sample size, it is inevitable that these statistics would vary if they were based on all funds established during the relevant period.

1.8 What rules apply to foreign managers or advisers wishing to manage, advise, or otherwise operate funds domiciled in your jurisdiction?

Provided that the activities of a foreign manager/adviser, including any transactions entered into, have not been and will not be carried on through a place of business in the Cayman Islands, or the fund is not subject to the Japan Regulations, there are no additional rules.

1.9 What co-operation or information sharing agreements have been entered into with other governments or regulators?

The Cayman Islands has Tax Information Exchange Agreements and similar bilateral arrangements with 36 countries as of April 2018 and is on the OECD "white list" with respect to the exchange of tax information. In addition, CIMA has entered into bilateral regulatory cooperation agreements pursuant to the AIFMD with the competent authorities of 27 of the EU and EEA Member States. Please also see the description of FATCA/CRS under question 6.6 below.

2. FUND STRUCTURES

2.1 What are the principal legal structures used for Alternative Investment Funds?

Three types of vehicle are most commonly utilised by Cayman Islands investment funds: exempted companies; exempted limited partnerships ("ELPs"); and exempted unit trusts. The term "exempted" in this context means that the vehicle is eligible to apply to the Cayman Islands government for an undertaking (lasting 20 or 50 years depending on the type of vehicle) that if any taxation is introduced in the Cayman Islands during the period to which the undertaking applies, such taxation will not apply to the vehicle in question. In return, exempted vehicles are not generally permitted to carry on business within the Cayman Islands.

In 2016 the Cayman Islands introduced limited liability companies ("LLCs"), which broadly operate in a similar manner to Delaware limited liability companies. Whilst such vehicles may be used in fund structures, we have not seen them used extensively to date in such capacity.

Exempted companies are by far the most common vehicle for open-ended funds (including master funds). Based on statistics published by CIMA, 92 per cent of reporting funds were exempted companies (including segregated portfolio companies) in 2016. Based on Maples and Calder's statistical analysis, the exempted company was used as the principal fund vehicle in 80 per cent of North American managed funds, 86 per cent of European managed funds and 75 per cent of Asian managed funds in 2017.

However, it is not common to see closed-ended funds established in the Cayman Islands as exempted companies. The ELP is usually the vehicle of choice for closed-ended or private equity funds.

The Cayman ELP concept is similar to that which applies in the United States and indeed the Exempted Limited Partnership Law (2018 Revision) (the "ELP Law") is based substantially on the Delaware equivalent (although a Cayman Islands partnership is not a separate legal person). Whilst exempted companies are extremely flexible in the extent to which voting and economic rights can be mixed and matched across separate classes of shares, companies have certain limitations that do not apply to ELPs. Fewer statutory rules govern the approvals processes within an ELP, which makes them generally more flexible and suitable for closed-ended vehicle purposes.

Unit trusts are the vehicle primarily used for investors in Japan, where the demand is driven by familiarity with the unit trust structure and historical local tax benefits relating to trust units as opposed to other forms of equity interest. Such investment funds can elect to comply with the Japan Regulations when applying for a licence under the MF Law that, under current guidelines set by the Japan Securities Dealers Association, permit them to be marketed to the public in Japan.

2.2 Please describe the limited liability of investors.

The limited liability of investors in a Cayman Islands investment fund depends upon the nature of the vehicle used and whether the investor has agreed to contribute additional funds to that vehicle pursuant to the terms of the governing documentation.

With exempted companies limited by shares, the liability of the investors is limited to the amount unpaid on their shares pursuant to the constitutional documents of the company and in accordance with the Companies Law (2018 Revision).

Limited partners ("LPs") of an ELP shall not be liable for the debts or obligations of the ELP under the ELP Law, (a) save as provided by the terms of the applicable partnership agreement, and (b) subject to the provisions of the ELP Law (i) providing that an LP who takes part in the conduct of the business of the ELP may lose its limited liability with respect to a third party who deals with that ELP and who reasonably believes such LP to be a GP of such ELP, and (ii) providing for clawback of capital distributions (together with interest) made to an LP within six months of the ELP becoming insolvent where the LP had actual knowledge of the insolvency.

Investors who are unitholders of an exempted trust must look to the wording of the relevant declaration of trust to provide them with limited liability status and protection.

