Welcome to the Stuarts Q3 2024 funds newsletter.
In this edition, you will read about topics including:
- Updated Cayman Beneficial Ownership Regime Now in Force
- Is Your Cayman Entity Compliant with P&P, ABM and AML Obligations?
- Register for AML and Compliance Training
- Key Dates and Preparations for Voluntary Liquidation
- Reminder of Annual Regulatory Filing Dates 2024
- Latest Investments and Securities Figures
- Crypto Funds and Digital Assets Thrive Under New Legislation
- Fund Finance: Security Structures and Transactions
- Recent Publications
- Stuarts Podcasts on Mutual Funds and Private Funds
We hope you will find the newsletter of interest.
Updated Cayman Beneficial Ownership Regime Now in Force
The Beneficial Ownership Transparency Act, 2023
(the "BOT Act") marks significant
changes to the beneficial ownership regime and came into effect on
31 July 2024. The Ministry of Financial Services and Commerce has
announced that enforcement of the new requirements will be deferred
until 1 January 2025. The BOT Act expands the range of entities
required to maintain beneficial ownership registers and now
includes exempted limited partnerships, limited liability
partnerships and limited partnerships.
Several categories of previously exempt entities are now required
to maintain a beneficial ownership register.
A fund registered under the Private Funds Act or Mutual Funds Act
is not exempt under the new BOT Act, however, such entities are now
afforded the option of an "Alternative Route to
Compliance". Instead of providing the details of its
beneficial owners, a registered fund may provide contact details to
a 'contact person' licensed or registered in the Cayman
Islands. Such contact person would be responsible for providing
details of the fund's beneficial owners if and when requested
by the relevant authority. Stuarts is providing the service of
'contact person' to our clients.
We will be reaching out to clients who will be affected by the new
BOT Act to ensure compliance by 1 January 2025. If you have any
questions, please reach out to your usual Stuarts attorney or
contact our Head of Corporate, Megan Wright, or our Head of Banking and
Regulatory, Jon McLean. The full update can be read
below.
Is your Cayman Entity Compliant with P&P, ABM and AML Obligations
Cayman Islands entities regulated by CIMA are required to comply with ongoing legal and regulatory requirements established in their Written Policies and Procedures ("P&P") including, holding Annual Board Meetings ("ABM"). ABMs and updates to P&Ps must be undertaken annually. Failure to comply with these requirements can result in serious penalties. These requirements apply to all entities (such as companies, partnerships and trusts) who are carrying out 'relevant financial business' including entities registered with or licensed by CIMA, such as:
- Mutual Funds;
- Private Funds;
- Securities Managers, Arrangers and Advisers;
- Virtual Asset Service Providers;
- Mutual Fund Administrators;
- Market-Makers;
- Broker-Dealers;
- Money Service Businesses;
- Company Managers;
- Corporate Service Providers;
- Banks;
- Insurance Businesses; and
- Trusts Businesses.
Read the full update in our article below.
If you have not held your ABM or your P&Ps are not up to date,
we can provide assistance with drafting bespoke minute materials to
meet your entity's particular requirements. Please contact our
Head of Banking and Regulatory, Jon McLean for assistance.
Register for Your AML and Compliance Training
Stay compliant with Cayman Islands regulations. Our AML and
compliance training led by former CIMA Chief Analyst Reuben Foster, ensures you meet all CIMA
regulatory requirements.
CIMA requires AML, CTF, PF and Sanctions related training to be
undertaken by all relevant financial service providers (FSPs)
personnel including, Directors, AML Officers, and Senior
Management. Training must be conducted annually to
stay abreast of obligations and to avoid penalties.
Our AML and compliance sessions will equip you with the essential
knowledge needed to remain compliant in the fast-paced world of
regulatory compliance. We cater to all FSPs including, but not
limited to, Investment Funds, Private Funds, Securities Investment
Business Managers, Advisers, Arrangers, Registered Persons, Broker
Dealers, Banking and Trust clients. Contact our Head of Banking
& Regulatory Jon McLean or our Head of Group Compliance, Reuben Foster for assistance. Learn more or
register in the link below.
Updated Deregistration Procedures for Cayman Funds
CIMA has announced updates to liquidation and deregistration
procedures for funds in the Cayman Islands. When terminating,
liquidating or deregistering your CIMA regulated fund - mutual fund
or private fund - in the Cayman Islands - there are a number of
options to consider, as well as filing and administrative
procedures to follow to ensure compliance and avoid unnecessary
penalties. We have outlined these in our legal update below and
included the most recent updates by CIMA and the Department for
International Tax Cooperation (DITC).
Contact our Head of Funds, Chris
Humphries or our Head of Corporate, Megan
Wright for assistance. Read the article in full below.
Key Dates and Preparations for Voluntary Liquidation
Cayman Islands-based companies considering a 2024 year-end
voluntary liquidation should plan early to avoid stress and ensure
timely filing as the firm nears the end of its lifecycle. Preparing
for the liquidations process in advance can help companies avoid
extra regulatory costs and lessen the burdens associated with
annual filing and reporting requirements. At Stuarts, our
liquidation attorneys can offer guidance to help simplify the
wind-down process. Read our advisory on key voluntary liquidation
dates below.
