Eternity Law International — News — Cayman Islands Investment Funds

Cayman Islands Investment Funds

Published:
August 22, 2024

The Cayman Islands was previously a leading center for setting up investment funds due to its low taxes and high confidentiality. These conditions have attracted many companies seeking to optimize tax obligations and protect the privacy of their clients. However, in recent years there have been changes in legislation. The Department of Financial Services, together with the CIMA, has introduced innovations in the regulation of investment funds, including changes to the process of their creation and operation. However, an investment fund Cayman Islands continues to be a profitable option for commercial prosperity for entrepreneurs from all over the world.

Our company is a leading firm specializing in providing comprehensive services for the registration and support of investment funds in the Cayman Islands. Our specialists have deep knowledge and experience in the field of international corporate law and financial regulation. We offer our clients consultations, assistance in drawing up legal documentation and support at all stages of creating and managing an investment fund, in particular. when obtaining an investment fund license, ensuring full compliance with all legal requirements.

Benefits of Cayman Islands investment funds

When establishing and implementing Cayman Islands fund management, this jurisdiction is attractive to investors for the following reasons.

  1. Recognized global financial center.
  2. Flexible legislation based on English law.
  3. Possibility of registering various types of funds.
  4. Wide range of financial services.
  5. Linking the local currency to the US dollar.
  6. Presence of the world’s leading banks.
  7. Competitive tax conditions.

Cayman Islands investment regulations

In 2020, laws on private and mutual funds came into force, promoting the development of the financial sector and increasing transparency and protection of investor interests. These laws create a legal basis for the functioning of funds and provide tax preferences, which makes investments more attractive.

  1. The Mutual Funds Act (MFA) regulates open-end funds that raise funds from multiple investors to invest in securities.
  2. Closed-end investment funds are regulated by the Private Funds Act (PFA), which allows investors to profit from a variety of assets.

Cayman Islands fund setup: the process of creating an investment fund

For starting a fund in Cayman Islands, you must complete the following steps.

  1. Register a physical address on the Islands.
  2. Hire a resident managing director and local staff.
  3. Maintain accounting policies and financial statements confirmed by the auditor.
  4. Fund managers must register with CIMA, file fund information and comply with professional and corporate governance requirements.
  5. You must also pay an annual registration fee and report changes in the fund structure.
  6. All funds are required to comply with anti-money laundering (AML/CTF) regulations and appoint responsible officers.

Following these requirements, the Cayman Islands remains an attractive jurisdiction for the creation and management of an investment fund.

Types of funds

There are several types of mutual funds in the Cayman Islands, subject to applicable law.

  1. Registered fund. Such an organization is exempt from licensing and local management requirements. Each investor contributes at least 100 thousand USD (or equivalent). The fund’s shares are listed on an exchange recognized by CIMA.
  2. The Master Fund owns more than 51% of the shares of other mutual funds, serving as the parent company.
  3. A restricted fund has fewer than 15 investors and is registered in Cayman, or is registered outside but offers shares to residents through a licensed entity.
  4. The managed fund uses a Cayman administrator’s license instead of its own license. The appointment of a resident administrator is required to notify CIMA of irregularities and financial problems of the fund.
  5. The licensed fund is open to the general public with no minimum subscription amount. Strict licensing process taking into account the reputation and qualifications of managers.

We are proud of our reputation as a reliable partner providing high-quality services in the areas of tax and corporate planning, licensing and compliance. Our experts are ready to offer customized solutions tailored to each client’s unique needs. We strive for long-term cooperation, helping our clients achieve their business goals in a dynamically changing legal environment. We help you quickly and without unnecessary fuss open an investment fund in any jurisdiction. We also have an extensive list of ready-made offers, in particular, we can offer an alternative investment fund in the Czech Republic for sale and much more.

Cayman Islands fund administration: key officials

Investment funds regulated by MFA or PFA appoint the following officers.

  1. Investment manager.
  2. Administrator.
  3. Auditor.
  4. Director.

These officials ensure that the fund complies with the law and is properly administered.

