Formation of a Registered Mutual Fund in the Cayman Islands. Service offer

Registered funds are the most common form of mutual funds in the Cayman Islands. They require no license. Instead, a prospectus and certain statutory data on offering of fund interests must be registered with CIMA.

Funds in which the minimum initial investment of each investor is USD 100 000 = CYD 83 300 (i.e. funds for institutional or sophisticated wealthy investors) or funds that are listed on an approved stock exchange may be registered by submitting the following documents to CIMA:

• prospectus that duly describes fund interests (i.e. shares) and contains information a potential investor needs to make a well-founded decision as to whether or not they should subscribe for shares;
• registration form (Form MF1);
• consent letter from auditors and administrator;
• affidavit of directors of the funds;
• confirmation of registration of the legal entity;
• statutory registration fee*.

There is no requirement to appoint a resident of the Cayman Islands administrator of a registered fund. However, a fund must have locally approved auditors.

All registered mutual funds must prepare audited financial statements signed by approved auditors of the Cayman Islands that shall be submitted to CIMA within six months of the end of the financial year. The auditing firm must be approved by CIMA and located in the Cayman Islands (but there are no objections against the collection of data necessary for audit in another jurisdiction).

The fees are paid to CIMA upon registration and then annually.

Constitutional documents of a mutual fund normally provide for issue to investors of fund interests of different classes or series. They also determine operating features, including the method and frequency of calculation of net asset value, procedure of subscription, cancellation and class conversion, isolation of assets belonging to each class, and restrictions (if any) on holding fund interests.

Corporate mutual funds are the most common structure and managed by directors the number of which must be at least two.

Directors of CIMA-regulated mutual funds or companies registered as excluded persons in accordance with the Securities Investment Business Law (2015 Revision) (SIBL) (each hereinafter referred to as “Regulated Entity”) must be registered with CIMA or obtain from CIMA a license in accordance with the Directors Registration and Licensing Law, 2014 (DRLL).

DRLL differentiates between professional directors (individual appointed director in 20 or more Regulated Entities), corporate directors (legal entity appointed director of a Regulated Entity) and registered directors (individuals who are not professional directors).

An individual acting as a director of an existing Regulated Entity must be registered with CIMA.

However, CIMA may refuse to register the applicant if it is aware that the applicant has been convicted of a crime connected with fraud or deception or is imposed with sanctions by a regulation authority, self-regulatory organization or professional disciplinary body.

A person is permitted to be appointed director of a Regulated Entity only after the submission of an application for registration / licensing in accordance with DRLL. In the case of a mutual fund or investment manager wishing to register with CIMA each director must be registered before the submission of an application for registration as a regulated mutual fund or excluded person in accordance with SIBL.

For mutual funds in the Cayman Islands it is normal practice to have an independent manager that usually holds voting fund interests that do not participate in the capital. The manager is not required to be a resident of or live in the Cayman Islands; investment management and consultation of a Caymanian fund may be provided by a manager situated in any part of the world.

If the manager is a company incorporated in the Cayman Islands, the Securities Investment Business Law applies.

There are certain exceptions to the licensing regime according to SIBL, in particular for a manager engaged in securities investment exclusively for companies of its group, or for high net worth or sophisticated persons, or for Caymanian funds investors of which are such persons. A manager that may not apply exemption or whose activities on other grounds are not exempted from SIBL must obtain a license from CIMA, which may be issued not certain conditions.

Most managers normally declare exemption from the licensing requirements set out in SIBL by reference to exemption applied to the manager of a mutual fund registered with CIMA.

Investment managers and consultants exempted from the requirement to obtain a license in accordance with SIBL must submit to CIMA an annual declaration confirming their exempt status and pay a prescribed exemption fee.

Directors of a manager that is obliged to register as an excluded person in accordance with SIBL are obliged to be registered with CIMA in accordance with DRLL.

Regulated mutual funds must annually provide CIMA with:

• statutory fee, which is paid before 15 January;
• audited accounts, which are filed within six months after the end of the financial year of the fund. At the same time CIMA must be provided with a Fund Annual Return (FAR) with a statutory fee. The manager or directors of the fund together with auditors have to coordinate simultaneous filing of FAR and payment of the fee.

Promoters and operators of regulated mutual funds (i.e. directors, trustees or general partners, depending on the structure) are also obliged by law to inform CIMA of:

• any changes they have become aware of that substantially affect information in the prospectus or application form and file the changed prospectus (and pay CIMA the administration fee) or corrected Form MF1 within 21 days;
• a change of the registered address or actual location of the fund.

Directors registered in accordance with DRLL must:

• pay annual registration fee before 15 January;
• inform CIMA of any changes in provided information within 21 days after such a change.

CIMA may demand a special inspection (audit) of a regulated mutual fund or licensee, and each operator of the regulated mutual fund must ensure such special inspection. Each promoter or operator of the regulated mutual fund or licensee must provide CIMA with such information and grant it access to such records as CIMA requests.

CIMA may apply to court in order to preserve assets of a regulated mutual fund.

In respect of a regulated mutual fund or licensee CIMA has the right to revoke the relevant license, impose certain conditions on the licensee, demand change of a promoter or operator, appoint consultants or persons to control matters of the mutual fund or licensee or demand reorganization or liquidation of the mutual fund or licensee.

All Caymanian mutual funds may place their interests on the Cayman Islands Stock Exchange (CSX).

CSX has been admitted to the European Securitization Forum (an independent initiative of the Bond Market Association) and established work relations with Euroclear, which gives participants of CSX access to Fundsettle to increase transparency and communicate with investors.

CSX is also a member of the International Organization of Securities Commissions (IOSCO).

*CIMA, registered agent and other functionaries of the fund have the right to request any other documents and information.

**The cost of services is effective as of September 2025.

***The cost of translation, notarization and apostille is not included.