Investment funds in the Cayman Islands
The Cayman Islands is one of the world’s leading offshore jurisdictions for the establishment of investment funds. As at 30 September 2011, there were 9,444 funds (predominantly hedge funds) registered with the Cayman Islands Monetary Authority (CIMA) under the Mutual Funds Law. There are also significant numbers of private equity and other closed-ended alternative investment funds registered in the Cayman Islands but which are not required to register with CIMA.
Key features include the flexibility of the investment fund regime within a clear and effective regulatory environment; the quality and experience of the legal, administrative and accounting service providers; ease of registration procedures; no requirement to have Cayman-based directors or officers, managers, administrators or custodians; and no restriction on commercial matters such as investment objectives, trading strategies or leverage, trading or diversification limits. Such commercial matters are for the fund’s sponsor to determine provided that full disclosure of such matters (and all associated risk factors) is made in the offering document.
The Mutual Funds Law is the principal legislation relevant to the regulation of investment funds in the Cayman Islands. Investment managers based in the Cayman Islands will also need to comply with the Securities Investment Business Law, and all investment funds and service providers must also comply with relevant anti-money laundering legislation and regulation. CIMA is the regulatory body responsible for compliance with these regulations and has broad powers to ensure the protection of investors…