Further to our recent client update on the Cayman Islands Mutual Funds (Amendment) Bill, 20201, the proposed amendments to the Mutual Funds Law (2020 Revision) (the "Law") requiring the registration of mutual funds that were previously exempted from registration under section 4(4) of the Law2 ("Section 4(4) Funds") have now passed into law.
Commencement and Timing
The amendments came into force on 7 February 2020 (the "Commencement Date"). Existing Section 4(4) Funds will need to comply with the registration requirements by 7 August 2020. New Section 4(4) Funds that start carrying on business after the Commencement Date will need to comply with the registration requirements with immediate effect.
Your regular Maples Group contact will be in touch on next steps for funds affected by these amendments.
Section 4(4) Funds will need to comply with the Cayman Islands Monetary Authority ("CIMA") 'four-eyes' principle that requires them to have at least two natural persons in management roles. Existing Section 4(4) Funds will need to review the current make-up of their boards or other governing bodies to determine if they satisfy this principle.
In addition, each director or manager of a Section 4(4) Fund structured as a Cayman Islands exempted company or limited liability company will need to register under the Directors Registration and Licensing Law, 2014 ("DRLL Registration") if not already registered. DRLL Registration is a simple process involving an online filing and payment of a fee through CIMA's director gateway portal.
Section 4(4) Filing Requirements
As part of the registration process, Section 4(4) Funds will need to prepare and file a registration form, which is expected to be similar to the form currently filed for mutual funds registered under section 4(3) of the Law. However, a Section 4(4) Fund will not be required to file an offering document (or any amendments) with CIMA. A prescribed fee will also be payable on registration and in January of each year thereafter.