Do you have Cayman fund vehicles that you intend to voluntarily terminate?
If so, you should consider initiating the process now to minimise or eliminate 2018 fees.
How much could you save?
A CIMA registered Master/Feeder structure will typically incur over US$10,000 in annual fees (in addition to its various service provider fees) and such fees will be due in full for 2018 if its initial deregistration and liquidation documents have not been been filed with CIMA by 12 noon on December 29, 2017.
What are the key stages of a solvent liquidation?
The principal factors that will drive the timetable, and therefore the fees, on the voluntary liquidation of a Cayman fund structure are:
(i) date of final redemption of investors;
(ii) date on which final redemption proceeds are paid to investors;
(iii) identity of voluntary liquidator;
(iv) statutory notice periods; and
(v) date by which final audited financial statements can be available.
If you have a CIMA registered fund to be terminated in 2017, you should get in touch with the fund’s auditor and with Ogier as soon as possible to ensure that the optimum timetable can be agreed.
What is the best outcome for a CIMA registered fund planning to terminate at year end?
After the final redemption and once the voluntary liquidator of the fund has been appointed, it should be possible to make the necessary filings with CIMA in advance to place the fund into “Licence under Liquidation” (LUL) status. A registered fund that has applied for LUL status by 12.00pm (Cayman Islands time) on December 29, 2017 will not incur CIMA annual fees for 2018. The fund can then complete its final audit in 2018 and once the audit, FAR form and FAR filing fee have been filed with CIMA and any required final CRS/FATCA report has been filed, the deregistration and voluntary liquidation of the fund can be completed.
Notwithstanding LUL status, it will still be necessary for the fund to pay fees to the Registrar of Companies (or Registrar of Exempted Limited Partnerships, as applicable) and the service providers for 2018. Further, during the liquidation process, the fund will continue to be subject to the obligations which the CRS and FATCA currently impose upon it.
What about a strike-off instead of a voluntary liquidation?
A strike-off is a more cost effective and less time consuming option but has the downside that it can be undone for a period of 10 years after the strike-off date. For this reason we don't usually recommend this option where the entity in question has taken in external investors and traded.
If a strike-off is a viable option you will need to have all relevant materials filed before December 29, 2017 to avoid 2018 government fees.