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Important changes in Cayman fund regulation

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Important changes in Cayman fund regulation

With the Cayman Islands Government set to introduce two bills aimed at regulating Cayman private funds and enhancing regulation of Cayman hedge funds, Managing Director - Cayman Islands, Richard Gordon highlights what this means for the funds and capital markets industry for 2020.

The Private Funds Bill, 2020 and Mutual Funds (Amendment) Bill, 2020 aim to bring private funds and hedge funds with fewer than 15 investors under the regulatory oversight of the Cayman Islands Monetary Authority (CIMA).

This means that all Cayman investment funds – except certain investment vehicles regulated under the Mutual Funds Law – will now be fully regulated by CIMA.

These bills are still under review but if passed, anyone with fund investments in Cayman will be required to increase their corporate governance framework significantly to remain compliant under the new CIMA rules.

The Private Funds Bill sets out exemptions to the registration requirements for (i) regulated mutual funds and regulated EU-connected funds, non-fund arrangements and certain overseas private funds that solicit the Cayman Islands public for investments. 

The industry should be prepared for how these bills will impact future fund and related relevant capital markets activity and how to comply with the new requirements in a timely manner. 

As an independent, market leading provider of fund, fiduciary and legal services in Cayman, our team of experts can help you respond to the unique requirements across a wide range of services. For guidance and questions, please reach out to our team below.