As year end approaches, it is time to start planning the
liquidation of Cayman Islands entities that have reached the end of
their life cycle to avoid unnecessary fees.
In order to prevent the expense of annual 2022 government
registration fees, an appointed liquidator will be required to hold
the final general meeting for a company or file the final
dissolution notice for an exempted limited partnership on or before
31 January 2022.
Additionally, an entity that is registered with the Cayman Islands
Monetary Authority ("CIMA") pursuant to the Mutual Funds
Act (2021 Revision) or the Private Funds Act (2021 Revision)
("Funds") may be required to submit documentation to CIMA
to have its status changed to Licence under Termination /
Liquidation. Documentation must be filed by 31 December 2021
in order for a Fund to qualify for a reduction in its 2022 annual
CIMA fee.
In light of the recently implemented CIMA Administrative Fines
Regime1, Funds will also need to be aware of
their requirements to file documents with, and make payments to,
CIMA in a timely manner. Specifically, a Fund that is a
regulated mutual fund is required to file an application to cancel
its CIMA Licence or Certificate of Registration on the earlier of
21 days from the date the Fund ceases to carry on business or
before 31 December of the year in which the Fund ceases to carry on
business as a mutual fund. CIMA may impose sanctions for
failure to comply with this requirement, which may include an
administrative fine of up to CI$5,000 (US$6,097.56).
Funds seeking to de-register from CIMA will also be required to
complete a final audit in most instances. Typically, in the
context of a mutual fund, the final audit will cover the period up
to the date of (i) the appointment of a third-party liquidator or
(ii) the full payment of final redemptions to investors.
Funds will need to allow for this, both in terms of the time
required to prepare and submit the audited financials, as well as
the associated costs.
The Maples Group offers the largest voluntary liquidations team in
the Cayman Islands, comprising dedicated individuals with extensive
experience in the dissolution of various corporate, structured
finance and investment fund vehicles. We have developed best
practice procedures that meet all local statutory
requirements. For a straightforward voluntary liquidation of
a Cayman Islands company, we can generally complete the formal
statutory process within four to five weeks (noting that the
effective date of the certificate of dissolution would be three
months after the final meeting).
For further information on the team and our liquidation services,
please view our Overview of Services. Additionally, you
may wish to refer to our legal guides with information on preparing
your entities for liquidation and the statutory process: Voluntary Liquidations
of Solvent Cayman Islands Companies Islands
Companies and Voluntary Dissolution and Winding Up of a Cayman
Islands Exempted Limited Partnership.
Footnote
1 Part VIA of the Monetary Authority Act (2020 Revision) (the "MAL") gives the Cayman Islands Monetary Authority ("CIMA") the power to impose administrative fines for breaches committed by persons (entities and individuals) of provisions prescribed under the MAL, the "regulatory laws" and the Anti-Money Laundering Regulations (2020 Revision). The administrative fines for breach of prescribed provisions of the Mutual Funds Act (2021 Revision) and Private Funds Act (2021 Revision) came into effect in June 2020.
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.