Do you have Cayman fund vehicles that you intend to terminate?
If so, you may wish to initiate the process now to minimise or eliminate 2017 fees.
How much could you save?
A CIMA registered Master/Feeder structure will typically incur over US$10,000 in annual fees (in addition to its various service provider fees) if its deregistration and liquidation has not been commenced by December 30, 2016.
What are the key stages of a solvent liquidation?
The principal factors that will drive the timetable, and therefore the fees, on the voluntary liquidation of a Cayman fund structure are:
(i) Date of final redemption
(ii) Date on which final redemption proceeds are paid
(iii) Identity of liquidator
(iv) Statutory notice periods
(v) Date by which final audited financial statements can be available
If you have a registered fund to be terminated in 2016, you should get in touch with the fund's auditor and with Ogier as soon as possible to ensure that the optimum approach can be taken.
What is the best outcome for a CIMA registered fund planning to terminate at year end?
If the final redemption date of a fund will be 12/30/16 and the voluntary liquidator of the fund can be appointed on that date, it may be possible to make necessary filings with CIMA to place the fund into "Licence under Liquidation" (LUL) status. A registered fund placed into LUL status by 12.00pm (Cayman Islands time) on 12/30/16 will not incur CIMA annual fees for 2017. The fund can then complete its final audit in 2017 and once the audit, FAR form and FAR filing fee have been filed with CIMA, the deregistration and voluntary liquidation of the fund can be completed.
Notwithstanding LUL status, it will still be necessary for the fund to pay fees to the Registrar of Companies (or Registrar of Exempted Limited Partnerships, as applicable) and the registered office provider for 2017.
What about a strike-off instead of a voluntary liquidation?
A strike-off is a more cost effective and less time consuming option but has the downside that it can be undone for a period of 10 years after the strike-off date. For this reason we don't usually recommend this option where the entity in question has taken in external investors and traded.
If a strike-off is a viable option you will need to have all relevant materials filed before 12/30/16 to avoid 2017 fees.
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.