Following industry consultation, the Cayman Islands Monetary Authority (CIMA) has issued new regulatory rules and procedures for Mutual Funds and Private Funds in relation to their deregistration with CIMA.

The principal changes to the updated deregistration procedures relate to better clarity regarding the timing of the deregistration process and the elimination of the options to place a fund in “License under Termination” (LUT) or “License under Liquidation” (LUL) status with CIMA, thereby reducing annual registration fees.

Firstly, funds must file their initial deregistration paperwork within 21 days of either a decision being made that the fund has ceased to trade (effectively this will be when the operator (directors/general partner or trustee) decides to acknowledge that the fund never launched or when the decision is made to terminate the fund’s investment activities) or the appointment of a liquidator.

Secondly, funds will remain in fully ‘active’ status until the deregistration process has been completed. In many respects this was always the case, with funds having to comply with all regulatory and statutory obligations as funds until the deregistration was approved, but now also means that a fund will be liable for annual registration fees in full until its deregistration is complete.

CIMA note that it is anticipated that the deregistration and approval process will be more efficient for funds seeking to deregister as a result.

In order to complete the deregistration process and be removed from active status, in addition to filing the initial core paperwork, a fund must have completed and filed its final audit (or seek and be granted an audit waiver/exemption from CIMA), file an operator’s affidavit that the relevant termination processes have been completed and be in good standing (all fees paid up to date and all filings completed).

CIMA have confirmed that all deregistration applications made on or after 17 August are subject to the new deregistration rules and procedures. CIMA have also confirmed that any funds that have submitted applications under the old procedures prior to that date will still be able to take advantage of the fee concessions under those procedures, provided the filing requirements associated with their LUT/LUL status have been met.

For further information or advice, please reach out to your usual Harneys contact.