Cayman Islands sets itself up for success

On 7 February this year, the Cayman Islands Government passed two new investment fund laws. Their ratification was an attempt to prevent the territory from being blacklisted by the EU Council for not having “appropriate measures” in place relating to the oversight of collective investment vehicles — a euphemism for corporate tax avoidance.

The introduction of the legislation, however, came a little too late. A few days before its implementation, the EU Council had met to decide which jurisdictions should be placed on the EU’s list of non-cooperative jurisdictions for tax purposes. And with the new laws still not formally in place, the Cayman Islands was one of them. This led to the slightly surreal spectacle of the territory being formally blacklisted on 18 February.

Thankfully, the banishment did not last long. A recent review of the list led to the Cayman Islands being taken off the tax haven blacklist on 6 October by the Council, who concluded that the new laws had addressed its concerns.

One of the laws that has put the Cayman Islands back in favour with the EU is the Private Funds (PF) Law 2020. This has brought any Cayman Islands closed-ended fund that falls within the definition of a “private fund” under the regulatory regime of the Cayman Islands Monetary Authority (CIMA) for the very first time. Crucially, it also requires private funds to use an independent fund administrator to ensure they meet their legal requirements.

As the majority of closed-ended funds are captured under this new law, you may well find that you need to engage with an administrator to comply with a whole new set of regulations when operating in the Cayman Islands.

The good news is that there is plenty of help out there. As a boutique firm with a global footprint and proactive approach to help you succeed, our fund services team is ideally positioned to ease the burden of this new legal change for you.

One of the main aims of the PF Law is to ensure transparency through clear documentation of a private fund’s core operations and processes. The PF Law achieves this by requiring private funds to have clear audit, valuation, custody, cash monitoring and securities identification procedures. Given our extensive experience of helping funds comply with similar regulatory obligations across the globe, we can take care of all the regulatory and administrative burdens created by this new law for you.

Forget boilerplate checklists and off-the-shelf procedures. We carry out our work differently for each fund. CIMA’s new demands include complying with certain ongoing obligations in relation to the valuation and safekeeping of fund assets, cash monitoring and identification of securities. Our tailored, premium service will make sure that you meet CIMA’s requirements, while keeping you in the best possible position to carry on with your core task — managing funds.

You may have also already begun realigning your operations with the new legislation and may have come up against some difficulties. Given our ability to provide single- or full-service legal and administrative tasks, we can step in at any point to ensure that you are fully compliant.

The Cayman Islands has strengthened its position as a preeminent jurisdiction for investment fund formation.

We can help you be a part of its success story.

If you want to find out more or discuss your situation, please get in touch with our Fund expert Stefanie Knoester.