Despite the limited liability nature of an equity interest purchased by an investor, it is common practice for the subscription and certain transaction documents of Cayman Islands investment funds to impose payment obligations on investors over and above the obligation to pay for their investment. Such additional obligations regularly include indemnification for misrepresentations and the requirement to repay excess redemption or withdrawal proceeds which were calculated and paid on the basis of unaudited data.

2.3 What are the principal legal structures used for managers and advisers of Alternative Investment Funds?

The principal structures are exempted companies and LLCs.

2.4 Are there any limits on the manager's ability to restrict redemptions in open-ended funds or transfers in open-ended or closed-ended funds?

Not as a general matter of Cayman Islands law; the ability to redeem or transfer equity interests in a fund and any restrictions thereon will be governed by the governing documents.

2.5 Are there any legislative restrictions on transfers of investors' interests in Alternative Investment Funds?

Not as a general matter of Cayman Islands Law; subject to restrictions on the assignment of certain liabilities by LPs pursuant to the ELP Law or the transferee meeting any minimum investment requirements that may apply. Of course, proposed transferees will need to satisfy applicable Know Your Client and Anti Money Laundering requirements.

2.6 Are there any other limitations on a manager's ability to manage its funds (e.g. diversification requirements, asset stripping rules)?

Not as a general matter of Cayman Islands law (assuming that the fund is not subject to the Japan Regulations).

3. MARKETING

3.1 What legislation governs the production and offering of marketing materials?

The MF Law requires that every regulated mutual fund issue an offering document which must describe the equity interests in all material respects and contain such other information as is necessary to enable a prospective investor to make an informed decision whether or not to invest.

To supplement this requirement, CIMA has issued a rule in relation to the content of offering documents for licensed funds, which is generally applied to the offering documents of all regulated funds. Japan Regulations also set out additional disclosure requirements for the prospectus of a retail mutual fund, which are more onerous.

3.2 What are the key content requirements for marketing materials, whether due to legal requirements or customary practice?

The minimum disclosure requirements for offering documents for regulated mutual funds generally include the following:

  1. details of the date of establishment of the fund, its registered office, fiscal year and its operator together with biographies;
  2. a description of the fund's investment objectives, policy, and restrictions;
  3. a description of the fund's investment manager or adviser, together with biographies of the portfolio managers and information regarding remuneration;
  4. the names and addresses of the fund's other service providers, together with details of the services to be performed and remuneration;
  5. the classes of interests available for investment or issue, together with descriptions of any minimum investment, eligibility requirements and subscription procedures;
  6. details of the principal rights and restrictions attaching to the fund's equity interests, including with respect to currency, voting, circumstances of winding up or dissolution and the procedures and conditions for repurchases, redemptions or withdrawals of such equity interests, including suspensions;
  7. the NAV calculation policy; and
  8. details of the fund's material risks and potential conflicts of interest.

3.3 Do the marketing or legal documents need to be registered with or approved by the local regulator?

The offering document of a registered mutual fund must be filed with CIMA as part of the initial application; however, it is not technically subject to approval by CIMA prior to its circulation to prospective investors. An amended offering document or supplement must be filed with CIMA within 21 days in the event of material changes, where there is a continuing offering.

3.4 What restrictions are there on marketing Alternative Investment Funds?

Generally, no offer or invitation to subscribe for equity interests in a Cayman Islands investment fund may be made to the "public in the Cayman Islands". The range of persons that may be considered excluded from the "public in the Cayman Islands" will depend upon the fund's legal structure and whether or not the fund is regulated under the MF Law, but it is generally likely that Cayman Islands exempted companies, ELPs and exempted trusts engaged in offshore business and foreign companies registered in the Cayman Islands will not be considered part of the "public in the Cayman Islands".

3.5 Can Alternative Investment Funds be marketed to retail investors?

Yes, in respect of section 4(1)(a)) or section 4(1)(b) funds. In respect of section 4(3) funds, yes, subject to the US$100,000 minimum investment or the equity interests being listed on a recognised stock exchange.

3.6 What qualification requirements must be carried out in relation to prospective investors?

Potential investors will be subject to due diligence and sanction checks in accordance with the Cayman Islands' anti-money laundering regime.

3.7 Are there additional restrictions on marketing to public bodies such as government pension funds?

No, there are not.