General requirements for Cayman Islands fund registration

  1. Offering Documents: You must have a current document that describes the key characteristics of the fund, including its objectives, strategy, risk profile and participation process.
  2. Allocation Documents: If applicable, the fund must provide information regarding the collection of funds from investors and the distribution of units.
  3. Updating of documents: If key characteristics change, documents must be updated within 21 days and submitted to CIMA.
  4. Annual audit: Funds are required to conduct an annual audit and submit audited financial statements to CIMA along with the annual return.
  5. Registration Fees: Registration fees and annual fees are required.

Note: CIMA has issued guidance on good governance that all mutual funds must follow.

Cayman Islands investment fund taxation

When setting up an IF in the Cayman Islands, it is important to consider that there is no immediate tax liability. Companies, mutual funds and LLCs may receive tax exemption. Exempt companies can maintain this status for 20 years, and mutual funds and limited partnerships can maintain this status for up to 50 years, subject to the required conditions.

Economic presence requirements

Entities operating in the Cayman Islands must meet economic substance requirements that demonstrate their sufficient economic status in the jurisdiction, especially for exempt companies (including SPCs).

Anti-money laundering (AML) regime

Establishing an FI in the Cayman Islands requires compliance with the AML regime, which includes measures and procedures to prevent money laundering and the financing of illegal activities.

  1. Verification of ultimate beneficial owners: Identification and verification of the real owners of the fund.
  2. Risk-based fund performance monitoring: Reviewing transactions and activity to identify potential misconduct.
  3. Implementation of risk management procedures: Developing strategies for identifying and managing risks.
  4. Substance Ineligible Countries List Compliance: Tracks countries that do not meet location requirements.
  5. Suspicious transaction notification procedures: Definition and reporting of suspicious transactions.
  6. Internal independent audit: Regular reviews and audits of internal procedures to assess their compliance with the AML regime.

Cayman Investment funds are subject to a variety of requirements, which may vary depending on the investor’s jurisdiction. This includes requirements for documentation, fund reserving, reporting and investment strategies.

If you are planning to open an investment fund in the Cayman Islands, our company’s specialists can provide advice on the registration and operation of funds, help with the preparation of the necessary documents and accompany the registration process, including interaction with registration authorities. We will also provide you with comprehensive support when establishing an investment fund in SVG, in Estonia, Switzerland and other countries.

Businesses for sale

Professionally-built investment fund in the Cayman Islands for sale

Offshore, Cayman Islands Crypto licenses for sale
This is a new investment opportunity – professionally-built investment fund in the Cayman Islands for sale. Please check out the main details regarding this proposal below. For sale investment fund in the Cayman Islands: key considerations Authorized by CIMA in the Cayman Islands; Two feeders (one in the USA and one in the Cayman Islands);...

Investment fund in Bahamas with bank accounts for sale

North America, Bahamas Hedge Funds for sale
Investment fund in Bahamas with bank accounts – what’s included: Year of company incorporation: 2015, Bahamas; The company has a highest license of a professional investment fund; The fund has a bank account in Central Bank of Bahamas; The fund also has an account in Hong Kong payment system in 28 currencies + accounts via...

Investment fund in UK for sale

Europe, UK Financial intermediaries
Below you can see the basic information regarding the operational investment fund in UK for sale Investment fund in UK – what’s included: Investment fund in London, UK 2020 year of registration; Fund is with the option of brokerage and investment accounts, which allows to: – advising clients on investment management of their investments; –...

You could be interested

Opening a UK Bank Account

Using personally-directed or commercially-used accounts in foreign banking establishments gives possibilities to preserve and increase savings and to freely carry out settlements with foreign clients and suppliers. It gives access to globally-functioning financial establishments not available in some other market-spaces and helps to bypass currency restrictions based on residence. One of trustworthy and appealing jurisdictions...

Classification of investment companies in Cyprus

IFD and IFR introduced a new system designed to classify investment firms. This system is based on the activities of such companies, on their size, systemic importance in the overall structure and group partnerships. Therefore, the capital adequacy requirements of CIF will be based on the class of the investment company. The following four categories...

