As year end approaches, it is time to start planning the liquidation of Cayman Islands entities that have reached the end of their life cycle, to ensure that unnecessary fees are not incurred.
In order to prevent the expense of annual 2020 government registration fees, an appointed liquidator will be required to hold the final general meeting for a company or file the final dissolution notice for an exempted limited partnership on or before 31 January 2020. Furthermore funds that are registered with the Cayman Islands Monetary Authority ("CIMA") pursuant to the Mutual Funds Law (2019 Revision) ("Funds") should consider submitting documentation to have their CIMA status changed to license under termination / liquidation by 31 December 2019 in order to qualify for a reduction in their 2020 annual fee.
Consideration for Funds should be given to CIMA's requirement for a final stub audit. Given CIMA's current practice, it is exceedingly unlikely that terminating Funds will be granted a partial year audit waiver. Therefore, it is our recommendation that Funds plan to complete a final audit for the period either up to the date of the appointment of a third party liquidator or to the date of the full payment of the final redemptions. Funds will need to allow for this, both in terms of the time required to prepare and submit the audited financials as well as the associated costs.
The Maples Group has also developed a solution for those vehicles that cannot be liquidated due to holding distressed or illiquid assets. FLP Investments Ltd. ("FLP") was established to take such assets (subject to certain criteria being met, transfer documentation being executed, a nominal one-off fee and basic terms and conditions being agreed for the sale) in both definitive registered and global form.
The timeframe for completing any possible transfer is dependent upon the availability of documentation, notice periods, transfer restrictions and, where an administrative / transfer agent is still in place, their willingness to assist. It is therefore important to start these conversations as early as possible whilst parties are still engaged and willing to acknowledge transfers (if required).