With its tax-neutral framework, robust financial services sector and renowned political and economic stability, the islands continue attracting asset managers from across the globe looking to establish cryptocurrency and other investment vehicles in 2024. However, recent legislative developments aligning fund regulations with evolving international standards warrant consideration. This article outlines key benefits and legal prerequisites for launching a Cayman Islands investment fund.

The jurisdiction offers numerous advantages for investment managers:

  • Political and economic stability
  • No foreign exchange controls
  • Sophisticated legal system based on English common law principles
  • Competitive tax regime
  • Deep pool of experienced professional advisory firms

Regulatory environment

The CIMA ensures funds operate responsibly by enforcing rigorous registration and reporting stipulations. Under CIMA’s oversight, funds are structured either as open- or close-ended vehicles in accordance with the acts adopted in 2020 on mutual and private funds, respectively.

To satisfy CIMA requirements, funds must provide:

  • A local registered office address
  • For locally registered entities, Cayman Islands-based staff
  • Licensed local fund managers

Moreover, managers must secure CIMA licensure themselves whilst submitting requisite fund particulars for vetting before commencing operations. Annual audited financial statements must also be furnished consistently.

By upholding transparency within a flexible ecosystem, CIMA empowers investment managers to efficiently establish funds in the Cayman Islands whilst championing accountability to investors.

In summary, despite tightening supervision, the Cayman Islands remains a pre-eminent global financial hub for legitimately launching investment funds in 2024. Asset managers seek out the jurisdiction for its stability, business-friendly practices and professional support structure. By adhering to registration and reporting stipulations enforced by CIMA, fund promotors can capitalise on these advantages when structuring cryptocurrency and other investment vehicles

Open vs. Close ended funds' structures

For establishing investment funds in 2024, you can opt from the options below.

Open-ended formats:

Fund Type

Licensing

Minimum investment/restrictions

Registered Funds

No licensed manager required.

$100,000 per investor.

Limited Funds

No minimum investment threshold.

Maximum of 15 investors.

Managed Funds

Locally licensed administrator required.

No minimum capital stipulations.

Licensed Funds

CIMA licence required.

Local office required.

Master/Feeder Funds

Memorandum registration with CIMA.

Feeder mechanisms for regulatory/tax optimization.

Closed-ended funds

Local legislation specifies that only open-ended vehicles constitute “mutual funds”. Hence, closed-ended funds bypass such regulations. However, domestically registered closed-ended partnerships must uphold a local registered office. Any connected Cayman Islands-based advisors/managers also require registration or exemptions under prevailing statutes.

Notably, all regulated Cayman Islands investment funds must file annual audit reports alongside adhering to pertinent obligations.

Private fund in the Cayman Islands

The islands continue to be a favoured jurisdiction for establishing private investment funds in 2024. Below, outlines key requirements for launching a private fund.

Defining private funds means entities that:

  • Operate in or from the Cayman Islands
  • Issue interests to pool funds from two or more investors
  • Invest capital without day-to-day investor involvement
  • Utilize external investment managers
  • Prohibit investor redemption requests

All private funds must file details with the regulator within 21 days of securing initial commitments whilst paying annual registration fees.

When structuring a private investment fund, common options include: exempted company, limited partnership, unit trust.

Additionally, managers must be locally based. The legislation permits entering into agreements with qualifying high-net-worth/sophisticated individuals before registering. However, capital cannot be accepted before completing the CIMA filing.

Registration involves submitting fund particulars and service provider details.

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2024 Compliance deadlines

Below are key Cayman Islands fund compliance deadlines:

  • January 2024:
    • Pay the CIMA fees
    • File annual return
    • File annual economic substance notification
  • March 2024:
    • Set up AML training for directors.
  • April 2024:
    • Register with the DITC, if you start in April 2023 (remotely also possible)
  • June 2024:
    • File your fund's annual return and financial statements'23.
  • July 2024:
    • Confirm filing of your FATCA report'23
  • September 2024:
    • Confirm filing of your CRS compliance form'23
  • October 2024:
    • Meeting to look at governance and compliance issues for the year.

Consult TKDeal experts on launching CI private fund. Please reach out with any questions. You can find detailed information on the official resources of the regulator, or by contacting our specialists directly for initial consultations to evaluate individual requirements and provide informed recommendations.