3.8 Are there any restrictions on the use of intermediaries to assist in the fundraising process?

No, there are not.

3.9 Are there any restrictions on the participation in Alternative Investment Funds by particular types of investors, such as financial institutions (whether as sponsors or investors)?

No, there are not.

4. INVESTMENTS

4.1 Are there any restrictions on the types of activities that can be performed by Alternative Investment Funds?

There are no such restrictions on investment strategy subject to applicable local regulatory laws.

4.2 Are there any limitations on the types of investments that can be included in an Alternative Investment Fund's portfolio whether for diversification reasons or otherwise?

No, there are not.

4.3 Are there any restrictions on borrowing by the Alternative Investment Fund?

No, there are no such restrictions (assuming that the fund is not subject to the Japan Regulations).

5. DISCLOSURE OF INFORMATION

5.1 What public disclosure must the Alternative Investment Fund or its manager make?

There are no public disclosure requirements for exempted companies or trusts. Although such vehicles are required to maintain statutory registers and make certain filings with the Cayman Islands Registrar and CIMA, those registers and filings are not available to inspection by the general public.

The register of limited partnership interests of an ELP is required by the ELP Law to be open to inspection during all business hours by all partners, subject to any express or implied term to the contrary of the limited partnership agreement, or by any other person with the consent of the GP.

5.2 What are the reporting requirements in relation to Alternative Investment Funds or their managers?

Regulated mutual funds are required to file, in electronic format, audited financial statements, an annual Key Data Elements Form (containing a summary of the basic information about the fund) and a Fund Annual Return ("FAR"), in each case within six months of the financial year end. The FAR provides general, operating and financial information relating to such regulated funds. Certain additional requirements apply to funds subject to the Japan Regulations.

A manager registered as an "Excluded Person" pursuant to SIBL is required to make an annual filing confirming its exempt status with CIMA but does not otherwise have any reporting requirements.

5.3 Is the use of side letters restricted?

No. Side letters are commonly used by Cayman Islands investment funds although certain legal considerations should be borne in mind in order to ensure that such letter agreements are compliant with Cayman Islands law.

6. TAXATION

6.1 What is the tax treatment of the principal forms of Alternative Investment Funds identified in question 2.1?

The Cayman Islands imposes no taxation on the income or capital gains of investment funds or their investors and no transfer taxes on the transfer of interests in investment funds. As discussed above, "exempted" companies, limited partnerships, unit trusts and LLCs can obtain undertakings from the Cayman Islands government that if any taxation is introduced during the period of the undertaking, such taxation will not apply to the entity to which the undertaking is given.

6.2 What is the tax treatment of the principal forms of investment manager / adviser identified in question 2.3?

Please see question 6.1 above.

6.3 Are there any establishment or transfer taxes levied in connection with an investor's participation in an Alternative Investment Fund or the transfer of the investor's interest?

No, there are none.

6.4 What is the tax treatment of (a) resident, (b) non-resident, and (c) pension fund investors in Alternative Investment Funds?

There is no distinction from a Cayman Islands perspective – please see question 6.1 above.

6.5 Is it necessary or advisable to obtain a tax ruling from the tax or regulatory authorities prior to establishing an Alternative Investment Fund?

No, it is not.

6.6 What steps have been or are being taken to implement the US Foreign Account and Tax Compliance Act 2010 (FATCA) and other similar information reporting regimes such as the Common Reporting Standard?

The Cayman Islands has signed two inter-governmental agreements to improve international tax compliance and the exchange of information – one with the United States and one with the United Kingdom (the "US IGA" and the "UK IGA", respectively). The Cayman Islands has also signed, along with over 80 other countries, a multilateral competent authority agreement to implement the OECD Standard for Automatic Exchange of Financial Account Information – Common Reporting Standard (the "CRS" and together with the US IGA and the UK IGA, "AEOI").

Cayman Islands regulations were issued on 4 July 2014 to give effect to the US IGA and the UK IGA, and on 16 October 2015 to give effect to the CRS (collectively, the "AEOI Regulations"). Pursuant to the AEOI Regulations, the Cayman Islands Tax Information Authority (the "TIA") has published guidance notes on the application of the US and UK IGAs and the CRS.