Funds registered with the Cayman Islands Monetary Authority (CIMA)
under the Mutual Funds Act (as Revised) or the Private Funds Act
(as Revised) should also begin dissolution proceedings before the
30 August 2024 deadline to ensure the company is dissolved by
year-end. This guarantees that final audited financial statements
are filed with CIMA before 30 August 2024, allowing the voluntary
liquidation to commence in time. Should you require immediate
assistance, please contact Megan
Wright. The update can be read in full below.
Latest Investments and Securities Figures
Most regulated sectors in the Cayman Islands have continued on a steady path over the last 12 months with Private Funds up close to 4%. Funds have been discouraged to set up the investment manager in the Cayman Islands due to the new economic substance rules. However, there are sensible solutions to meet the economic substance requirements and we encourage funds to discuss the options with us.
Reminder of Regulatory Filing Dates 2024
Clients are reminded of the 2024 filing dates for
financial institutions under the CRS and FATCA regimes and under
the Economic Substance regime with the Tax Information Authority in
the Cayman Islands.
Renewals and cancellations should be made and paid for through CIMA's
portal by using the login credentials previously supplied upon
registration.
The CRS has updated the list of Reportable
Jurisdictions. The list can be viewed on the DITC website
here.
Should you have any questions or require assistance with filing
please contact your usual Stuarts attorney or contact our Head of
Banking and Regulatory, Jon McLean.
In Legal500. Alternative Investments: Crypto Funds and Digital Assets Thrive Under Innovative Legislation
Stuarts is pleased to be contributing authors in the Legal500
Country Comparative Guide for Fintech, Alternative Investments:
Crypto Funds and Digital Assets Thrive Under Innovative
Legislation in the Cayman Islands. In this chapter,
Stuarts' attorneys explore the various types of funds available
for alternative investments - their structures, regulations and
benefits - and shine a light on how new, innovative virtual asset
legislation (including the special economic zone) is driving the
growth of the digital assets marketplace and opening up new doors
of opportunity for investment in the Cayman Islands.
Read the chapter in full below. If you require more information,
please reach out to our Head of Funds and Fintech, Chris Humphries.
Fund Finance: Security Structures and Transactions
In the article below, Head of Banking and Regulatory, Jon McLean, looks at fund finance securities
for private equity funds in the Cayman Islands under The Private
Funds Act (As Revised). One of the most important aspects in
arranging a fund finance transaction is structuring the security
package. A private fund structure chart often includes several
entity types, such as limited partnerships and limited liability
companies, organised in multiple jurisdictions. The type of
facility, whether it is a subscription facility, a NAV facility, or
a hybrid facility, determines the collateral pledged. This
collateral may be provided by one or more of these entities to
secure the repayment obligation to the lenders or a security agent
on their behalf.
Read the article in full below or get in touch with our team for further
advice.
Publications
Legal500 Fintech Guide 2024:
Alternative Investments: Crypto Funds and Digital Assets Thrive
Under Innovative Legislation>
Legal500 Interview with Chris Humphries: Market
Overview and Adapting to Clients' Needs>
Business Reporter 2024:
Empowering Web3 through Innovative Legislation in the Cayman
Islands
Lexology Panoramic 2024 Chapters:
Private Equity: Fund Formation in the Cayman Islands
Lexology Panoramic 2024 Chapters:
Private Equity: Transactions in the Cayman Islands
Chambers Global Guide
2024:Introduction to Funds in the Cayman Islands
>
Chambers Practice Guide 2023:
Doing Business in the Cayman Islands: Digital Assets, Trends and
Developments>
Legal500 Alternative Investments Guide 2022: Rise in Fintech Funds in the Cayman Islands >
Corporate Governance Article >
Cayman Structures for Cryptoassets and Digital
Asset Companies >
Revisiting Fund Registration in the Cayman Islands
As demand grows for investment funds, we have included a guide
to registering a fund in the Cayman Islands. The below Guidance
Note summarises the various types of funds, their definitions and
registration requirements.
If you would like any assistance with the registration or
structuring of a fund, please reach out to your usual Stuarts
attorney or contact Chris Humphries.
Stuarts Podcasts on Mutual Funds and Private Funds
Stuarts released podcasts on the Registration of Private Funds
and Mutual Funds in the Cayman Islands. The podcasts include a
brief summary on; the types of private funds (including non-fund
arrangements) and mutual funds in the Cayman Islands and their
registration requirements.
Podcast - Mutual Fund Registration in the Cayman
Islands
Podcast - Private Fund Registration in the Cayman
Islands (Part 1)
Podcast - Private Fund Registration in the Cayman
Islands (Part 2)
Events:
Miami, 21-24 January 2025
The biggest Web3 event in the US.
Stuarts is proud to sponsor the upcoming WAGMI Web3 conference in
Miami! Get in touch if you will be in the area or
attending the event. We would love to connect with you and discuss
all things Web3.
Originally published 24 September 2024
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.
