Eternity Law International News Investment funds on the Caymans

Investment funds on the Caymans

Published:
February 10, 2020

Investment funds on the Caymans. Their features and varieties

Investment funds on the Caymans – an attractive way to invest.

The creation of investment-type funds on the Caymans is possible based on current legislation. At the same time, his management will be carried out by the managing European organization.

Using this structure, you can increase confidence indicators in the investment fund. This is due to the fact that within the framework of the legislative framework there is an exact observance of laws adopted at the European level.

But at the same time, due to the opening of the fund directly in the Cayman Islands, it will be outside the control exercised by a huge number of regulators.

Therefore, it turns out that only the organization that belongs to the managerial type of companies will fall under the control of the European Union.

Often the process of registering funds of a new type takes place directly on the territory of the Cayman Islands. Sometimes this process is carried out on islands such as Bermuda, Maine, Jersey, etc.

For the formation of investment funds, this territory is quite an attractive jurisdiction. Moreover, in this territory there are no restrictions regarding investment processes.

State regulator

The process of monitoring and regulating the functioning of funds is carried out by the Cayman Islands Monetary Authority. This is a special department located on the islands.

Varieties of funds

From the legislative base operating on the territory of the islands, the formation of investment category funds is possible. Often they are represented by such varieties:

  • mutual funds;
  • partnerships;
  • company.

Moreover, the action of these institutions can be both independent and in the process of interaction with other similar organizations. In addition, it is possible to organize activities such as replenishment, fixed assets or the so-called fund of funds.

Mutual Type Excluded Fund

In the event that the largest indicator of the number of investors is not more than 15 people, then the fund does not need to submit to such a process as regulation carried out in relation to fund organizations.

At the same time, it is imperative that all investors are fully equitable and do not carry out activities related to fund management.

Mutual Registered Fund

Among all forms of fund organizations, the most commonly used is that which is regulated by law under the name “About Mutual Funds” and adopted in the Cayman Islands.

Within the framework of this law, the main characteristics of stock institutions can be distinguished:

  • the circulation of stock shares must be realized on one of the exchanges, which has an approved form;
  • 100 thousand dollars are the smallest amount by which an investor can enter a fund institution;
  • mandatory annual audit, which goes through the approval process by a specific audit organization;
  • there is no need to obtain a license for the fund that is undergoing the registration procedure.

The process of registering a special memorandum of ideas and a certain kind of data that are related to proposals aimed at the process of selling securities must be carried out without fail.

MUTUAL TYPE ADMINISTRATIVE FUND

If the head office of the registered fund is located on the territory of the islands themselves and the management process is implemented through a company that has a special license, it can be considered that the fund belongs to the category of mutual administered funds.

Compared to registered type funds, administrative funds must also carry out a process such as registering their own memoranda, as well as the mandatory audit every year.

MUTUAL LICENSED FUND

This type of fund is very rare. The process of obtaining a license for a fund institution should be carried out directly with the regulator of national importance.

In the event that the fund cannot be represented in the form of one of the categories that are higher, then it receives a license of a special mutual fund.

Certain requirements are put forward for such funds, the first of which is that a fund office should be located in the Cayman Islands. It is also mandatory to register memorandums, as well as undergo an audit.

Based on all of the above, we can conclude that the most popular form is a registered fund. This is due to the fact that you can manage it even when the investor is outside the Cayman Islands.

And his investment powers are maximum.

TOOLS USED IN INVESTMENT TYPE FUNDS

Registered-type funds that operate in accordance with the legal framework of the Cayman Islands may use such investment value instruments:

  • stocks and stock investment certificates;
  • municipal, mortgage and corporate bonds;
  • options and government bonds;
  • forwards and futures;
  • swaps and corporate rights.

STOCK RESTRICTIONS

Considering the legislative framework, it is worth paying attention to the fact that the policies on the activities of such funds are not subject to restrictions on residence, tools, fund administrator and the number of investors.

Eternity Law International specialists will be happy to рrovide you with assistance in resolving this issue.

 

 

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