All Cayman Islands "Financial Institutions" will be required to comply with the registration, due diligence and reporting requirements of the AEOI Regulations, except to the extent that they can rely on an exemption that allows them to become a "Non-Reporting Financial Institution" (as defined in the relevant AEOI Regulations) with respect to one or more of the AEOI regimes, in which case only the registration requirement would apply under CRS.

The AEOI Regulations require funds to, amongst other things (i) register with the Internal Revenue Service ("IRS") to obtain a Global Intermediary Identification Number (in the context of the US IGA only), (ii) register with the TIA, and thereby notify the TIA of its status as a "Reporting Financial Institution", (iii) adopt and implement written policies and procedures setting out how it will address its obligations under CRS, (iv) conduct due diligence on its accounts to identify whether any such accounts are considered "Reportable Accounts", and (v) report information on such Reportable Accounts to the TIA. The TIA will transmit the information reported to it to the overseas fiscal authority relevant to a reportable account (e.g. the IRS in the case of a US Reportable Account) annually on an automatic basis.

6.7 What steps are being taken to implement the OECD's Action Plan on Base Erosion and Profit-Shifting (BEPS), in particular Actions 6 and 7, insofar as they affect Alternative Investment Funds' operations?

As part of the Cayman Islands' ongoing commitment to international tax transparency, the Tax Information Authority (International Tax Compliance) (Country-By-Country Reporting) Regulations, 2017 (the "CbCR Regulations") were issued on 15 December 2017, with the Department for International Tax Cooperation releasing its Guidance on the Country-by-Country Reporting ("CbCR") requirements of entities that are resident in the Cayman Islands on 29 March 2018.

The CbCR Regulations essentially implement in the Cayman Islands the model legislation published pursuant to the OECD's Base Erosion and Profit Shifting Action 13 Report (Transfer Pricing Documentation and Country-by-Country Reporting). The CbCR Regulations also reflect the Cayman Islands' obligations under the OECD Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (the "CbC MCAA").

Pursuant to this initiative, qualifying multinational enterprises ("MNEs") are required to report annually the information set out in the model legislation for each tax jurisdiction in which they operate. The TIA will automatically exchange such reports prepared by MNE Groups in the Cayman Islands with partner jurisdiction competent authorities in all jurisdictions that the MNE Group operates, provided that the jurisdiction is a co-signatory to the CbC MCAA or a tax information exchange agreement is in place between the Cayman Islands and each relevant jurisdiction. The information reported will be subject to confidentiality restrictions compliant with the requirements of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Pursuant to the CBCR Regulations, any business unit or permanent establishment of an MNE Group "resident in the Cayman Islands" that are "Constituent Entities" will have registration and/or reporting requirements in the Cayman Islands. An MNE Group means, broadly, with respect to any fiscal year of the Group, a Group that has two or more enterprises for which the tax residence is in different jurisdictions or that has an enterprise that is resident for tax purposes in one jurisdiction and is subject to tax through a permanent establishment in another jurisdiction and, in both cases, that has a total consolidated group revenue of equal to or more than US$850 million during its preceding fiscal year.

The notification and first reporting deadlines for a "Constituent Entity" with a Cayman Islands Reporting Entity are 15 May 2018 and 31 May 2018, respectively. The notification deadline for Constituent Entities whose Reporting Entity is not resident in the Cayman Islands is 30 September 2018.

As a Cayman Islands fund will not be claiming access itself to a tax treaty, Action 6 is not directly relevant to it. However, a Cayman Islands fund can be set up in a variety of different legal forms, either as legally transparent or opaque, which facilitate cross-border fund structures, whereby either the fund investors may rely on their own treaty or through investment entities that may be able to rely on their own treaty.

6.8 Are there any tax-advantaged asset classes or structures available? How widely are they deployed?

Not applicable – please see question 6.1 above.

6.9 Are there any other material tax issues for investors, managers, advisers or AIFs?

No, there are not.

6.10 Are there any meaningful tax changes anticipated in the coming 12 months?

No, there is not.

7. REFORMS

7.1 What reforms (if any) are proposed?

The Cayman Islands continuously keeps its laws under review to ensure that the jurisdiction remains the leading domicile for alternative investment funds and remains responsive to stakeholder's needs.

Originally published by The International Comparative Legal Guide to: Alternative Investment Funds 2018

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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You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions