The Private Funds Law, 2020 of the Cayman Islands (the “PF Law“) (which came into force on 7 February 2020), requires that certain closed ended funds which fall within the definition of “private fund” as set out in the PF Law, be regulated and register with the Cayman Islands Monetary Authority (“CIMA“) within twenty-one (21) days of accepting capital commitments from investors. Transitional provisions require that a private fund that has commenced carrying on business at any time prior to 7 August 2020, register with CIMA no later than 7 August 2020. The introduction of measures providing for oversight of previously unregulated closed ended funds, was aimed at increasing transparency in this sector and satisfying the requirements of global standard setting bodies.

The PF Law was amended by the Cayman Islands government on 7 July 2020 to provide clarity on how the PF Law should be applied as well as to extend its scope. The definition of “private fund” has been broadened to mean:

“a company, unit trust or partnership that offers or issues, or has issued, investment interests, the purpose or effect of which is the pooling of investor funds with the aim of enabling investors to receive profits or gains from such entity’s acquisition, holding, management or disposal of investments, where:

  1. the holders of investment interests do not have day-to-day control over the acquisition, holding, management or disposal of the investments; and
  2. the investments are managed as a whole by or on behalf of the operator of the private fund directly or indirectly.”

Consequent on the expanded definition of “private fund”, entities which were previously excluded may now be required to be regulated and to register with CIMA pursuant to the PF Law.

Entities that may now fall within the ambit of the PF Law include:

  1. pooled structures with a single investment;
  2. certain master funds; and
  3. certain alternative investment vehicles.

It is to be noted that non-fund arrangements remain excluded from the definition of “private fund” and will not be required to register under the PF Law[1].

The deadline for registration of entities which fall within the definition of “private fund” is 7 August 2020. Fund Managers should review their previous assessments bearing in mind the changes noted above.

[1] There are other exclusions which may also be applicable.

This briefing has been provided as a general guide and is not a substitute for specific legal advice. To discuss how the revisions may apply to you or for assistance with the registration process please contact:

Janet Francis
D. +1 345 815 2807

Mark-Paul Cowan
D. +1 345 815 2809