New rules for private funds in Cayman Islands

The Zeifmans team wants to make you aware of the recent changes to financial regulations relating to private funds in Cayman Islands, and we’re pleased to offer the services necessary to align with the new rules. The Cayman Islands Monetary Authority (CIMA) has released the following information pertaining to the registration process and ongoing requirements for private funds:

Registration
Private fund registration applications should be submitted electronically through CIMA’s secured Regulatory Enhanced Electronic Forms Submission (REEFS) web portal. Information on the specific documents and fees that are required to register can be found on the CIMA website. Documentation will include marketing materials and offering documents.

Once all documentation is complete and payment is submitted, the processing of the application can begin. Applications submitted with incorrect or incomplete documentation will be rejected.

CIMA is attempting to process applications as quickly as possible, but registrants should note that registration turnaround time will be impacted in the event of adverse findings, or if the fund’s operators are found to be the subject of an ongoing regulatory or criminal investigation. The registration date will be the day the complete application is received by CIMA.

Private funds that submit evidence (resolutions, auditor confirmation, etc.) to CIMA that they are in the liquidation/wind up phase, and that liquidation will be complete by the end of the transition period will not be required to apply for registration.

Leadership
CIMA will require a minimum of two directors for applicants that are companies. This will also extend to the general partner or a corporate director.

Audits
Pursuant to Section 13(1) of the PFL, private funds are required to have their accounts audited annually by a CIMA-approved auditor. Audited accounts, along with the Fund Annual Return should be submitted to CIMA within 6 months of the end of the financial year. Audits will be required for 2020.

Zeifmans (Cayman) is a CIMA-approved authority, authorized to conduct audit of private funds in alignment with the new regulations.

Valuation
Valuations of private funds need to be carried out annually, and in accordance with the fund’s valuation policy. While investors are aware that capital contributions made to the fund won’t be distributed until the established time frame, investors still must remain informed of the fund’s performance on an ongoing basis.

Monitoring
Private funds can choose whether to conduct cash monitoring internally, or to hire an external third party to perform the function. If they wish to perform cash monitoring internally, the fund’s auditor will need to confirm that monitoring was conducted throughout the year. CIMA will assess the process to confirm that cash monitoring was sufficient based on the type of assets held by the fund.

Speak to the pros
Zeifmans is proud to be a CIMA-approved authority with years of audit experience in the Cayman Islands. In working with us, our clients can rest assured that their audits will be conducted in alignment with the new regulations, positioning them to continue to preserve wealth while being protected from penalties.

If you own a private fund in the Cayman Islands, reach out to Larry Zeifman or Kristie Lester to discuss how Zeifmans can help.