The Cayman Islands legislature recently approved the Mutual Funds (Amendments) Bill 2012 which seeks to amend certain definitions within the Mutual Funds Law in order to clarify the regime relating to registration of master funds.

Effect

Previously Cayman master funds did not require to be registered with the Cayman Islands Monetary Authority (CIMA) where they had only one feeder fund and that feeder fund was registered with CIMA. The amendments now bring such entities into the scope of the regime and so these will now be required to register as master funds.

Accordingly, all Cayman Islands master funds will now require registration unless they fall within one of the following categories:

  • Closed-ended funds where there are no redemption rights at the option of the investor; or
  • Master funds with one or more feeder funds, none of which are themselves required to register with CIMA.

We anticipate that the amendments could take effect shortly and will advise further once an implementation date is confirmed.

What are the initial registration requirements?

In order to register a master fund, the following requires to be filed with CIMA:

  • Registration fee of US $3,049
  • Form MF4 prescribed details
  • Certified copy of Certificate of Incorporation

For almost all master funds, there will be no requirement to prepare and file an offering document specific to the master fund. Nor will there be a requirement to file consent letters for the auditor and administrator provided that these are the same as for the regulated feeder fund.

What are the on-going requirements?

A registered master fund will need to have audited financial statements prepared annually, signed off by an approved auditor in Cayman (which will invariably be the same as the auditor for the regulated feeder fund). The audited financial statements will need to be filed with CIMA, together with the Fund Annual Return (FAR) form, within six months of the end of the financial year of the master fund.

In addition, the master fund will need to file material updates to the prescribed details filed with CIMA on the Form MF4, in the same way that a regulated feeder fund does on its Form MF1.

The master fund will also be required to pay an annual fee of US $3, 049, and will be required to have a US $100,000 minimum initial investment.

Increase in Fees

In addition, legislation was also passed which made certain amendments to fees payable by Cayman entities. These are as follows:

  • Application fee payable by a feeder fund registering with CIMA - increase to US $4,268
  • Annual fee payable by a CIMA registered feeder fund - increase to US $4,268

The application fee and annual fee for a registered master fund will remain as US $3,049.

Should you have any questions in respect of the content of this briefing, please contact your usual Ogier attorney or any of the partners listed below.