As the end of 2024 draws closer, now is the time to start preparing for end-of-year filing deadlines. Cayman Islands entities that are nearing, or have reached, the end of their lifecycle should plan for liquidation and dissolution as part of their 2024 to-do list.
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To avoid incurring 2025 annual government fees, Cayman Islands companies that are intending to dissolve by way of a solvent voluntary liquidation process should consider the timing for engaging and appointing a liquidator. The appointed liquidator will need to hold the final general meeting and file a statutory final return for a company on or before 31 January 2025. Likewise, to avoid 2025 government fees, an exempted limited partnership will need to file the final dissolution notice on or before 31 January 2025.
Considering these deadlines, it is prudent to contact a Maples Group liquidations professional no later than 1 November 2024 for advice on dissolving Cayman Islands entities and to begin any on-boarding and pre-appointment requirements.
What are the audit requirements for a regulated fund to complete the Cayman Islands liquidations process?
Regulated funds will need to deregister from the Cayman Islands Monetary Authority ("CIMA") prior to dissolution and, in most instances, will be required to complete and file a final audit. Typically, in the context of a mutual fund or private fund, the final audit should cover the period from the last financial year-end for which an audit has been filed with CIMA, up to the date of:
- The final net asset value, with subsequent events notes confirming that the final distribution has been made to investors; or
- The full payment of final distribution to investors. Funds will need to plan for this, both in terms of the time required to prepare and submit the audited financials, as well as the associated costs.
Failure to comply with filing requirements may result in administrative fines being levied by CIMA. A fund will only be granted an audit waiver from CIMA in very limited circumstances and CIMA retains discretion as to whether to grant such a waiver.
What are the key considerations for Cayman Islands funds applying to deregister with CIMA?
With effect from August 2022, CIMA eliminated the ability of a
fund to be categorised as being in License under Termination
("LUT") or License under Liquidation ("LUL")
status. As a result, funds must now address all filing requirements
at the time of applying to deregister with CIMA and will remain
registered (and liable for annual fees) until such requirements are
fully met.
As such, a fund must file its deregistration application, along
with its final audited financials, before 31 December to avoid
incurring the following year's CIMA annual registration fees.
Furthermore, a fund must be in good standing with respect to all
fees (including all fund annual return "FAR" fees) and
required filings before applying for deregistration with CIMA.
Please keep in mind, however, that a fund is required under the
cancellation rules to notify CIMA of its plans to cease carrying on
business as a regulated mutual or private fund within 21 days of
making that determination and / or appointing a designated
liquidator. Failure to notify CIMA may bring about sanctions from
CIMA for non-compliance. With the proper documentation and good
planning, and provided a fund is in good standing with CIMA, the
deregistration process should proceed smoothly.
How the Maples Group can assist with Cayman Islands liquidations
The Maples Group is home to the largest voluntary liquidations team in the Cayman Islands, comprising dedicated individuals with extensive experience in the dissolution of various corporate, partnership, structured finance and investment fund vehicles. We have developed best practice procedures that meet all local statutory requirements.
For a straightforward voluntary liquidation of an unregulated Cayman Islands company or partnership, we can generally complete the formal statutory process within four to five weeks, noting that the effective date of the certificate of dissolution of a company would be three months after the final meeting. The effective date of the certificate of dissolution for a partnership would be as at the date of the final dissolution notice. Further time should be factored in for any entity regulated with CIMA as an investment fund in order to achieve the deregistration steps described above.
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.