Legal regulation of operations with cryptocurrencies in Ukraine

There is a large number of Bitcoin users in Ukraine. On this indicator, it is included in the TOP-10 countries of the world. Legal regulation of operations with cryptocurrencies in Ukraine has many features and pitfalls. Despite this, Ukraine still does not have the status of a cryptocurrency. The relevant legislation is under development, and...

Administrative advocate

Eternity Law International law company offers legal entities and individuals protection of their rights in cases of administrative offenses. Professional assistance of advocates will be needed if some people want to bring you to administrative responsibility. This can happen in cases where the administrative offense concerns certain points. Property encroachment; Disputes with government agencies; Violation...

Obtaining Gaming licenses, Licenses for Forex activities, Financial licenses

Obtaining licenses for gaming activities in offshore and onshore zones, obtaining Forex licenses in offshore and onshore zones, obtaining financial licenses, registering online casinos, registering companies in jurisdictions without requiring licensing of the relevant activities.

Following EU’s Crypto Rules Coming Into Effect, Do We Need MiCA 2.0?

The European Union’s new crypto rules, set to take effect at the beginning of July, mark the culmination of 2,5 years of legislative efforts. However, forward-thinking lawmakers have already begun calling for a revised version of MiCA down the line, acknowledging that evolving market dynamics require continuous updates to ensure effectiveness. Has the execution of...

Related posts

Cyprus investment funds

Cyprus, due to its strategic geographical location, is a significant international financial center attracting investors and entrepreneurs from all over the world. This is due to a stable economic environment, attractive tax policies and a harmonized regulatory framework that meets international standards. This jurisdiction provides many investment opportunities, including the establishment of an investment fund...

Crypto-regulation in Cayman Islands

The Isles, renowned for its economic services sector and business-friendly environment, has emerged as a destination of interest for enterprises functioning in the cryptocurrency and blockchain space. For companies engaged in providing virtual asset services, obtaining a Virtual Asset Service Provider (VASP) license is a crucial step to confirm adjustment adherence and credibility. This article...

PSP license in Cayman Islands

Modern online transaction platforms, when users make online payments, have become possible thanks to the use of e-payment systems. Such digital exchange market participants can carry out activities only after acquiring permission. Buying a ready-made PSP license in the Cayman Islands is all that is needed to accompany the transactions and to complete the deals...

Investment funds

Investment funds (hedge). How to open Investment funds – companies engaged in collective investment. Their essence is the accumulation and saving of funds of private and legal entities for further investment through the purchase of securities and shares. For what purposes funds are created? Opening investment funds will help to solve a number of issues...

Types of investment funds

TYPES OF PUBLIC FUNDS According to SIBA, there are four categories of Open Funds: Professional foundation; Private foundation; Public fund; Recognized foreign foundation. Professional foundation Their statutory documents state: the fund’s main interest goes only to “professional investors”; the initial investment of each investor in the fund (other than “exempt investors”) must be at least...

Bank in Cayman Islands

Bank in Cayman Islands for sale. Package includes: Bank has been operating since 2014; fully licensed and operating Cayman Bank with category B license; approx. USD 50 million of total assets, and continually generates new deposits; annualized profits of USD 1.5 million; seven full time and part-time staff members and multiple correspondent banking relationships; ability...

Discover our services

The international company Eternity Law International provides professional services in the field of international consulting, auditing services, legal and tax services.

Ready-made companies for sale

Companies with a bank account around the world

Banks for sale

Established Banks for sale

Ready-made licenses for sale

Forex, cryptocurrencies, gambling, EMI, PSP, SVF, MSO, DLT

Licensing

Forex licenses, cryptocurrencies, gambling, EMI, PSP, SVF, MSO, DLT

Offshore company registration

Expert advice on the acquisition of an offshore company

Open a bank account

Open bank accounts in more than 120 banks around the world
Fill the blank: